World Bank helps South African govt develop energy efficiency financing mechanisms
The World Bank has provided a $305 000 grant for South Africa to develop a study on sustainable financial mechanisms for demand-side energy efficiency market transformation.
The beneficiaries of the study, the South African National Energy Development Institute (SANEDI) and the Department of Mineral Resources and Energy (DMRE), will use the study to identify and develop appropriate financing mechanisms.
The beneficiaries will also develop associated institutional structures for implementing energy efficiency measures at scale, focusing on the public, agriculture and industrial sectors – these sectors, combined, represent about 45% of the total energy consumption in the country.
The study will assist the DMRE and SANEDI in the design of mechanisms that can be used to leverage private sector participation and the mobilisation of capital to address the financing needs for delivering the measures laid out in the National Energy Efficiency Strategy.
SANEDI and the DMRE in April started discussing this activity with the World Bank’s energy team and was elated at the news of the grant provided through the World Bank’s Public-Private Infrastructure Advisory Facility.
The facility helps developing country governments strengthen policies, regulations and instructions that enable sustainable infrastructure being built through private and public sector participation.
“We look forward to making the most of this opportunity to develop sustainable financing solutions in supporting a conducive market for sustainable energy solutions, which will have a wider positive impact for South Africa,” says SANEDI energy efficiency GM Barry Bredenkamp.
DMRE senior energy negotiator Thebe Mamakoko adds that the promotion of energy efficiency is one of the key interventions stated in the department’s strategic plan towards supporting energy security and the transition to a low-carbon future.
“Scaling-up demand-side energy efficiency implementation in South Africa is, perhaps, one of the most promising and cost-effective solutions to enhance energy security, avoid power outages and reduce emissions, while supporting employment creation and other co-benefits,” notes World Bank senior energy specialist Ashok Sarkar.
Further, this project by the DMRE and SANEDI, called the “Climate Change Trust Fund for South Africa: Development of Sustainable Financing Mechanisms for Demand-Side Energy Efficiency Market Transformation”, will contribute towards bringing about positive macroeconomic impacts through cost-effective energy efficiency improvements in these critical economic sectors.
Bredenkamp explains that energy efficiency reduces the amount of energy needed to deliver services such as lighting, heating and cooling, and improving industries’ competitiveness. This will boost economic activity and could lead to increased employment.
“In addition, lowering the cost of energy services frees up much-needed resources for households, businesses and governments. The knock-on effects are boundless, and we look forward to seeing South Africa moving towards a transformed energy efficiency market,” Bredenkamp concludes.
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