South Africa’s Just Energy Transition Programme (JETP) has been given further boost with a R7.2 billion investment by the European Investment Bank (EIB) to generate an additional 1 200MW of solar and wind energy.
This comes after French and German public development banks, AFD and KfW, extended R10.7bn in concessional financing to South Africa to support the country’s efforts to reduce its reliance on coal through a just transition to cleaner energy sources.
On Friday the European Investment Bank (EIB) and the Development Bank of Southern Africa (DBSA) formally agreed EIB financing that will back a new targeted financing programme to unlock €400 million, or R7.2bn, for private sector renewable energy investment across South Africa.
The agreement was signed at the United Nations Climate Change Conference, or COP27, in Sharm El Sheikh, Egypt.
The initiative will be backed by €200m from the EIB and provide financing for a range of new renewable energy projects across South Africa.
The scheme is earmarked to increase clean energy power generation and contribute to DBSA’s Embedded Generation Investment Programme (EGIP) that is co-financed by the Green Climate Fund.
DBSA’s EGIP supports the development and upscaling of solar photovoltaic and wind renewable energy embedded generation projects, developed by independent power producers operating by offering a credit support mechanism through the provision of risk capital.
The Fair Finance Coalition of Southern Africa last week scored the DBSA higher on financing renewable energy generation among six development finance institutions, but said the bank had still not pronounced fossil fuels as unacceptable.
DBSA CEO Patrick Dlamini said they have a clear goal to increase investment in renewable energy and improve energy security, not only in South Africa but across the African continent.
“South Africa, like many African countries, is already suffering the effects of climate change,” Dlamini said.
“This new investment from the EIB in our Embedded Generation Investment Programme is an important contribution to South Africa’s resilient and sustainable growth.”
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 financing will be available for renewable energy projects – solar photovoltaic and onshore wind energy generation – and potentially also energy efficiency projects promoted by the private sector in South Africa.
The projects it will finance are expected to create hundreds of new jobs during construction and operation and support local companies.
EIB vice-president Ambroise Fayolle said they were committed to supporting South Africa’s efforts to decarbonise, adding that the agreement was the largest ever EIB investment in South Africa.
“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.”
President Cyril Ramaphosa last week said the $8.5bn pledge made by the International Partners Group (IPG) towards South Africa’s JETP last year at COP26 was a far cry from the R1.5 trillion required in investment over the next five years alone.
Emerging economy leaders at COP27 have been calling for the developed world to fulfil its pledges and commitments toward financing initiatives aimed at dealing with climate change.