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The Banks of Power

Finance | 0 comments

Written by Robert Stirling

February 12, 2021

Sooner or later, if you want to stop talking about your renewable energy plans and start implementing them, money will come into play.

How much money is involved may depend on whether you are dipping your toe in the water or diving in and going completely off the grid. Either way, especially in our post-Covid world, you will probably need to finance the move.

The top four banks in South Africa (as rated by advratings.com) have all made moves to help finance renewable energy in various ways, either at customer level or by financing larger projects. What are the four big players offering?

Standard Bank

Sooner or later, if you want to stop talking about your renewable energy plans and start implementing them, money will come into play.

How much money is involved may depend on whether you are dipping your toe in the water or diving in and going completely off the grid. Either way, especially in our post-Covid world, you will probably need to finance the move.

The top four banks in South Africa (as rated by advratings.com) have all made moves to help finance renewable energy in various ways, either at customer level or by financing larger projects. What are the four big players offering?

Other solutions the bank offers, according to the report, include data monitoring for companies to “calculate the emissions of their vehicles and manage their environmental impacts better”; funding for projects like the Lake Turkana wind farm in Kenya; and desalination plants in drought-affected areas.

Standard Bank also offers, on its website, a solar photovoltaic (PV) solution asset solution. The site states, “Standard Bank has the knowledge and expertise to design financing solutions in this area. We support clients in the industrial, commercial and agricultural markets looking to reduce their electricity costs and have energy security”.

First Rand Bank

First Rand Bank has recently secured a loan from the International Finance Corporation (IFC) of $225million to finance green projects in South Africa, apparently to enable increased financial and advisory support to energy-efficient and water-smart projects.

The First National Bank website offers eco-energy loans of up to R1 million (subject to affordability) to businesses, with flexible terms and ways to reduce interest over time.

A news article on the site states, “We have cultivated a deep understanding of the renewable energy sector in both South Africa and the broader continent, and are  well positioned to assist in driving the current play towards private power generation through financial structuring tools to help companies finance private power sources.”

ABSA

Absa announced in 2018, that “Absa Corporate and Investment Banking (CIB) has successfully closed debt financing worth R22 billion for 12 renewable energy projects as part of the Department of Energy’s latest bidding round under the renewable energy independent power producer programme (REIPPP)”.

Apparently, the projects, comprising seven wind, four solar and one biomass project, will add a combined 1 200MW to the Eskom grid. Absa added that this brings the total projects financed by the bank to 33 or a combined 2 900 MW from the start of the programme since 2012.

“By winning these mandates, Absa has demonstrated its dominance in funding renewable energy projects in South Africa. Our aim is to finance independent power projects that can provide reliable and affordable power.

““The recent material reduction in the cost of renewable energy makes this form of power even more relevant for the African continent, where affordability remains a key challenge for the many power utilities on the continent,” said Bhavtik Vallabhjee, head of Power, Utilities & Infrastructure at Absa.

The business sector of Absa’s website has reports on a variety of renewable energy projects that Absa is concerned with, including solar power, wind power, hydropower, and bioenergy.

Nedbank

The Bankseta report mentioned earlier also looked at Nedbank’s approach to sustainability. It states, “Nedbank has taken various steps in order to realise the goal of affordable and clean energy. In 2012 they launched the Nedbank Green Savings Bond to give retail clients the opportunity to make green investments.

“Since its inception more than R25.2 billion has been invested by retail clients. In 2017 Nedbank financed transactions to the value of R24 million in relation to photovoltaics and a total of R18.4 billion was disbursed in 2017 for renewable energy deals.”

Apparently, as per the report, “Nedbank remains the leader in terms of the financing of green buildings”.

The report added, “R 1.3 billion in funding was provided in 2017 for the construction of buildings that conform to green building standards, which brought the total investment of the Nedbank Group in green buildings to R8.7 billion and over 400 000 m2 by 2017.”

Nedbank’s website also shows offerings to help with embedded generations and energy finance deals.

SPOILED FOR CHOICE

The major banks in South Africa state that they are focused on providing financial support to boost renewable energy. Perhaps, if you thought finances were a roadblock on your renewable energy journey, a conversation with your bank might prove that obtaining financing is only a speedbump.

Stay charged.

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