Eskom in talks with lenders, foreign governments to fund clean energy projects

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Eskom is proposing a Just Energy Transition Financing Facility to provide concessional funding for clean energy projects.
Eskom is proposing a Just Energy Transition Financing Facility to provide concessional funding for clean energy projects.
  • Eskom says it is in discussions to with lenders and foreign governments to "confirm their interest" in funding cleaner energy projects.
  • The power utility seeks to raise just over R33 billion from development finance institutions, Bloomberg reported.
  • Eskom is proposing a Just Energy Transition Financing Facility to provide concessional funding for such projects.

Eskom is in discussions with various lenders and foreign governments to "confirm their interest and appetite" for cleaner energy projects.

The power utility responded to questions from Fin24 following a report by Bloomberg that it was seeking to raise R33.1 billion from five Development Finance Institutions (DFI). The funding would be used to help repurpose coal-fired power plants to become sites for renewable energy, Bloomberg reported.

Eskom told Fin24 its funding plan incorporates finance from both DFIs and multilateral banks. It said its funding plans would also cover social elements of these clean energy projects, as part of its Just Energy Transition (JET) strategy.

In a presentation to the Presidential Climate Change Coordinating Commission (PCCCC) last week Friday, Eskom CEO André de Ruyter said the power utility is proposing a JET Financing Facility to speed up the transition from coal to other forms of electricity generation.

"We have not opted for making available a single large pot of money, but rather, in order to ensure that there is discipline and governance over the funding of such a facility, we have proposed a multi-tranche, multi-year facility to be funded by a multi-lender syndicate," said De Ruyter. This syndicate would provide concessional funding for such JET projects on a "pay-for-performance" basis.

In other words, as new-, low- or no-carbon capacity is added or as existing coal-fired capacity is retired, funding will be released. "There will be a link between decarbonisation and the making available of funds," he said.

De Ruyter said there had been good feedback on the financing facility from the World Bank as well as the US, UK, Germany and France.

The power utility said it is crucial that the transition is just and that it had conducted socioeconomic impact studies. De Ruyter previously said that the transition should not leave behind "ghost towns" as have been seen in Wales and England after shifts from coal.

Eskom said that staff would remain employed at projects and the repurposing of plants would ensure this.  

Parliamentary coordinator of labour federation Cosatu, Matthew Parks, said that the power utility had made presentations to the Eskom social compact as part of the country's economic recovery plan this week.

However, labour was seeking more "granular" details on the just transition plan, he added. 

"Many of the power stations are coming to the end of their lifespan over the next few years. Komati is closing next year, Grootvlei the year after and Hendrina the following year. We need the details," said Parks. "Our fear is if you do not have detail, you will leave families and workers and communities behind and we can't afford that."

De Ruyter told the PCCCC that lenders had visited coal-fired power station Komati and there are plans for it to be a "flagship" of the just energy transition as it is repurposed for renewable energy technologies. "We look forward t being able to play a continuous role in supporting the community and to create new, and decent work for people who will be displaced by the shut down of this power station," De Ruyter said.

Eskom said it is engaging with labour and civil society on its JET plan.

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