Development Bank of Southern Africa Approves $400M to Accelerate Renewable Energy Projects in South Africa
The Development Bank of Southern Africa (DBSA) and the European Investment Bank (EIB) have agreed to provide $400 million in financing for South Africa’s renewable energy projects (R7.2 billion). Ambroise Fayolle, vice-president of the EIB, and DBSA CEO Patrick Dlamini formally agreed to EIB financing in SA last Friday at the COP27 summit in Egypt. This financing will support a new targeted financing program to release $400 million for private sector renewable energy investment throughout South Africa.
The new financing agreement follows the signing last week of a new, long-term $8.5 billion (R150 billion) Just Energy Transition Partnership to support SA’s decarbonization efforts by France, Germany, the UK, the US, and the European Union. 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 is due to the fact that more than 80% of the nation’s electricity still comes from coal-fired power facilities, the most of which are close to shutting down.
Earlier this month, the troubled power company Eskom welcomed the approval of a R9 billion World Bank concessional loan for the conversion of the Komati Power Station as “a big step” toward renewable energy.
The €400 million plan, according to a release from the EIB and DBSA, will support €200 million from the EIB and offer funding for a number of new renewable energy projects around South Africa. According to them, the program will support DBSA’s Embedded Generation Investment Program and improve the production of clean energy electricity (EGIP).
Once all the sponsored projects are completed, the financial institutions predict that the new effort will add 1 200 MW of producing capacity and prevent 3.6 million tonnes of CO2 emissions. In addition to supporting regional businesses, the projects it will finance are anticipated to generate hundreds of new employment both during development and operation.
According to Dlamini of the DBSA, the Development Bank of Southern Africa has a clear mission to promote investment in renewable energy and improve energy security, not just in South Africa but throughout 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.”
“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,” Fayolle added.