World Bank’s African renewables funding rises to $3.6 billion
South Africa and the World Bank signed a $250-million loan agreement on Monday for the two utility-scale Eskom renewable-energy projects, which the bank said would accelerate the development of large-scale clean-energy generation in South Africa and Africa.
The World Bank’s renewable energy portfolio had increased to $4.9-billion in 2010/11, which was 23% of the bank’s overall energy portfolio. Renewable energy funding to Africa had also reached $3.6-billion, a 380% increase on the $750-million invested in 2009.
The Eskom package was secured through the Clean Technology Fund and would help finance a 1000 MW concentrating solar power plant in Upington, in the Northern Cape, and a further 1000 MW wind power project known as Sere, in the Western Cape.
The ‘soft loan’ had a 40-year tenor, 10-year grace period, and a 0.25% yearly service on disbursed amounts.
Finance Minister Pravin Gordhan, Public Enterprises Minister Malusi Gigaba, Eskom CEO Brian Dames and the World Bank’s South Africa country director Ruth Kagia signed the agreements.
World Bank special envoy on climate change Andrew Steer said the costs associated with renewable energy technologies were falling and more countries were, thus, taking the steps to broaden their energy mixes with support from the climate investment funds.
Gordhan said that South Africa would be at the forefront of renewable-energy production on the continent, while Gigaba emphasised the role the Clean Technology Fund could play in catalysing a local renewable-energy supply industry.
"The loan will further support government’s drive to create five-million jobs by 2020 and facilitate the creation of a local renewable-energy skills base," Gigaba said.
The loan complements the $260-million provided to Eskom for the Upington and Sere projects as part of the $3.75-billion World Bank loan approved in April 2010, which mainly supported the funding of the Medupi and Kusile power projects.
Eskom had also secured other $1000-million of Clean Technology Fund assistance through the African Development Bank (AfDB). Further development-finance support of $265-million had been obtained directly from the AfDB, while Agence France Developpment had also extended $151-million in support.
The funding phase for the Sere wind farm project had, therefore, been completed and processes were now under way to procure the key components for the development.
Funding was still being finalised for solar development, which Eskom also planned to source from development finance agencies.
This article was originally posted on Sustainable Development Africa Platform
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