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How Standard Bank is supporting a just energy transition for South Africa and the continent

18th December 2023

     

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It has often been said that Africa is a continent that is filled with untapped opportunities, and while we believe in our continent’s potential, we recognise that there are various challenges that threaten its growth.

The energy crisis has plagued our country for decades, and we have committed ourselves to leveraging our expertise to find solutions to ensure that we drive a sustainable and just energy transition that will transform the lives of millions of people across the country. The crisis continues to negatively impact on safety, productivity and economic growth in the country, which is why it is so crucial that we focus on reforming the sector. We recognise that we cannot do it alone and have dedicated ourselves to actively seeking partnerships with likeminded stakeholders and businesses to support their ambitions and promote innovative thinking and funding structures.

The Electricity Regulation Amendment Bill is posed to create more opportunities and a more competitive market by enforcing third-party access to the transmission and distribution system based on published tariffs, applicable to all customers and applied objectively without discrimination.

There are still existing challenges, such as potential unknown challenges with the amendments to the Electricity Regulation Act, as well as the lack of ability to find sites for transmission on the grid, particularly in areas such as the Northen Cape and Eastern Cape, which are currently constrained.

There is a long road ahead of us, but we are proud to say that in 2023, we have made great progress in finding solutions that can potentially begin to reduce the reliance on the national grid by working with various businesses that have dedicated themselves to transforming the energy sector. Some of our recent partnerships include the following:  

  • GoSolr: This innovative solar energy company provides rental solar photovoltaic (PV) solutions for household use, which secure energy supply specifically during power outages and load shedding, as well as environmental benefits through the use of clean energy supply and reduced carbon emissions. We partnered with GoSolr to support its ambition to expand access to reliable renewable energy solutions across South African households by funding its initial rollout of its proof of concept. Acting as sole sustainability coordinator, sole mandated lead arranger and equity investor in the transaction, we have now underwritten a green growth capex facility to support GoSolr’s ambitions and contributed towards the creation of greater access to reliable and clean energy for SA households.
  • Metrowatt: We partnered with Metrowatt to provide a R70 million debt package to purchase equipment which will facilitate the rollout of its solar and back-up power solutions. This partnership enabled us to support a local start-up that is focused on helping reduce the impact of the energy crisis on consumers and is driving growth in the economy through job creation.
  • EDF Renewables: EDF Renewables’ 420MW Koruson wind cluster comprises three 140MW wind farms located in the Northern Cape, which were developed under REIPPP Bid Date 5 at a total capital cost of approximately R11.4 billion. We provided green loans under the LMA Green Loan Principles and also acted as the co-ordinating bank for all 3 projects, and once operational, the wind farm cluster will supply enough electricity to power 193 000 SA households.
  • Red Rocket: Three wind projects, Brandvalley, Rietkloof and Wolf Wind, were awarded to Red Rocket under BD 5 of REIPP in SA. Two of the projects are 140MW and one 70MW, and together, they will contribute a combined 350MW of new renewable energy to the SA grid and form one of the largest renewable energy clusters in the country. We underwrote a total of approximately R1.5 billion across multiple facilities for the project.
  • Scatec: The company was awarded preferred bidder status under the RMIPPP to construct 3 hybrid battery energy storage solar PV projects in Kenhardt, Northern Cape. This project is the first dispatchable renewable energy project in SA, and at 540MW of solar PV and 1.1GWh of battery storage, it is also the largest project of its kind in Africa and one of the largest globally. We were the sole hedge provider for FX and joint hedge provider for interest rates and will perform the role of account bank over the next 20 years.
  • Tronox: We provided financing to the company for them to supply electricity, through wheeling arrangements with Eskom, to 5 Tronox facilities in the Western Cape and KwaZulu-Natal for their own use. These are the first projects of this scale in SA that are based on pure private bilateral trade. These projects are 100% SA owned, financed, constructed, operated and managed.

In addition to these partnerships, we also won 10 REIPP Round 5 projects with a total of 1070MW. Nine out of the 10 projects have reached financial close, and to date, we are the only bank to successfully close any Round 5 projects, with operations set to commence by Q4 2024.

Standard Bank also served as the sole mandated lead arranger for all bidders who won preferred bidder status under the Battery Energy Storage IPP bidding programme. This included EDF Renewables, which was awarded 3 projects, and Scatec, which was awarded 1 project. The 4 projects are critical to support increased renewables in the Northern Cape through battery storage. The projects will likely reach financial close in 2024.

Investing in the energy sector is crucial to our economic growth as it will lead to increased job opportunities and economic activity. As Africa’s largest bank, Standard Bank is committed to driving the continent’s growth by promoting long-term energy security and a low carbon transition to ensure that we play our role in creating a better life for all.

Prepared by:

Vincenzia Leitich - Executive: Energy and Infrastructure

 

Edited by Creamer Media Reporter

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