The European Investment Bank (EIB) and Development Bank of Southern Africa (DBSA) have agreed to finance South Africa’s renewable energy projects to the tune of €400 million (R7.2 billion).
Last week Friday at the COP27 summit in Egypt, Ambroise Fayolle, vice-president of the EIB, and DBSA CEO Patrick Dlamini formally agreed EIB financing in SA that will back a new targeted financing programme to unlock €400 million for private sector renewable energy investment across South Africa.
The new finance deal comes after France, Germany, the UK and the US, along with the European Union, last week concluded a new long-term $8.5 billion (R150 billion) Just Energy Transition Partnership to support SA’s decarbonisation efforts.
The deal was also inked at COP27, as SA is making frantic efforts to move away from fossil fuels to introduce cleaner energy sources to the national grid.
This, as the country still gets over 80% of its electricity from coal-fired coal plants, with the majority of them nearing their end of life.
Earlier this month, embattled power utility Eskom welcomed a R9 billion World Bank concessional loan approved for the repurposing of the Komati Power Station, saying it is a “significant step” towards clean energy.
The coal-fired power station was shut down after serving the country for at least 60 years, and is set to become SA’s first station to be repurposed into a renewable energy site.
In a statement, EIB and DBSA say the €400 million initiative will be backed by €200 million from the EIB and provide financing for a range of new renewable energy projects across South Africa.
They say the scheme will help to increase clean energy power generation and contribute to DBSA’s Embedded Generation Investment Programme (EGIP).
According to the financial institutions, the new initiative is expected to generate an additional 1 200MW of generating capacity and avoid 3.6 million tonnes of CO2 emissions once all the supported projects are operational.
The projects it will finance are expected to create hundreds of new jobs during construction and operation, and support local companies, they add.
Says DBSA’s Dlamini: “The Development Bank of Southern Africa has a clear goal to increase investment in renewable energy and improve energy security, not only in SA but across the African continent.
“South Africa, like many African countries, is already suffering the effects of climate change. This new investment from the EIB in our Embedded Generation Investment Programme is an important contribution to South Africa’s resilient and sustainable growth.”
Fayolle adds: “As the EU Climate Bank, the EIB is committed to supporting South Africa’s efforts to decarbonise and today’s [Friday’s] agreement of the largest ever EIB investment in South Africa follows past support for renewable energy and climate adaptation projects across the country.
“EIB Global is pleased to build on three decades of partnership with DBSA to boost renewable energy generation, which will contribute to energy security and a just transition in South Africa. The EIB is stepping up our efforts to support green energy projects globally, with a special focus on Africa and economies dependent on carbon-intensive activities that are vulnerable to the impacts of climate change.”
DBSA’s EGIP supports the development and upscaling of solar photovoltaic and wind renewable energy embedded generation projects, developed by independent power producers operating in SA.
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