Signature of technical assistance agreements to support green transition in South Africa
On 26 May 2016, the French Development Agency (AFD) and the State Secretariat for Economic Affairs of Switzerland (SECO), signed an agreement to finance a technical assistance program to assist banks in financing small scale renewable energy and energy efficiency projects in South Africa.
The agreements are part of the second phase of the Sustainable Use of Natural Resources and Energy Finance (SUNREF) programme.
This technical assistance totaling an amount of 3M€ provided by SECO and managed by AFD will enable local finance institutions to strengthen their capacities in clean energy finance. It will also provide expertise for project developers to develop and improve their green energy projects.
The technical assistance is complementary to a contemplated credit facility of 120M€ financed by AFD to the benefit of partner banks and institutions. The facility provides long-term low-interest loans adapted to renewable energy and energy efficiency projects which face difficulties in accessing funding.
The partners, the Industrial Development Corporation (IDC) and Nedbank, will be in charge of lending directly to the companies according to criteria such as the size of the project and the environmental impact of the projects (CO2 reduction, production of green energy, energy savings).
The technical assistance program will be hosted by the South African National Energy Development Institute (SANEDI). This institution, in charge of energy research and promotion of green energy in South Africa, signed an agreement with AFD to implement the technical assistance. It will support the partners in identifying and assessing green projects. The technical assistance will also assist the banks and SANEDI with capacity building for renewable energy projects for a period of three years.
For a first collaboration between SECO and AFD in South Africa, SECO has delegated this grant to AFD for a period of 5 years. Both AFD and SECO are strongly committed in promoting renewable energy initiatives in the private sector as a key element to support green transition in South Africa.
The program builds upon a successful first program implemented by AFD, SANEDI and 3 partners banks between 2012 and 2015 that allowed for the financing of 120 small-scale clean energy projects, resulting in CO2 savings of 370 000 tons per year.
Through this new program, AFD, SECO, SANEDI and the two partner institutions confirmed their commitment to support South Africa’s efforts towards a green transition.
The program will enable the financing of a number of projects, therefore supporting the development of green industries and promoting access to finance for small and medium companies in South Africa.
Present for the signing ceremony in Johannesburg were Ambassador of France to South Africa, HE Elisabeth Barbier, Ambassador of Switzerland to South Africa, HE Hélène Budliger Artieda, AFD Regional Director, Martha Stein-Sochas, and SANEDI Chief Executive, Kevin Nassiep.
To experience first hand the success of the SUNREF programme, Ambassador Barbier visited LVG Plants in Krugersdorp - the largest horticultural facility in South Africa - that benefited from the programme through a green credit line from AFD and Nedbank.
The project aims to switch LVG’s green house from coal-based heating to solar thermal energy and, through the use of solar water heating panels and a hot storage tank, LVG Plants have reduced their coal consumption by 80%. The facility has 700 000 square meters of solar panels - the biggest in the Southern Hemisphere.