PHOTO: Supplied by Absa Group.
JOHANNESBURG - The Department of Energy’s foray into the renewable energy programme received a shot in the arm yesterday when Absa Corporate and Investment Banking (CIB) funded 12 projects for R22 billion. 

CIB announced it had successfully closed the debt financing as part of the department's latest bidding round under the renewable energy independent power producer programme (Reippp).

This as Eskom is struggling to keep the lights on due to sabotage at its power stations, allegedly by disgruntled employees demanding bonuses from the cash-strapped utility, which has posted a net loss of R2.3 bn.

Yesterday, CIB said the 12 projects it was funding comprised seven wind, four solar and one biomass project. They are expected to add a combined 1200MW to the Eskom grid, which is currently under pressure due to low coal stockpiles.

The 12 projects bring the total projects financed by Absa to 33, or a combined 2900MW since Reippp started in 2012.

Bhavtik Vallabhjee, Absa's head of power, utilities and infrastructure, said by winning these mandates Absa had demonstrated its dominance in funding renewable energy projects in the country.

“Our aim is to finance independent power projects that can provide reliable and affordable power,” said Vallabhjee.

The bank said the Reippp had resulted in more than R200 bn in direct investments and had the potential to reshape the South African energy landscape.

In April, Energy Minister Jeff Radebe signed agreements worth $4.7bn (R62.24 bn) with 27 independent power producers after more than two years of delays. The projects were expected to add 2300MW of electricity to the national grid over the next five years.

Cheaper

Vallabhjee said the latest round of renewable energy projects in the country demonstrated that it was relatively and comparatively cheaper to produce energy from renewable energy plants.

“The bulk of the projects will deliver power at below R0.70 per kilowatt hour, compared to the cost of thermal power plants which are typically much more expensive,” said Vallabhjee.

The South African Institute of Race Relations' chief economist, Ian Cruickshanks, said that while renewable energy was more environmentally friendly, it was equally important to know what the cost per unit would be.

Metalworkers’ union Numsa has dismissed the Reippp, saying it would lead to massive job losses and “economic suicide”.

- BUSINESS REPORT