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France, Switzerland to finance small-scale green energy projects in South Africa

24th June 2016

By: Donna Slater

Features Deputy Editor and Chief Photographer

  

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An agreement to finance a technical assistance programme to assist banks in financing small-scale renewable-energy and energy efficiency projects in South Africa was signed on May 26 by the French Agency for Development (AFD) and the State Secretariat for Economic Affairs of Switzerland (Seco).

This technical assistance, valued at €3-million, is financed by Seco and managed by the AFD. It will enable local finance institutions to strengthen their capacities in clean energy finance. It will also provide expertise for project developers to develop and improve their green energy projects.

The assistance is complementary to a contemplated credit facility of €120-million, which is financed by the AFD to the benefit of partner banks and institutions. The facility provides long-term, low-interest loans adapted to renewable-energy and energy efficiency projects facing difficulties in accessing funding.

The potential partners, development financier Industrial Development Corporation and financial service provider Nedbank, will be in charge of lending directly to the companies according to criteria, such as the size of the project and the environmental impact of the project, which includes aspects such as carbon dioxide (CO2) reduction, production of green energy and energy savings.

The technical assistance programme will be hosted by the South African National Energy Development Institute (Sanedi), which also signed an agreement with AFD to implement the technical assistance. Sanedi will support the partners in identifying and assessing green projects.

The technical assistance will also assist the banks and Sanedi with capacity building for renewable-energy projects for a period of three years.

For a first collaboration between Seco and the AFD in South Africa, Seco has delegated this grant to the AFD for a period of five years. Both the AFD and Seco are strongly committed to promoting renewable-energy initiatives in the private sector, as a key element to support the transition to a green economy in South Africa.

The programme builds on a successful first programme implemented by the AFD, Sanedi and three partner banks between 2012 and 2015, that allowed for the financing of 120 small-scale clean energy projects, thereby resulting in CO2 reduction of 370 000 t a year.

To experience the success of the first programme, the signing ceremony was followed by a visit to horticultural facility LVG Plants, in Krugersdorp, which benefited from Phase 1 of the programme.

The project aims to switch LVG Plants’ greenhouse from coal-based heating to solar thermal energy and, through the use of solar water heating panels and a hot-storage tank, LVG Plants have reduced their coal consumption by 80%.

In addition, LVG Plants has 700 000 m2 of solar panels – the biggest in the southern hemisphere.

Through this new programme, the AFD, Seco and Sanedi, as well as the two potential partner institutions confirmed their commitment to support South Africa’s transition to a greener economy. The programme will enable the financing of a number of projects, therefore, supporting the development of green industries and promoting access to finance for small and medium-sized companies in South Africa.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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