JSE-listed financial services group Nedbank will expand its R28 billion purse to fund South Africa’s flourishing renewable energy projects.
So said Nedbank chief operations officer Mfundo Nkuhlu yesterday, in an interview following the big-four bank’s announcement of its financial results for the first half of 2022.
Nedbank is looking to cash-in on South Africa’s move from fossil fuels to renewables, as embattled power utility Eskom struggles to maintain a steady energy supply.
With Eskom dropping the ball, the South African government has turned to the private sector − especially the renewable energy independent power producers − to plug the energy shortfall; which, according to president Cyril Ramaphosa, stands at 6 000MW.
“The market knows us as a green bank, not just in terms of the corporate colour, but also in terms of how we’ve positioned our business in the sustainability arena,” Nkuhlu said.
“In this respect, the overall transition to a decarbonised economy is a big element of that strategy. We have announced a comprehensive energy policy to the market, where we seek to be a net-zero fossil fuel funder by 2045, as we contribute to a net-zero carbon economy by 2050.”
According to Nkuhlu, Nedbank currently has on its books renewable energy assets of R28 billion, which is 3.1% of the bank’s total loans and advances.
He expects this figure will increase, as the bank has appetite to pump more money into renewable energy projects.
“There will be round five of the renewable energy programme that is expected to close in the third quarter of this year, followed quickly thereafter by round six. We plan to be active participants in those rounds and we see renewable energy as programmes of multi-year growth opportunities for Nedbank going ahead.”
South Africa’s Department of Mineral Resources and Energy recently launched Bid Window 6 of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).
This tender is to secure another 2 600MW of renewable energy.
For Bid Window 5 of the REIPPPP, the total new contracted capacity will be 2 583MW, of which 1 608MW will be procured from 12 wind projects and 975MW from 13 solar PV projects.
According to Nkuhlu, government’s drive towards renewable energy sources aligns with Nedbank’s strategy.
“Energy supply is a serious constraint to the economy at the moment and it calls for the diversification of energy sources. We know Eskom has a journey to go in its turnaround exercise.”
In the meantime, he said, electricity supply has to be increasingly complemented by new sources of energy.
“There is the embedded energy dispensation that allows players in the market to sell excess energy they have into the grid and we see this as an opportunity to be funders of a number of projects related to new sources of energy and the new players that will come in to the sector.
“We will be using our balance sheet to support these initiatives in a creative and sensible way.”
In its results, Nedbank says it continues to create positive impacts and remains committed to its energy policy, as evidenced in renewable energy lending exposures of R28 billion, strong lending pipelines related to the Sustainable Development Goals and retaining its top-tier environmental, social and governance (ESG) ratings.
“Our efforts in sustainability and ESG matters were externally recognised, including through Nedbank winning the Best Corporate ESG Strategy South Africa Award at the prestigious Global Banking and Finance Awards 2022,” says the bank’s CEO, Mike Brown.
“I believe our focus on leading in renewable energy will be a multi-year growth opportunity for Nedbank.”
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