Cape Town - Standard Bank Group [JSE:SBK]
, Africa’s largest lender by assets, plans to commit more than R10bn to green energy projects in South Africa, its head of power finance said on Thursday.
Alastair Campbell said there was significant appetite from both local and foreign power producers for investing in South Africa’s renewable energy sector, despite the government’s delays in finalising related subsidies.
“The bank is committed and has appetite to fund as many megawatts as is possible ... upwards of R10bn for South Africa alone,” Campbell told Reuters in an interview, adding that it would go mostly to wind and solar projects.
South Africa, which relies on coal for most of its electricity supply, is eager to diversify its energy mix and reduce its heavy carbon footprint.
Independent power producers (IPPs) are eagerly waiting for the energy regulator to finalise proposed renewable energy subsidies, which are meant to stimulate large-scale investments. The regulator is due to announce the final figures next week after it said in March that the numbers initially proposed would be cut after it revised estimates of debt and inflation.
South Africa, which is to host global climate change talks later this year, aims to procure about 1 000 MW from private producers by the end of this year, but the target may be at risk given delays in finalising the tariffs.
The country wants to source at least 3 825 MW of renewable energy from IPPs by 2016.
South Africa is struggling to meet fast-rising demand for power, and private producers are seen as vital to add much-needed megawatts and reduce pressure on power utility Eskom, which is trying to find the money it needs to build new plants.
South Africa’s national grid nearly collapsed in early 2008, forcing mines and smelters to shut for days and costing billions of dollars in lost output.
Eskom has said it expects power supply to remain tight over the next few years until its new power plants come on stream.
Campbell said the bank also planned to invest $50m to $75m in Kenya’s 310 MW Lake Turkana wind project, and would put money into Mozambique’s proposed $3bn 1500 MW Mphanda Nkuwa hydro-power project.
“The Mphanda Nkuwa funding process will start imminently and we are hoping to be the lead arranger, aiming for financial close by the end of 2012,” Campbell said, declining to give more details on the amounts.
The hydropower project is being jointly developed by a consortium consisting of Brazilian conglomerate Camargo Correa, the Insitec Group and Mozambique’s EDM.
Standard Bank is 20% owned by Industrial and Commercial Bank of China.