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Banks up solar financing as load-shedding again hits stage six

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 05 Sept 2023
More local banks have introduced solar financing initiatives.
More local banks have introduced solar financing initiatives.

South Africa’s big banks are stepping up their efforts to finance renewable energy projects, such as solar, as load-shedding again reached stage six this week, with no end in sight.

Yesterday, First National Bank (FNB) became the latest financial institution to announce a loan scheme that will see businesses and individuals access much-needed finance to alleviate the challenges brought by lengthy power cuts.

FNB has entered into the Energy Bounce Back (EBB) Loan Guarantee Scheme, announced by National Treasury and administered by the South African Reserve Bank, to help customers mitigate the impact of power supply shortages.

In a statement, the bank says the scheme is designed to assist businesses and households through financial incentives for the installation of rooftop solar-generated energy and energy storage assets.

According to FNB, the scheme is currently available for commercial customers and will soon be extended to individual FNB and non-FNB customers.

In March, FNB introduced a home solar loan facility for its mortgage customers. It enables clients to apply for a loan, starting at R50 000 and going up to 15% of their home’s value, to finance the installation of a solar energy system from a pre-screened list of reputable renewable energy providers.

Until further notice

Yesterday, embattled power utility Eskom announced the commencement, for an indefinite period of time, of the much-dreaded stage six load-shedding, as a result of breakdowns at its power stations.

Stage six load-shedding allows for up to 6 000MW to be removed from the power grid, leading to power supply cuts in the impacted area 18 times over a four-day period, for four hours at a time.

According to the state-owned company, breakdowns are currently at 16 210MW of generating capacity, while the capacity out of service for planned maintenance is 5 894MW.

Since Sunday, generating units at Kriel and Medupi power stations have been offline for repairs.

In the same period, Eskom adds, generating units at Arnot, Kendal, Kriel and Lethabo power stations were returned to service.

The delay in returning to service generating units at Hendrina and Tutuka power stations is also contributing to the current capacity constraints, it notes.

In August, National Treasury launched the EBB, an initiative to alleviate the impact of unreliable power supply on small businesses and households.

The EBB aims to generate 1 000MW in additional generation capacity, as well as facilitate resilience to load-shedding for micro and informal businesses.

Resilience measures include power storage assets without generating capacity, like batteries and inverters. The EBB is a complementary intervention to the tax measures announced in the 2023 Budget Speech.

To facilitate investments, government will, through a government guarantee administered by the South African Reserve Bank, assume the initial losses (20%), with finance providers assuming the risk for remaining losses for small and medium enterprises (SMEs) and households’ rooftop photovoltaic solar investments (rooftop solar).

Jacques Celliers, FNB CEO, says: “We are grateful for the opportunity to once again enable customers to invest in solar equipment via the National Treasury EBB loan guarantee scheme, as we did in the previous schemes.

“Energy security continues to be one of the key challenges for individual customers, families and businesses. As a financial services partner, we want to help our customers meet their day-to-day requirements to enable them to thrive.

“While we have been supporting our customers with a range of solutions to build resilience against energy challenges, we believe the Energy Bounce Back Loan Scheme adds significant value as it allows us to help many more.”

Jacques Celliers, FNB CEO.
Jacques Celliers, FNB CEO.

Other South African banks are also increasingly funding renewable energy projects, to alleviate the energy shortfall.

Nedbank last month told ITWeb that it has a R24 billion kitty earmarked to finance renewable energy projects in South Africa.

“We have been a major financier of renewable energy, and we will continue to do so. To date, we have financed R28 billion worth of renewable energy projects. We have a pipeline of R24 billion that we want to finance on renewable energy,” said Mfundo Nkuhlu, Nedbank chief operating officer.

In a move to support and grow SMEs, earlier this year Absa started providing up to R50 million in energy subsidies under its Green Asset Finance programme for qualifying SMEs.

Absa also has a solar offering for its home loan clients, a personal loan option for retail customers to procure alternative power sources, and bespoke solutions supported by subject matter experts who have assisted SMEs to find the best option for their particular needs.

Speaking during the just-ended 15th annual BRICS Summit in Johannesburg, Standard Bank CEO Sim Tshabalala reportedly said the financial institution aims to raise R250 billion to fund renewable energy projects by 2026.

According to Sunday Times, he said the bank was also deepening its finance provision for individuals investing in alternative forms of power for their households, and Standard Bank’s insurance business had R13 billion in assets under management for renewables.

In June, Discovery Bank started providing solar financing for consumers, with the service offered through the digital-only player’s partnership with solar solutions provider Rubicon.