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Page location: Sustainable development | Environment overview | Climate finance & carbon trading | Clean energy & energy efficiency

Clean energy & energy efficiency

Recognition (gri 2.10)
In the Bloomberg New Energy Finance Clean Energy & Energy Smart Technology League Tables, Standard Bank ranked as the seventh international lead arranger for renewable energy financing.
   

South Africa has a high level of renewable energy potential and the South African Government’s Renewable Energy Independent Power Producer Procurement (REIPPP) Programme is a mechanism to promote the development of renewable energy sources. South Africa aims to secure a total of 17 800 megawatts of renewable energy by 2030. Standard Bank Group (SBG) is committed to helping to establish a renewable energy sector in South Africa. We are active in advising, arranging finance for and funding renewable energy projects under the REIPPP Programme and we are dealing with a large number of project developers to this end. Renewable energy projects currently represent a third of our project finance energy portfolio and include wind, hydro and geothermal power stations.

We are underwriting R9,4 billion for preferred bidders in the first phase of the REIPPP Programme, representing an installed renewable energy capacity of 573 megawatts. Standard Bank has emerged as the leading investor in the first round of the REIPPP Programme‚ backing a total of 11 wind and solar power projects. We will provide comprehensive corporate and investment banking services to these clients and have taken a R220 million equity stake in four projects. Our mandated clients comprise 338 megawatts of wind and 235 megawatts of solar photovoltaic‚ out of the 1 416 megawatts of expected renewable energy capacity awarded in the first round. Our debt funding is a third of the total R27 billion committed by banks, making us the largest funder of the 28 wind and solar power projects awarded in this round. Winning bidders signed project agreements with the Department of Energy in November 2012‚ officially starting closing procedures on South Africa’s first large-scale procurement programme which began a year ago. Following the financial close projects now proceed to the construction phase.

For the second phase of the REIPPP Programme, a total of 79 bids were received and 19 preferred bidders were selected. Five of the bids we supported were selected, representing an installed renewable energy capacity of 328 megawatts and a total financing requirement of R6,1 billion. These projects will produce approximately 805 gigawatt hours of renewable energy a year. The financial close of phase two is scheduled for April 2013.

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Solar panel support structures being erected at the Renewable Energy Independent Power Producer Procurement Programme site in the Northern Cape. Standard Bank has committed R9,4 billion to 11 projects in the first phase of the programme.

 

The transparency of the process has ensured that bidders are incentivised to compete vigorously. This resulted in many bidders being aggressive in the pricing of their bids in the second phase of the REIPPP Programme, which has meant that tariffs offered to government in this round of deals are lower than in the first phase, which bodes well for South Africa’s future electricity prices due to lower funding requirements. It is expected that consolidation among manufacturers of wind and photovoltaic equipment particularly in Europe and China will result in bidders being able to offer even better tariff propositions in the third bidding window.

The introduction of renewable energy sources serve to lower electricity prices, reduce the reliance on coal and lower pollution over time. For the second round of bids, the South African Government increased local manufacturing requirements which creates an opportunity for job and wealth creation. It is compulsory for the project deals to include local communities as equity participants, funded by local development finance institutions. As local content requirements increase for the third round of bidding, we believe there will be opportunity for South African start-up businesses to enter this emerging sector.

During 2012, we were actively involved in developing financing solutions for a number of projects in Africa. We pursued renewable energy projects in Angola, Ghana and Nigeria. A USD50 million (R410 million) term loan facility was provided to the Ministry of Finance of the Republic of Angola, on an unsecured basis, to complete the Gove Hydropower Project. This includes the reconstruction and upgrade of one of four key hydropower plant projects planned by the government. The project is an integral part of a larger design to establish a regional grid involving Angola, Namibia and South Africa, which will eventually connect the northern, central and southern grids of Angola and Namibia into South Africa.

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