DBSA to receive US$100m for programme to help SA achieve climate targets

Researchers are finding that sometimes a solution to an environmental problem can cause trouble in another area. AFP/ERIC CABANIS

Researchers are finding that sometimes a solution to an environmental problem can cause trouble in another area. AFP/ERIC CABANIS

The programme consists of a credit support mechanism that will develop a model for funding embedded generation renewable energy projects.

The Development Bank of Southern Africa said on Wednesday it had been granted US$100 million funding from the Green Climate Fund to establish the Embedded Generation Investment Programme (EGIP).

Embedded generation under EGIP is defined as the production of electricity from generation facilities that are connected to the national grid with or without wheeling arrangements.

The investment programme consists of a credit support mechanism that will develop a model for funding embedded generation renewable energy projects in South Africa. The sub-projects under EGIP will be implemented by private sector entities in their capacity as independent power producers and local municipalities.

The DBSA said it had matched the Green Climate Fund’s $100 million, ensuring a funding contribution of $200 million towards the implementation of the embedded generation investment programme from the two institutions.

Approximately $84 million of the $200 million will be used to provide broad-based black economic empowerment funding to enable the participation and ownership of local communities and small, medium and micro enterprises in renewable energy.

The financing mechanism is also intended to crowd-in additional funding of approximately $104 million from local financial institutions and help the country towards its climate change objectives.

Once all sub-projects are in operation, the proposed investment will add 330 MW of new generating capacity, thereby directly avoiding emissions of more than 700,000 tCO2e (tonnes of carbon dioxide equivalent) per annum.

“The key objective of the EGIP is to improve the viability and bankability of the initial projects so that they reach financial close,”  DBSA CEO Patrick Dlamini said.

“This will ensure that a market for embedded generation is created in South Africa. We believe the programme will create an enabling environment and a new funding model for continued renewable energy investments outside of the REIPPP (Renewable Energy Independent Power Producer Procurement) programme.”

The DBSA will be responsible for programme implementation and management and will take responsibility for overall portfolio management, evaluation, and monitoring of the sub-projects under the EGIP.

South Africa has said it intends to have embedded generation contributing approximately 11.5% or 2,600 MW to renewable energy capacity by 2030.

– African News Agency

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