Eskom in talks with lenders and foreign governments to finance clean energy projects
Eskom offers a Just Energy Transition Funding Mechanism to provide concessional finance for clean energy projects.
- Eskom says he is in talks with lenders and foreign governments to “confirm their interest” in funding cleaner energy projects.
- The power company is seeking to raise just over R33 billion from development finance institutions, Bloomberg reported.
- Eskom offers a just energy transition financing mechanism to provide concessional financing for such projects.
Eskom is in talks with various lenders and foreign governments to “confirm their interest and appetite” for cleaner energy projects.
The electricity utility responded to Fin24’s questions following a bloomberg report that he was seeking to raise 33.1 billion rand from five development finance institutions (DFIs). The funding would be used to help reuse coal-fired power plants to become renewable energy sites, Bloomberg reported.
Eskom told Fin24 that its financing plan incorporates funding from both DFIs and multilateral banks. He said his financing plans would also cover the social elements of these clean energy projects, as part of his Just Energy Transition Strategy (JET).
In a presentation At the Presidential Climate Change Coordination Commission (PCCCC) last Friday, Eskom CEO André de Ruyter said the power company was proposing a JET funding mechanism to accelerate the transition from coal to other forms of electricity generation.
“We have not opted for the provision of a single large pot, but rather, in order to ensure discipline and governance over the financing of such a facility, we have proposed a multi-tranche and multi-year facility. funded by a syndicate of multiple lenders, ”said De Ruyter. This union would provide concessional financing for these JET projects on a “pay for performance” basis.
In other words, as new low-carbon or zero-carbon capacity is added or existing coal-fired capacity is withdrawn, funding will be released. “There will be a link between decarbonization and the provision of funds,” he said.
De Ruyter said there has been good feedback on the World Bank’s funding facility as well as the US, UK, Germany and France.
The power company said it was crucial for the transition to be fair and that it had conducted socio-economic impact studies. De Ruyter has previously said the transition should not leave behind “ghost towns” as seen in Wales and England after the passage of coal.
Eskom said staff will remain employed in the projects and the reallocation of factories will ensure that.
Cosatu Labor Federation parliamentary coordinator Matthew Parks said the power company made presentations to Eskom’s social pact as part of the country’s economic stimulus plan this week.
However, unions were looking for more “granular” details on the just transition plan, he added.
“Many power plants will come to the end of their lifespan over the next few years. Komati will shut down next year, Grootvlei the following year and Hendrina the following year. We need details,” Parks said. “Our fear is that if you don’t have the details you will be leaving behind families, workers and communities and we cannot afford that.”
De Ruyter told PCCCC that lenders have visited the Komati coal plant and that it is expected to be a “beacon” of just energy transition as it is reused for renewable energy technologies. “We look forward to being able to play a continued role in supporting the community and creating new decent jobs for the people who will be displaced by the closure of this power plant,” said De Ruyter.
Eskom said he is engaging with workers and civil society on his JET plan.