The African Development Bank is setting up an African Energy Transition Facility to help South Africa secure adequate financing as the nation transitions to renewable energy.
According to Dr Akinwumi Adesina, President of the African Development Bank, the institution, in collaboration with global partners, notably the G7 countries, is in the process of setting up an African Energy Transition Facility to help South Africa secure adequate financing as the nation transitions from fossil fuel to renewable energy.
He said: “South Africa cannot and should not embark on the journey of energy transition without the necessary financial support.” Adesina affirmed that through the African Energy Transition Facility “South Africa can leverage on the $8.5 billion in grants from the G7 countries to generate all the money it needs for its just energy transition without getting into debt.”
The African Development Bank forecasts that more than $30 billion is required for SA to effectively transition to renewable energy.
Currently the Bank is financing numerous renewable energy projects in South Africa, comprising the award-winning 100-megawatt Red Stone solar project, the 100-megawatt Sere wind power plant, and the 100-megawatt Xina solar power concentrated power plant. Further, to support the country’s electricity public utility, Eskom, as it transitions to renewable energy, the Bank is making provision for a $400 million package.
As South Africa relies on coal for 75% of its energy needs, the minister assured that the government is committed to achieving a 15% reduction in coal power production and an 18% increase in renewable energy by 2030.
“We want to move from high carbon to low carbon emission. The Just Energy Transition Plan should be about people’s lives and livelihoods, particularly in coal mining areas. We must develop a concrete alternative economic program for communities in those areas.” he stated.
Moreover, Mantashe said the government was preparing to produce a further 1 500 MW of electricity from coal. “We want to be actively involved in the experiment for cleaner coal production technology, including carbon capture and storage…If the experiment works, we’ll expand it and that will reprieve coal as a commodity.”
As gas and nuclear are a part of South Africa’s energy mix, Mantashe reported gas as a tipping point for development, with reference to Mozambique, whose economic prospects have shifted following its gas discovery.
Adesina further stated that solar power should be a fundamental element of South Africa’s energy mix. “Be bold about solar power,” he said. “Africa today has no choice but to transition out of coal. But God is good to us. We have 11 terawatts of solar. That is Africa’s future. South Africa can help make that future happen. South Africa can become and should position itself to be the lead manufacturer of polysilicon.”
Polysilicon is a key raw material in the solar photovoltaic (PV) supply chain and is largely imported from China.
“The minerals of the future that will contribute to a green economy are here,” Mantashe affirmed considering South Africa’s discovery of rare earth minerals, critical in solar power components.
Further to the above, the Bank Group president and the minister addressed the rise in the prices of food, fertilizer, oil, and gas owing to the conflict between Russia and Ukraine.
Adesina said the African Development Bank was formulating a plan to raise $1 billion to fund emergency food production to stave off an impending food crisis across the continent.
The minister said the South African government was considering using 10 million barrels of its crude oil reserves in a bid to manage the escalating prices of petroleum by suspending all taxes and levies for two months.
The Africa Energy Indaba 2023, Africa’s most revered conference, will be unpacking this pressing topic in tandem with many others prevalent to the energy landscape. The symposium serves as an indispensable platform for attendees to debate, network, learn and exchange ideas to not only enrich but expand Africa’s energy community, thereby empowering sectoral stakeholders with opportunities that may not have been uncovered otherwise.