South Africa’s just energy transition will require blended finance and collaboration

by MMC
0 comment

One of the key questions facing South Africa regarding the just energy transition was how to finance it. This is emphasized by the professor co-director of the Center for Sustainability Transitions at the University of Stellenbosch. Mark Swilling at the Windaba Connect symposium, at the Cape Town International Convention Centre, on Tuesday. Windaba Connect is a precursor to the Windaba Conference.

He noted that South Africa was already transforming. Its economy had been built on cheap coal and cheap black labor, and that model had disintegrated.

According to calculations, a just energy transition would cost the country $250 billion (he used the dollar figure). This puts into perspective the $8.5 billion offered by major economies to South Africa to support its transition.

Shutting down coal production early would require $24 billion, he added. The social investment needed for a just transition would amount to an additional $10 billion.

But the big problem was the transmission. The country needed a network into which new sources of electricity production could be injected.

“Where will the money come from? » he asked, rhetorically. He noted that a number of financial institutions were studying this issue.

The private sector, he observed, could provide some, but not all, of this. The South African state was in no position to provide any funding.

The answer, Swilling proposed, was blended finance. And the main source should be South African pension funds. Collectively, these represented a total value equivalent to half of the country’s gross domestic product.

So the next question was: how were pension funds mobilized? The answer is, he stressed, only if the investments are viable.

Speaking at the same event, Land Bank Partnership and Program Development Manager Litha Kutta pointed out that the institution had established a R2 billion energy fund to help farmers cope with the energy crisis, which has seen national power company Eskom implement scheduled and rotating power cuts. The aim of the fund was to help farmers develop off-grid energy sources, to reduce or even eliminate their dependence on Eskom.

The function of the Land Bank was to invest in agriculture. The energy crisis threatens the country’s food security by disrupting agricultural production and processing, he said. Hence the creation of the fund.

The concern was that black and emerging farmers, unlike affluent white farmers, would not be able to come up with innovative solutions to the energy crisis. However, he pointed out, some of the country’s wind projects were located in rural areas. Wind energy developers could work with the Land Bank (which was represented almost everywhere in rural South Africa) to ensure that emerging farmers around these projects had access to wind electricity.

Kutta expressed hope that the Land Bank would indeed be able to collaborate with renewable energy companies, create joint projects and provide electricity to rural communities. He urged renewable energy companies not to be like mining companies, which are often unpopular in rural areas because they are seen as completely indifferent to rural communities.

You may also like

Leave a Comment

The news website dedicated to showcasing Africa news is a valuable platform that offers a diverse and comprehensive look into the continent’s latest developments. Covering everything from politics and economics to culture and wildlife conservation

u00a92022 All Right Reserved. Designed and Developed by PenciDesign