Spain is providing 2.1 billion euros ($2.3 billion) to help fund South Africa\u2019s energy transition and water needs, even as some of the world\u2019s richest nations struggle to push forward on a ground-breaking climate-finance initiative with the continent\u2019s most-industrialized country.<\/p>\n
The Spanish funding is being provided through a mixture of financial instruments, with the country\u2019s government working with its development finance institution, Cofides, and South Africa\u2019s Industrial Development Corp., said Ambassador Raimundo Robredo Rubio.<\/p>\n
While not part of it, the Spanish initiative is in line with the aims of the $8.5-billion Just Energy Transition Partnership between South Africa and funding partners including France, Germany, the US, UK and the European Union.<\/p>\n
That program has been hailed as a pioneering example of how rich nations can help wean developing nations off their dependence on coal.<\/p>\n
\u201cThis is the first time in history we have done something like this,\u201d Robredo said in an interview at his nation\u2019s embassy in Pretoria, the capital. \u201cIt is tailor-made just for South Africa,\u201d with the potential to replicate it in other countries, he said.<\/p>\n
Spain, along with other developed countries that aren\u2019t part of the Group of Seven wealthy nations, weren\u2019t included in the JETP as it was an initiative of that bloc. JETPs are also being put in place in countries including Indonesia, Vietnam and Senegal.<\/p>\n
Spain will provide 15 million euros in grants for feasibility studies, while the rest of the money will come in the form of loans at about half the cost of commercial credit, risk insurance, and capital investments, Robredo said.<\/p>\n
Capital investments will be done together with Cofides and the IDC, with clear exit prices and dates, Robredo said. There will be a requirement that while those projects will be 100% financed, while 30% must go to Spanish companies in the form of equity or procurement, he said.<\/p>\n
\u201cSpanish participation is needed,\u201d Robredo said. \u201cThere must be a return to the taxpayer.\u201d<\/p>\n
The funding will cover potential investments in renewable energy, battery storage, transmission, green hydrogen and electric vehicles. Unlike the JETP it will also be open to water and sanitation projects.<\/p>\n
The IDC signed a cooperation agreement with Cofides in October, though the amount and funding instruments are still to be finalized, as are ownership and procurement levels, Tshepo Ramodibe, the development institution\u2019s head of corporate affairs, said in a response to queries. A pipeline of opportunities is now being developed and agribusiness opportunities may be included, he said.<\/p>\n
Denmark, Netherlands<\/strong><\/p>\n Spain isn\u2019t the only European country seeking to help with South Africa\u2019s transition from its reliance on coal, which accounts for more than 80% of the power the nation produces.<\/p>\n Denmark has funded knowledge-exchange programs on topics such as power-market operation and energy regulation and oversaw the mapping of South Africa\u2019s wind resources.<\/p>\n It\u2019s also made South Africa, a middle-income country, eligible for development finance for infrastructure projects such as power plants and a fund of about 1 billion Danish krone ($146 million) to cover this, said Tobias Elling Rehfeld, the Nordic country\u2019s ambassador to the African nation.<\/p>\n The Netherlands is planning a study to identify energy-transition opportunities in South Africa for Dutch-funded businesses and investors, and will use existing instruments to execute this, a diplomat familiar with the plans said.<\/p>\n The country is also working with national power utility Eskom Holdings SOC Ltd. to repurpose land for labour-intensive agriculture at the site of the Grootvlei power plant, which is scheduled to be closed in coming years, they said.<\/p>\n That partnership would initially create 300 jobs and the aim is to form a commercial venture between Dutch and South African agricultural companies. Eskom didn\u2019t respond to a request for comment.<\/p>\n More Partners<\/strong><\/p>\n South Africa produced an energy-transition plan last year that estimated it will need R1.5 trillion ($84 billion) in investment over the next five years. It comes at a time when frequent breakdowns of aging coal-fired plants are subjecting South Africa to rotational power cuts of often more than 10 hours a day.<\/p>\n \u201cWhat I see now is a lot of other international partners moving in to see where they can help,\u201d Rehfeld said, adding that Denmark has been running energy programs in South Africa since the end of apartheid in 1994.<\/p>\n
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