It has often been said that Africa is a continent filled with untapped opportunities, and while Standard Bank believes in the continent’s potential, it recognises there are various challenges that threaten its growth.
The energy crisis has plagued the country for decades, and Standard Bank has committed itself to leveraging its expertise to find solutions to ensure that it drives a sustainable and just energy transition that will transform the lives of millions of people across the country. The crisis continues to negatively impact on safety, productivity and economic growth in South Africa, which is why it is so crucial that it focuses on reforming the sector. Standard Bank recognises it cannot do it alone and has dedicated itself to actively seeking partnerships with like-minded stakeholders and businesses to support their ambitions and promote innovative thinking and funding structures.
The Electricity Regulation Amendment Bill is poised to create more opportunities and a more competitive market by enforcing third-party access to the transmission and distribution system based on published tariffs, applicable to all customers and applied objectively without discrimination.
There are still existing obstacles, such as potential unknown challenges with the amendments to the Electricity Regulation Act, as well as the lack of ability to find sites for transmission on the grid, particularly in areas such as the Northern Cape and Eastern Cape, which are currently constrained.
There is a long road ahead, but Standard Bank is proud to say that in 2023 it made great progress in finding solutions that can potentially begin to reduce the reliance on the national grid by working with various businesses that have dedicated themselves to transforming the energy sector. Some of Standard Bank’s recent partnerships include the following:
▪ GoSolr: This innovative solar energy company provides rental solar photovoltaic (PV) solutions for household use that secure energy supply specifically during power outages and load shedding, as well as environmental benefits through the use of clean energy supply and reduced carbon emissions. Standard Bank partnered with GoSolr to support its ambition to expand access to reliable renewable energy solutions across South African households by funding its initial roll-out of its proof of concept. Acting as sole sustainability co-ordinator, sole mandated lead arranger and equity investor in the transaction, it has now underwritten a green growth capex facility to support GoSolr’s ambitions and contributed towards the creation of greater access to reliable and clean energy for South African households.
▪ Metrowatt: Standard Bank partnered with Metrowatt to provide a ZAR70 million debt package to purchase equipment that will facilitate the roll-out of its solar and back-up power solutions. This partnership enabled Standard Bank to support a local start-up that is focused on helping reduce the impact of the energy crisis on consumers and is driving growth in the economy through job creation.
▪ EDF Renewables: EDF Renewables’ 420MW Koruson wind cluster comprises three 140MW wind farms located in the Northern Cape, which were developed under REIPPP Bid Window 5 at a total capital cost of approximately ZAR11.4 billion. Standard Bank provided green loans under the LMA Green Loan Principles and also acted as the co-ordinating bank for all three projects. Once operational, the wind farm cluster will supply enough electricity to power 193,000 South African households.
▪ Red Rocket: Three wind projects – Brandvalley, Rietkloof and Wolf Wind – were awarded to Red Rocket under Bid Window 5 of the REIPPP in South Africa. Two of the projects are 140MW and one 70MW. Together, they will contribute a combined 350MW of new renewable energy to the South African grid and form one of the largest renewable energy clusters in the country. Standard Bank underwrote a total of approximately ZAR1.5 billion across multiple facilities for the project.
▪ Scatec: The company was awarded preferred bidder status under the Risk Mitigation IPP procurement programme to construct three hybrid battery energy storage solar PV projects in Kenhardt, Northern Cape. This project is the first dispatchable renewable energy project in South Africa, and at 540MW of solar PV and 1.1GWh of battery storage, it is also the largest project of its kind in Africa and one of the largest globally. Standard Bank was the sole hedge provider for FX and joint hedge provider for interest rates, and will perform the role of account bank over the next 20 years.
▪ Tronox: Standard Bank provided financing to the company for them to supply electricity, through wheeling arrangements with Eskom, to five Tronox facilities in the Western Cape and KwaZulu-Natal for their own use. These are the first projects of this scale in South Africa that are based on pure private bilateral trade. These projects are 100% South African-owned, financed, constructed, operated and managed.
In addition to these partnerships, Standard Bank also won 10 REIPPP Round 5 projects with a total of 1,070MW. Nine out of the 10 projects have reached financial close and, to date, Standard Bank is the only bank to successfully close any Round 5 projects, with operations set to commence by Q4 2024.
Standard Bank also served as the sole mandated lead arranger for all bidders that won preferred bidder status under the Battery Energy Storage IPP bidding programme. This included EDF Renewables, which was awarded three projects, and Scatec, which was awarded one project. The four projects are critical to support increased renewables in the Northern Cape through battery storage. The projects will likely reach financial close in 2024.
Investing in the energy sector is crucial to economic growth as it will lead to increased job opportunities and economic activity. As Africa’s largest bank, Standard Bank is committed to driving the continent’s growth by promoting long-term energy security and a low-carbon transition to ensure it plays a role in creating a better life for all.
Prepared by:
Vincenzia Leitich – Executive: Energy and Infrastructure
