South Africa Gets Backing for Plan to Raise Green Energy Output
South Africa Gets Backing for Plan to Raise Green Energy Output
(Bloomberg) -- South Africa’s state-owned Development Bank of Southern Africa is funding a program intended to give renewable energy projects in the electricity-starved country a boost by making them more appealing to commercial banks.
The financier will funnel $200 million into the Embedded Generation Investment Program to kick start developments that will add 330 megawatts of new generating capacity to the national grid and reduce carbon emissions. Half of the funding will be provided by the Green Climate Fund, the Johannesburg-based financier said in an emailed statement.
While the DBSA’s investments will get initiatives off the ground, the goal is to create projects that commercial lenders will want to fund to completion, said Mohale Rakgate, the group executive responsible for project preparation. The projects will need to attract at least $104 million more from local banks in their initial phases, he said.
“We have a pipeline of more than 10 projects,” Rakgate said. “We want to take the first steps, prove the concepts work” and get commercial financing, he said, adding that “attracting private funding is really at the core of what we are doing.”
Global Trend
South Africa aims to have embedded generation contribute 2,600 megawatts to the country’s renewable energy capacity, representing an 11.5 percent slice, by 2030 and is rekindling enthusiasm for green alternatives to keep the nation’s lights on. The country’s debt-laden utility Eskom Holdings SOC Ltd. has been forced to cut power in recent weeks as it cannot afford to maintain its coal-fired plants.
“This is in line with a global trend that has been happening in the U.S. and Europe. South Africa is just catching up on the renewable trend of how power is now generated by diversifying sources of generation,” Rakgate said.
Nedbank Group Ltd. is already shunning coal-fired projects, with the Johannesburg-based lender saying last month it will no longer provide project financing or other forms of asset-specific financing where the proceeds will be used to develop plants using the fuel, regardless of the country or technology.
The DBSA will launch the program after the country’s revised Integrated Resource Plan is approved by the government and will also allocate some of the funding to black empowerment schemes, it said.
To contact the reporter on this story: Roxanne Henderson in Johannesburg at rhenderson56@bloomberg.net
To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Vernon Wessels, Hilton Shone
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