The Renewable Energy Sector Development Project was approved by the NDB Board at the end of March in 2019, with the loan agreement being signed the following February. Picture: Supplied.
Nicola Mawson
The Independent Evaluation Office (IEO), which reviews the BRICS’s New Development Bank’s (NDB’s) investments, has found that the multi-billion-rand projects to develop the renewable energy sector and reduce greenhouse emissions in South Africa have been a success.
In a recently released report on the NDB-financed Greenhouse Gas Emissions Reduction and Energy Sector Development Project in the Republic of South Africa, the first project evaluation done by the IEO in South Africa, it stated that this project involved a $300 million loan from the NDB to the Development Bank of Southern Africa.
“The project mobilised co-financing of approximately $2.2 billion, supporting 15 renewable energy sub-projects across four provinces of South Africa,” wrote Ashwani Muthoo, IEO director-general in the preface to the report.
Overall, the evaluation found that the project, implemented in the North West, Northern Cape, Western Cape, and Mpumalanga provinces, “achieved its objectives and had a positive impact,” he said.
Muthoo further noted that the NDB’s investment “contributed to the national strategy of expanding power generation through renewable energies. It also brought additionality in terms of crowding in private sector financing and extending access to long-term funds for renewable energy activities in South Africa.”
Most importantly, Muthoo said, “the project benefited from the Renewable Energy IPPP’s mandatory requirement for socio-economic inclusion and black economic empowerment, even though such aspects were not explicitly considered as part of the original project design”.
This initiative ran from March 2019 to January 2024, including an extension to the closing date of 22 months.
In a second review report on the evaluation, the IEO stated that NDB invested R1.15bn into in four sub-projects in the Northern Cape Province via the Industrial Development Corporation (IDC) with a total cost of R27.8bn.
The Renewable Energy Sector Development Project was approved by the NDB Board at the end of March in 2019, with the loan agreement being signed the following February. Initially, financing was only extended to Redstone, with the Scatec projects to follow.
The one Redstone project and three by Norwegian renewable energy group Scatec, resulted in 250MW of solar power, with Scatec also building battery storage plants.
Redstone forms part of the South African Renewable Energy Independent Power Producer Procurement Programme (IPPP), while the Scatec projects fall under the first Bid Window of the Battery Energy Storage IPPP.
Muthoo wrote that through the funding of renewable energy plants, the project’s main objective was to “contribute to the power generation mix and reduction in CO2 emissions in South Africa”.
“Overall, the project has been successful, contributing to the generation of renewable energy, reducing greenhouse gas emissions, and fostering sustainable development; in fact, the energy generation targets were exceeded by the Scatec sub-projects alone,” he said.
Muthoo added that the “project gave impetus to the institutional arrangements put in place by the government to support energy sector development and introduced state-of-the-art technology too”.
The solutions provided what he called “dispatchable power” with the capacity to store excess electricity, which enhanced stability in the energy sector.
The 2024 South African Renewable Energy Grid Survey, released in August, found that there had been a significant increase in renewable projects, which were now set to provide 133GW across various development stages, compared to 66GW in 2023.
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