‘Renewable Energy Fund’ for South Africa

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South Africa’s National Treasury has issued a tender for a transaction adviser to help it establish a facility, currently termed a ‘Renewable Energy Fund’, that will channel international donor and commercial funding to support South Africa’s ambitious roll-out of renewables technologies.
The request for proposals has been advertised by the department’s public–private partnership unit, which wants the successful bidder to offer advice on the structuring and implementation of the proposed fund.
Finance Minister Pravin Gordhan was quoted by Reuters as saying that R800-million has been set aside for the fund and government is currently seeking private partners to manage it.
The successful advisory team would also be expected to provide advice, help formulate project documentation and liaise with international donors and commercial finance institutions.
South Africa aims to install 17 800 MW of renewables capacity between 2011 and 2030, in line with its recently adopted Integrated Resource Plan for electricity.
However, the authorities are concerned about the price implications, particularly given the relative electricity intensity of key economic sectors, such as mining and minerals processing. Therefore, it is seeking to find ways to tap into international funding pools that could help it in lowering the cost of its renewables programmes.
Cabinet also recently approved the South African Renewables Initiative (SARi), which will be launched during the upcoming United Nations Framework Convention on Climate Change Conference of the Parties, or COP 17.
SARi is aimed at catalysing the growth of a green industry through the financing of large-scale renewable generation capacity. The objective is the development of related industrial capabilities through the design of a financial solution for the roll-out of large-scale renewable generation capacity.
The COP 17 launch will be accompanied by the announcement of partnerships between South Africa, other governments and development finance institutions to explore possibilities for developing enhanced financing arrangements for renewables.
The initial design seeks to combine low-cost loans, insurance and other financial instruments with climate funding on a pay-for-performance basis.

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