WASHINGTON, June 28, 2007 – The World Bank Board of Directors today approved a project to establish policy and regulatory frameworks and build institutional capacity for renewable energy development in South Africa.
The Renewable Energy Market Transformation Project has an overall cost of US$17.3 million, and is being funded by a US$6 million grant from the Global Environment Facility (GEF), US$2.3 million contribution from the South African government and US$9 million leveraged from the private sector.
The project's objective, over a four-year period, is to remove the barriers and reduce implementation costs of renewable energy technologies to help mitigate greenhouse gas (GHG) emissions. The Government’s White Paper on Renewable Energy has set a target of 4% of electricity demand (equivalent to 10,000 GWh) from renewable energy sources in 2013. This project aims to assist the government in meeting this target. The project will provide technical assistance and capacity building for (i) renewables-based power generation and (ii) commercial solar water heating:
- Renewables-based power generation in South Africa: the project will assist South Africa in developing and implementing legal, policy and regulatory frameworks for renewable energy power generation, and building capacity to strengthen the relevant public and private sector institutions, and to enable them to meet the renewable energy power generation target.
- Commercial Solar Water Heating: CSWH can substitute for fossil fuel-based power generation, and potentially penetrate a large market share to reduce greenhouse gas emissions. The project will provide technical assistance and capacity building to professional, technical, and business groups in key market segments, and establish a Help Desk to provide advisory services and matching grants for small and medium size private enterprises to design and implement CSWH investment.
World Bank Project Task Team Leader, Xiaodong Wang notes this is the first World Bank energy project in South Africa, and it is a result of several years of dialogue and discussion with the Government. “The Government of South Africa is committed to reducing the country’s GHG emissions. The government outlined its vision and target for renewable energy development in the White Paper on Renewable Energy, and this project aims to assist South Africa in implementing this strategy. This is also part of the climate change dialogue between the Bank and the government that aims to assist South Africa in developing and implementing low-carbon growth strategy.”
South Africa is one of the few countries in the world that heavily relies on coal to meet its energy needs, with 75% of total energy consumption from coal in 2004. It is the world’s sixth largest coal producer, 90% of which was used for electricity generation and the synthetic fuel industry. As a result, South Africa has high greenhouse gas emissions, the largest contributor in Africa.
The Department of Minerals and Energy (DME) is responsible for implementing this project and has designated the Development Bank of Southern Africa (DBSA) as the implementing agent. The DBSA is a well-established agency that has considerable expertise in both financing and managing development projects. In recent years, DBSA has taken an interest in promoting renewable energy investments.
About the GEF
The Global Environment Facility (GEF) is an international financial mechanism with 176 member countries that addresses global environmental issues while supporting national sustainable development initiatives. GEF grants support projects in developing countries related to biodiversity, climate change, international waters, land degradation, the ozone layer and persistent organic pollutants. GEF’s implementing agencies—the UN Development Program (UNDP), the UN Environment Program (UNEP), and the World Bank—share credit for GEF’s measurable on-the-ground achievements. Since its inception in 1992, GEF has achieved a strong track record of support to developing countries and countries with economies in transition, providing $6.2 billion in grants and leveraging $20 billion in co-financing for over 1,800 projects in 140 countries. Through its Small Grants Program, GEF has also made more than 7,000 small grants, up to $50,000 each, directly to nongovernmental organizations and community organizations.