The World Bank estimates that South Africa will need $500billion to achieve carbon neutrality by 2050, highlighting the need for innovative financial instrumentals and policies to attract Foreign Direct Investment and foster public private partnership in the sector.
This is where banks have a central role to play.
“Standard Bank is exploring sustainable opportunities that can facilitate a just transition and we are mindful of both the opportunities to partner with clients and stakeholders to support their climate transitions and the national climate commitments of the countries where we do business,” said Rentia van Tonder, Head for Power at Standard Bank.
“We are uniquely positioned to model appropriate solutions for mitigating against and adapting to the effects of climate change, and to develop innovative financial products and services that support the green economy, reduce carbon emissions, increase climate resilience, and enhance socio-economic development.”
In the past decade, 86% of Standard Bank’s new energy lending has been to renewable energy.
More recently, the bank provided the requisite finance and advisory services to assist its clients transition 321 sites toward green energy solutions and further facilitated 95 green energy solution providers grow their businesses.
One of these milestone transactions was the recent financial close of the first Renewable Independent Power Producer Programme (REIPPP) Bid Window 5 deals.
By partnering with Standard Bank, EDF Renewables – and its partners H1 and Gibb-Crede – was able to secure financial close for two of its three ‘Koruson 1’ projects – the first wind energy deals to reach conclusion since Round 4 of the REIPPP in 2018.
When the final deal reaches closure, the three projects, with installed capacities of 140 MW each, totaling 420MW, will commence at the boundaries of the Eastern and Northern Cape provinces.
The low-carbon renewable electricity produced each year by the three wind farms will help to meet the electricity needs of approximately 193,000 South African households.
“We have shown that we can better support the development of infrastructure in emerging markets across Africa to enable inclusive and sustainable industrialisation by financing large-scale infrastructure projects and by partnering with our clients to ensure environmental and social risks are appropriately managed and minimized,” said van Tonder.
Aside from this transaction, the bank has also recently partnered with businesses and other relevant stakeholders in finding innovative solutions to decarbonise South Africa’s economy and help alleviate the energy crisis.
Standard Bank was selected as the Mandated Lead Arranger, Hedging Bank, and Account Bank for a $4billion transaction between Tronox, one of the world’s leading producers of high-quality titanium products, and local independent power producer, SOLA Group, to construct a 200MW solar powerplant.
It is anticipated that using solar energy will reduce Tronox’s carbon emissions by approximately 13%, further providing material cost reductions and certainty of supply in its energy procurement.
“Through our new climate policy, we plan on raising up to ZAR 300bn (USD 19.1bn) in sustainable finance by 2026.
We envision that our commitment to renewable energy power plants will outnumber that of fossil fuel-fired plants three-to-one, while installing the necessary infrastructure to support the transition for those communities that still dependent on coal and other fossil fuels for their livelihoods,” said van Tonder.