South Africa’s independent power producers on Friday received 400 million euros from the European Union and a local bank to support the development of clean energy in the nation that relies heavily on coal.
At the COP27 climate summit in Egypt, the European Investment Bank (EIB), the EU’s financing arm, and the government-owned Development Bank of Southern Africa (DBSA) signed the agreement, according to a release.
DBSA and the Green Climate Fund (GCF) will each give 100 million euros, while the EIB will provide 200 million euros ($206 million).
“The funding will finance private sector renewable energy projects,” DBSA’s head Patrick Dlamini told AFP.
This is the latest tranche of funding South Africa has secured in recent days to transition from fossil-fuelled power production.
Dlamini called it “an important contribution to South Africa’s resilient and sustainable growth”.
South Africa, one of the world’s top 12 largest polluters, generates about 80 percent of its electricity through coal.
The funds will support private-sector solar and wind investments expected to add 1200 megawatts of generating capacity to the country’s ailing energy system, the banks said in a statement. South Africa’s monopoly state-owned power utility Eskom currently generates a daily average 26,000MW of electricity against national demand of 32,000MW.
As outdated coal plants are shut down, Eskom stated last month that 53 gigawatts of new capacity, primarily from renewable sources, will be required by 2032 to make up for the shortage and guarantee energy security.
The amount released by the EIB, which the bank claimed marked its greatest investment in South Africa ever, comes on top of the $8.5 billion pledged to the country last year by a collection of wealthy countries. France and Germany agreed the first loans earlier this week for a total of 600 million euros.
According to the bank, the wind and solar projects it will finance are anticipated to prevent the emission of 3.6 million tonnes of CO2 into the atmosphere and to generate hundreds of new employment.
