South Africa’s clean energy partnership gets first funding at COP 27
South Africa, France and Germany have signed loan agreements to each extend $300 M in concessional financing to support South Efrica's energy transition.
Image source: Energy & Utilities
South Africa, France and Germany have signed loan agreements to each extend $300 M in concessional financing to support South Africa’s energy transition.
The signing, at a ceremony held during the COP 27 climate change conference currently taking place in Sharm El Sheikh, Egypt, represents a significant milestone in the implementation of the Just Energy Transition Partnership (JETP) announced at COP 26 last year.
The JETP is a long-term partnership between South Africa, France, Germany, the United Kingdom, the United States, and the European Union. It essentially consists of pledges of grants and loans to South Africa in exchange for that country’s commitment to retire coal plants, shift to renewable energy and retrain workers.
Last year, the founding partners of the JETP, known as the International Partners Group (IPG), pledged to mobilise an initial amount of $8.5 B over the next three to five years. The new concessional loans are provided by the French and German public development banks, AFD and KfW, directly to the South African government via its National Treasury, according to a statement from the Treasury.
South Africa continues to depend on coal for more than 80 % of its power and the coal sector remains significant to the country’s national and regional economies.
The $600 M in loans form a first part of the $8.5 billion, expected to be deployed to support the national power utility, Eskom Holdings SOC Ltd., as it prepares to close down some of its coal-fired plants and re-purpose them for the production of green energy.
Last month, an investment plan for the $8.5 B package was approved by South Africa’s cabinet, envisaging most of the funds being used to decommission coal-fired power plants, develop renewable energy generation, and strengthen grid infrastructure. Smaller amounts will support green hydrogen projects and electric vehicles. Worker retraining will also be supported.
In addition to the $8.5 B, the World Bank Board has recently approved $0.5 B of financing for the Eskom Just Energy Transition project.
Source: Energy & Utilities
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