INSIGHT •
EMERGING DEVELOPMENTS IN SA GREEN HYDROGEN , COMMERCIAL , INDUSTRIAL ENERGY SECTOR
By Mathapelo Malao , head of Energy , Environment , and ICT , Development Bank of Southern Africa
The lifting of restrictions on the licencing and registration requirements is contributing significantly towards making renewable energy more accessible to intensive energy users , particularly to the industrial and mining users , and as a result this has become a more compelling and strategic investment for such entities .
The amendment of the Electricity Regulation Act is one such action that has seen the easing of the capacity threshold requirement for embedded generation projects . The need to obtain an electricity generation licence has resulted in the growth of the electricity self-generation market as the threshold was increased from 1MW to 100MW in August 2021 , which saw a significant increase in the pursuit of commercial and industrial ( C & I ) related renewable energy projects .
The increasing ease of access to alternate electricity supply not only serves as a means to ensuring security of electricity supply , but also enables businesses to achieve their internal decarbonisation efforts . The level of investment required to support the many commercial users of energy will need significant capital outlay which commercial and development finance institutions will be required to support , this will once again highlight the significant impact and strategic role that the development finance institutions such as the Development Bank of Southern Africa ( DBSA ) continue to play in the energy sector .
The significant amount of funding required to develop and support the C & I energy ecosystem has seen the DBSA emerge as a lender of preference in this market particularly in unlocking of funding for black economic empowerment shareholders as well as also playing a role in the senior debt market alongside commercial banks .
Important to note is the investment initiative developed by the European Investment Bank ( EIB ) together with the DBSA to stimulate the funding of C & I energy projects . This programme has seen the EIB and DBSA launch a South African renewable energy investment initiative which was established in November 2022 called the Embedded Generation Investment Programme ( EGIP ). This initiative has been backed by a facility of EUR200- million from the EIB to provide financing for a range of new renewable embedded generation energy projects across South Africa . This , the largest ever EIB investment in South Africa , was signed at COP27 . The investment initiative promises to support clean energy power generation in South Africa and will also contribute towards alleviating energy supply challenges .
DBSA ’ s Embedded Generation Investment Programme ( EGIP ) supports the development and upscaling of solar photovoltaic and
Development Bank of Southern Africa
Mathapelo Malao , head of Energy , Environment , and ICT , Development Bank of Southern Africa .
wind renewable energy embedded generation projects , developed by independent power producers ( IPPs ) operating in South Africa . Embedded generation is the production of electricity from small to large-scale power generation facilities and usually defined as projects that are connected to customers directly for their own use or indirectly via wheeling arrangements .
EGIP offers a blended finance structure to credit enhanced renewable energy projects through the provision of a subordinated debt facility or first risk loss cover . The EGIP initiative is intended to provide funding to non-sovereign backed Power Purchase Agreement led projects with an energy output capacity of between 10MW and 75MW that are implemented by private sector entities ( in their capacity as IPP and off-takers ).
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