DBSA, RMB and Partners Convened Discussion to Address SA’s Electricity Transmission Grid

Johannesburg, 14 August 2023 - The Development Bank of Southern Africa (DBSA), Rand Merchant Bank (RMB), members of civil society and academia recently convened a roundtable meeting to discuss various blended finance and resource mobilisation strategies to address South Africa’s electricity transmission grid challenges. The discussions took place at the DBSA headquarters in Midrand, South Africa.

South Africa is currently grappling with a severe energy crisis that has far-reaching economic growth and social development implications. Insufficient power generation capacity from ageing coal power stations, a lack of maintenance, employee strikes, and reported sabotage are some of the factors that have contributed to recurring blackouts and hindered the country’s economic progress. The Reserve Bank estimates that unabated loadshedding costs the national economy between R204 million and R899 million a day - a major hindrance for an economy characterised by sluggish growth over the last few years. To help combat this crisis, Development Finance Institutions (DFIs) have emerged as key players, providing financial support, expertise, and innovative solutions to foster sustainable energy development.

Prof Mark Swilling, Chairman of the DBSA, opened the proceedings. Nina Callaghan, researcher at the Centre for Sustainability Transitions presented the findings of the “Better Finance, Better Grid” report. The panel members at the Grid discussion included, Catherine Koffman, DBSA Group Executive: Project Preparation, Dipak Patel from the Presidency Climate Commission, Ronald Marais of Eskom, Joanne Yawitch from the Just Energy Transition Programme Unit and Dario Musso of Rand Merchant Bank.

Mohan Vivekanandan, DBSA’s Group Executive Client Coverage said, “It goes without saying that the challenges affecting the national electricity transmission grid needs all hands-on deck, whether private or public sector”, he further said, “we are meeting with relevant stakeholders to discuss avenues available domestically and internationally to prepare, finance and ensure the implementation of programmes to address the SA electricity transmission grid. We are meeting to align on the financial and non-financial commitments required from all quarters to ensure all role players are involved and the decisions are equitable and just”. The key point is how the DBSA will collaboratively mobilise sufficient capital to get the job done as the grid is key to energy security and just energy transition”.

One of the key priority areas for DBSA is to address the catalytic use of blended finance public capital for transmission infrastructure. While the country faces continuing load shedding, new renewable generation capacity being procured via bid window 6 could not be progressed because of the lack of available transmission grid capacity. Unless the use of the existing transmission grid is optimised and strengthened significantly, there can be no just transition as no more generation capacity can be connected. This not only creates the risk of continued load shedding, but also poses a threat to economic growth in for example hydrogen, electric vehicles and other green industries.

The DBSA has pioneered and catalysed several national programmes to address energy security including the establishment and financing of the Independent Power Producer’s renewable energy programmes, Embedded Energy Generation Investment Plan, (EGIP) the Infrastructure Fund, (IF), the Infrastructure Investment Partnership Fund, (IIPSA) and more recently the National Water Partnerships Programme (NWPP).

“We need to demonstrate the positive impact of DFIs in partnering with the private sector to address South Africa's energy crisis, paving the way for a more resilient and sustainable energy future. By continuing to invest in clean energy and innovative solutions, these partnerships will play a vital role in powering South Africa's economic growth and social progress. We aim for this to be the first conversation of a series of conversations with key partners to ensure the restoration of the SA electricity grid in a just and sustainable manner”, Vivekanandan concluded.

End