EEDSM Programme Energy Efficiency & Demand Side Management

The Energy Efficiency and Demand Side Management (EEDSM) programme is a government grant that funds municipalities to reduce electricity consumption across their public infrastructure. Managed by the Department of Mineral Resources and Energy (DMRE) and allocated through the Division of Revenue Act (DoRA), the programme provides non-repayable grants to selected municipalities for retrofitting streetlights, traffic lights, municipal buildings, water pump stations, and wastewater treatment works with energy-efficient technologies.

The programme has a national target of 16% reduction in economy-wide energy consumption by 2030 (against a 2015 baseline) as set out in the post-2015 National Energy Efficiency Strategy. Over R810 million was spent through the programme between 2016/17 and 2020/21, and municipalities have reported annual electricity savings exceeding 19,700 MWh.

This Programme Is for Municipalities Only

The EEDSM grant is not available to individual households or private businesses. It is a conditional grant transferred from national government to municipalities. If you are a resident interested in energy efficiency, contact your municipal energy office to find out whether your municipality participates in the EEDSM programme. Businesses and homeowners looking for energy incentives should see Section 12B/12BA Tax Allowances.

Savings Verified

10.3 TWh

over three years (DMRE verified)

National Target

16% Reduction

by 2030 (vs 2015 baseline)

Total Spent

R810.9M

2016/17 to 2020/21

Annual Savings

19,724 MWh

reported by municipalities

Energy Savings Potential by Intervention

The EEDSM programme targets the municipal infrastructure categories with the highest electricity saving potential.

Up to 80%

Traffic Lights

LED conversion of signalised intersections

40 - 70%

Street Lighting

High-pressure sodium to LED retrofit

20 - 30%

Office Buildings

HVAC, lighting, and insulation upgrades

15 - 25%

Water Pumps

Variable speed drives and pump optimisation

Varies

Solar PV

Rooftop and ground-mount installations

What Does the EEDSM Grant Cover?

The grant covers the full lifecycle of an energy efficiency project, from planning through to verification.

Baseline Assessment

Comprehensive audit of electricity consumption across all municipal infrastructure. This establishes the starting point against which savings will be measured.

Planning Phase

Business Plan Development

Development of a detailed business plan and technical specifications for the proposed project. The business plan must follow DMRE templates and include energy savings targets, cost estimates, and payback periods.

Planning Phase

Implementation

Investment in energy-efficient design, technologies, and installations. This is where the actual retrofitting happens: replacing old streetlights with LEDs, installing variable speed drives on pumps, upgrading building HVAC systems, or installing solar PV.

Execution Phase

Measurement & Verification

Independent M&V of actual energy savings achieved. This is mandatory. An accredited M&V body confirms that the interventions are delivering the projected savings before the DMRE signs off on the project.

Verification Phase

Awareness Campaigns

Energy efficiency awareness and education programmes within the municipality. This can include community workshops, staff training, and public messaging about energy conservation.

Support Activity

Key Stakeholders

The EEDSM programme involves several national and provincial bodies working together.

DMRE

Manages the programme, evaluates proposals, allocates funding

Municipalities

Submit proposals, implement projects, report monthly

SALGA

Represents local government, supports non-performing municipalities

GIZ (SAGEN)

Technical support through the SA-German Energy Programme

MISA

Assists municipalities with capacity and personnel shortages

Eligibility & Application Process

Who Can Apply?

Any South African municipality across all categories (metro, district, and local) can apply.
Priority is given to municipalities with higher electricity consumption and greater energy saving potential.
Proposals must use proven energy-efficient technologies with low payback periods.
Municipalities participating in the Vertically Nationally Appropriate Mitigation Action (V-NAMA) are encouraged.
Projects must be prioritised in the municipality's Integrated Development Plan (IDP).
Municipality must commit to specific energy savings targets (in kWh) and report monthly to the DMRE.
Where implementation is delegated to a municipal entity (e.g. Johannesburg City Power, Mangaung CENTLEC), a formal implementation contract must be in place.

Key Deliverables

Extended baseline of all possible EEDSM projects in the municipality. Shortlisted priority projects for the current financial year. Detailed electricity consumption baseline for shortlisted interventions. Energy Audit Report combining extended and detailed baselines. Business Plan in the DMRE template with energy savings targets and cost estimates. Monthly progress reports signed by the Municipal Manager. Quarterly reports to the DMRE (September, December, March, June). Independent Measurement and Verification (M&V) of energy savings.

How the Process Works

DMRE Issues Request for Proposals

The DMRE publishes a Request for Proposals (RFP) typically at the beginning of October each year. Municipalities must respond by the deadline (usually 30 September for the following financial year). The RFP outlines the evaluation criteria, eligible interventions, and reporting requirements.

October annually

Municipality Prepares Baseline & Business Plan

The municipality conducts a comprehensive energy audit, develops an extended baseline of all potential projects, shortlists priority interventions, and prepares a business plan in the DMRE's template. Consultants may be procured to assist with this step.

Baseline + business plan

DMRE Evaluates and Allocates Funding

The DMRE evaluates proposals based on energy savings potential, cost-effectiveness, payback period, and alignment with national energy efficiency targets. Approved municipalities receive a grant allocation and enter into a performance agreement with specific conditions.

Grant allocated via DoRA

Implementation and Procurement

The municipality procures service providers (accredited by the DMRE) to supply and/or install energy-efficient technologies. Street light luminaires must meet DMRE standardised technical specifications. Monthly and quarterly reports are submitted throughout implementation, starting from July.

Retrofit and install

Measurement, Verification & Close-Out

An independent M&V body verifies the actual energy savings. The DMRE reviews reports to confirm that targets have been met. Any scope changes during implementation must be pre-approved by the DMRE. Unspent funds may be stopped and reallocated to better-performing municipalities.

Verified savings

Underspending and Fund Reallocation

The EEDSM programme has experienced significant underspending, with only 76% of transferred funds spent between 2016/17 and 2020/21 (R246.2 million unspent). Municipalities that report significant underperformance by mid-year (31 December) or fail to comply with DoRA conditions risk having their allocations stopped and reallocated to better-performing municipalities. Capacity constraints, procurement delays, and lack of dedicated energy staff are common reasons for underperformance.

Part of a Bigger Picture

The EEDSM programme supports the National Energy Efficiency Strategy (NEES), the National Development Plan (NDP), and South Africa's international emissions reduction commitments. It also feeds into the Vertically Nationally Appropriate Mitigation Action (V-NAMA) for buildings. Energy efficiency is recognised as the cheapest, fastest, and least polluting "energy source" available to South Africa.

For Municipalities Considering Applying

Start your baseline assessment early. The most common reason for delayed or failed EEDSM projects is incomplete baseline data. Ensure your asset register is up to date, collect at least 12 months of electricity billing data for target infrastructure, and consider engaging GIZ/SAGEN for free technical support. Municipalities that have dedicated energy officers or are part of the South African Local Government Association (SALGA) energy efficiency network tend to perform significantly better.

Common Questions

Can a private business or homeowner apply for EEDSM?

No. The EEDSM programme is a conditional grant to municipalities only. Private businesses and homeowners cannot apply directly. However, if your municipality participates in the programme, you may benefit indirectly through improved street lighting, more efficient traffic signals, and lower municipal electricity costs. For private energy incentives, see Section 12B/12BA Tax Allowances for solar PV and renewable energy installations.

Does the municipality need to repay the grant?

No. The EEDSM is a non-repayable conditional grant transferred through the Division of Revenue Act. However, the municipality must meet its performance targets and reporting obligations. Failure to spend the funds or deliver on commitments can result in the allocation being stopped and reallocated.

When is the annual call for proposals?

The DMRE typically issues the Request for Proposals in October each year, with a submission deadline of 30 September for the following financial year. However, exact dates may vary. Municipalities should maintain regular contact with the DMRE's Energy Efficiency unit and monitor official government gazettes for the annual RFP.

Can the municipality use its own service providers?

Municipalities must use service providers accredited by the DMRE or follow the standardised technical specifications issued by the DMRE (particularly for streetlight luminaires). The tender process can be for supply and install, supply only, or install only, depending on the municipality's situation. All procurement must comply with the Municipal Finance Management Act (MFMA).

What happens if the municipality does not spend the funds?

Under sections 18 and 19 of the Division of Revenue Act, the DMRE can stop and reallocate unspent or underperforming allocations. This process is triggered at mid-year (31 December) if the municipality reports significant underperformance or non-compliance. Some rollovers may be approved in exceptional cases, but the general expectation is that funds are spent within the financial year.

Is there technical support available?

Yes. The programme is supported by GIZ through the South African-German Energy Programme (SAGEN), which provides free technical assistance. SALGA supports non-performing municipalities through its energy efficiency network. MISA (Municipal Infrastructure Support Agent) assists municipalities with capacity and staffing shortages. The DMRE also conducts capacity-building workshops on best practices.

Important Links & Resources

Official DMRE portals, programme documentation, and technical guidance.

Municipal EEDSM Portal

savingenergy.org.za - Templates, examples, guides

DMRE Official Website

Department of Mineral Resources and Energy

IEA Policy Profile

International Energy Agency overview of EEDSM

DoRA Grant Frameworks

National Treasury - Conditional grant conditions

SALGA

SA Local Government Association - Municipal support

GIZ SAGEN Programme

SA-German Energy Programme - Technical support

grantZA is an independent informational guide and is not affiliated with the DMRE, National Treasury, or any government department. For official enquiries, contact the DMRE Energy Efficiency unit in Pretoria.