South African Development Bank Aims to Double Renewable Energy Program

(Bloomberg) -- The Development Bank of Southern Africa plans to double the size of its program to finance renewable energy plants and is pressing ahead with plans to help facilitate private investment in South Africa’s national transmission grid.

The Embedded Generation Investment Programme, which is helping to finance plants that can produce 700 megawatts of power, aims to back facilities producing a total of 1,400 megawatts within 18 months, Mpho Mokwele, group executive for transacting, said at the bank’s results presentation on Tuesday.

The program, which primarily finances plants built by companies for their own use, was set up in 2019 with an initial $200 million, half of which was provided by the Green Climate Fund, with plans to secure more from commercial banks. 

It’s part of a drive by South Africa to build more power generation facilities to end an electricity shortage that has seen intermittent outages since 2008. 

The state development bank also wants to proceed with a plan to set up an office that will manage auctions of transmission projects for the national grid. It hopes to get the go-ahead from the newly formed National Transmission Company South Africa, Mokwele said, adding that the time frame is unclear. South Africa’s inadequate transmission grid is restraining the roll-out of energy generation. 

Unlike the Independent Power Producer Office, which the DBSA created more than a decade ago to attract private investment into renewable energy for the national grid, the DBSA says it won’t employ models that need state guarantees.

“We are on a journey to implement transmission,” Mokwele said. “We want to do it without the state support as we understand the constraints,” he said, adding that the DBSA is in talks with the World Bank on “credit enhancement mechanisms.”

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