Release date: 31 August 2022
Promoter – Financial Intermediary
DEVELOPMENT BANK OF SOUTHERN AFRICALocation
Description
A framework loan to DBSA for on-lending to eligible projects under the Embedded Generation Investment Programme (renewable energy investments) and other eligible projects.
Additionality and Impact
The present operation will finance 100% Climate Action investments in solar photovoltaic and onshore wind renewable energy embedded generation projects (and potentially energy efficiency projects) in South Africa, by providing an intermediated Framework Loan to one of its main development finance institutions. Projects under this operation lead to carbon emission and air pollution reductions by promoting additional renewable generation capacity, thus contributing to the National Climate Change Adaptation Strategy, and supporting Sustainable Development Goals "Affordable and Clean Energy", "Sustainable Cities and Communities" and "Climate Action".
It demonstrates strong strategic alignment with the Multiannual Indicative Programme (2021-2027), which lists Environment/climate change" as a cross-cutting issue, and with EU policy goals in South Africa, while addressing the existing failures of the energy market, namely negative environmental externalities and incomplete markets.
The project quality and results for this operation are deemed to be very good mainly due to the high social benefits expected by generating clean and renewable power at a lower cost compared to the fossil-fuel based alternatives in the country.
This operation will contribute to improving DBSA's funding terms in the renewable energy sector. It will provide DBSA a long-term table source of funding with a choice of currency, including ZAR.
Objectives
The operation will provide financing for low-carbon and climate-resilient infrastructure projects or other eligible projects, leading to a substantial reduction of carbon emissions.
Sector(s)
- Energy - Electricity, gas, steam and air conditioning supply
Proposed EIB finance (Approximate amount)
EUR 300 million
Total cost (Approximate amount)
EUR 600 million
Environmental aspects
The energy component of the operation intends to generate environmental benefits by supporting renewable energy (i.e. solar photovoltaic projects, onshore wind) schemes that help to mitigate climate change. The underlying schemes would fall under the Annex II of the EIA Directive 2014/52/EU (amending Directive 2011/92/EU), if located within the EU, requiring the competent authorities to determine whether an environmental impact assessment (EIA) is required. In such case, the Promoter will ensure that an Environmental and Social Impact Assessment is carried out and that public consultation is undertaken in accordance with national legislation and the EIB's environmental and social standards. The Bank will assess the capacity and procedures of the Promoter to ensure the projects' compliance with national environmental, social and biodiversity regulations, as well as with the EIB's environmental and social standards and the principles of relevant EU Directives (i.e. Habitats Directive 92/43/EEC, Water Framework Directive 200/60/EC and Industrial Emissions Directive 2010/75/EU, as appropriate).
Procurement
The Bank will require the Promoter to ensure that implementation of the project will be done in accordance with the Bank's Guide to Procurement.
Status
Signed - 3/11/2022
Disclaimer
Before financing approval by the Board of Directors, and before loan signature, projects are under appraisal and negotiation. The information and data provided on this page are therefore indicative.
They are provided for transparency purposes only and cannot be considered to represent official EIB policy (see also the Explanatory notes).