Nedbank to power up private electricity generation
Big-four bank Nedbank has a R24 billion kitty earmarked to finance renewable energy projects in South Africa.
This was revealed by Nedbank COO Mfundo Nkuhlu this week in an interview with ITWeb, after the company announced its interim financial results for the six months to 30 June.
According to Nkuhlu, to date, the bank has financed renewable energy projects worth R28 billion, as South Africa continues to endure power shortages.
Over the years, embattled power utility Eskom has been struggling to consistently supply electricity, leaving businesses and households with no choice but to invest in renewable energy sources.
The country is also looking to reduce its carbon emissions, and this has given rise to the adoption of green energy solutions, such as wind and solar.
In its results on Tuesday, Nedbank said while record levels of electricity outages in H1 2023 had a limited impact on its operations, it had a negative impact on the operations of many of its clients.
At the same time, the situation resulted in many clients wanting to invest in renewable energy and private power generation solutions, providing a large financing opportunity for the bank.
“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,” Nkuhlu said.
“In addition, we are financing private power generation now that the market has opened up. We are looking to participate further in the renewable energy rounds that are coming.”
South Africa’s renewable energy independent power procurement programme is a public-private partnership that encourages independent energy producers to submit bids on the development and design of large-scale renewable energy power plants.
Amid the power crisis, the 2023 National Budget outlined that individuals would be eligible for a tax rebate of 25% of the cost of any new and unused solar photovoltaic panels purchased and installed at a private residence for which a certificate of compliance was issued from 1 March 2023 to 29 February 2024.
“Load-shedding affects us all. We’ve had to put some mitigation measures in place, but this raises costs of diesel consumption when we have to run backup generators in order to support operations,” Nkuhlu continued.
“We have backup generators across all our main centres. That has allowed us to keep our branch infrastructure open and to keep our ATMs as seamless as possible.
“We are investing in rooftop solar in our retail business. This has started at a low base, but we think this will ramp up very quickly to R750 million as an asset on our balance sheet. We expect it will continue beyond that. Some of the key constraints that we have to overcome is the access to the panels themselves and the installers who have to be trained.”
In the wide-ranging interview, Nkuhlu also pointed out that the bank’s digital transformation initiative − “Managed Evolution” − is set to be completed next year.
“The outstanding element that we are dealing with now is the modernisation and refactoring of core banking systems, which is 84% complete. That’s what gives us the confidence that the overall build programme should be through by end of next year.”
The bank still needs to spend around R200 million to complete the project, he said.
“Our cash flow spend, with respect to IT spend on an annual basis, should be about R1.6 billion. The Managed Evolution programme is having a huge impact on new client acquisitions, as well as on our efficiency.
“The programme is also providing us with optimisation opportunities in respect of data. We want to increasingly leverage data and artificial intelligence to get client insights − and on the back of those insights, derive commercial value and better client experiences.”
He said while the bank is making gains in its digital journey, it’s also cognisant it must ensure cyber resilience. “We want to make sure that in the event of any breach, we are able to restore platforms quickly.”