PRETORIA, South Africa, November 14, 2011 – The Government of South Africa and World Bank today signed a US$250 million loan agreement of the Eskom Renewables Energy Support Project (ERSP), paving the way for speedy implementation of the pioneering Upington concentrating solar power and Sere wind power plants in South Africa.
The loan agreements were signed by Hon. Pravin Gordhan, Minister of Finance and Hon. Malusi Gigaba, Minister of Public Enterprises representing South Africa, Brian Dames, Eskom CEO, and Ruth Kagia, World Bank Country Director for South Africa. The soft loan has a 40 year tenor, 10 year grace period, and a 0.25 percent service charge per annum on disbursed amounts.
“These are exciting times as renewable energy technologies are improving, costs are plummeting, and more countries are taking the steps to broaden their energy mixes with support from the Climate Investment Funds,” said Andrew Steer, World Bank Special Envoy on Climate Change. “From South Africa to Morocco, and indeed across the developing world, a discernible shift towards modern renewable energy is underway paving the way for a clean energy future in Africa and beyond.”
The loan was approved by the World Bank’s Board on October 27, 2011, and today’s signing ceremony helps Eskom to finalize its financing plan for two of the largest renewable energy projects ever attempted on the African continent.
- One hundred megawatt, utility-scale, concentrating solar power plant to be located in Upington, Northern Cape province,
- One hundred megawatt wind power project to be located in Sere, 300 kilometers north of Cape Town.
“Across Africa, governments, the private sector and civil society are looking for large-scale, technically viable, transformative renewable energy projects,” said Jamal Saghir, World Bank Director for Sustainable Development for the Africa Region. “With the signing of these agreements, South Africa is uniquely positioned to jumpstart low-emission, climate-resilient development for the benefit of all.”
During November 28-December 9, 2011, South Africa will assume Presidency of the next Convention of Parties (CoP-17) meeting of the U.N. Framework Convention on Climate Change in Durban. South Africa has made bold commitments to broadening its energy mix, and the Durban meetings will offer an opportunity to discuss greater scale-up and scale-out of renewable energy technologies throughout Africa. In addition, sustainable energy access will also be a major issue for discussion as only 31 percent of Africa’s population has access to electricity.
“The agreement signed today is about accelerating development of large-scale renewable energy generation capacity in South Africa,” said Ruth Kagia, World Bank Country Director for South Africa. “We are proud to be a partner in supporting South Africa’s progress toward a clean energy future that will serve as a beacon of hope and transformation for the benefit of Africa.”
The World Bank Group’s renewable energy portfolio has increased from a total of $3.1 billion between fiscal years 2008-09 to $4.9 billion in 2010-11. Given the simultaneous expansion of the overall energy portfolio during the same period, the renewable energy proportion rose from 20% to 23%. Africa had the largest percentage increase in renewable energy investment among the developing regions, excluding the big three economies of Brazil, China and India, and reached $3.6 billion, a 380%-increase over the $750 million invested in 2009.
The Climate Investment Funds are a unique pair of financing instruments designed to support low-carbon and climate-resilient development through scaled-up financing channeled through the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, and World Bank Group. The two CIF funds are the Strategic Climate Fund (SCF) and the Clean Technology Fund (CTF).