Big-four bank Nedbank has seen a sharp increase in demand for solar financing, as South Africa continues to battle acute energy shortages.
This was revealed by Vusi Mpofu, sector lead for mining and chemicals at Nedbank Corporate and Investment Banking (CIB), in an interview with ITWeb.
The interview followed last week’s Investing in Africa Mining Indaba, the largest mining investment event on the African continent.
Mpofu’s comments come after Nedbank CIB recently announced it is funding about R35 billion of SA’s Renewable Energy Independent Power Producer Programme and has helped introduce 3 517MW of new energy into the grid.
“Against the backdrop of SA’s deepening energy crisis, the need for financing of alternative energy sources has undoubtedly filtered through to the retail market,” says Mpofu.
With embattled power utility Eskom struggling to keep the lights on, South African households and businesses have been exploring the use of alternative energy sources, such as solar, to keep operations going during the never-ending bouts of load-shedding.
Speaking at the Mining Indaba, energy minister Gwede Mantashe said: “South Africa experienced more power supply disruptions in 2022. This led to a decline in mineral production across all commodities.
“It is estimated that load-shedding cost the economy about R1 billion a day. In November 2022, mining production contracted by 9%, marking a 10th consecutive month of contraction in volumes produced.”
President Cyril Ramaphosa has since declared the energy crisis to be a national disaster, with plans in motion to appoint a minister of electricity.
Amid the crisis, Mpofu says Nedbank has, over the years, provided a variety of finance solutions that speak to this need.
“Drawing on the expertise of Nedbank’s MFC (a division of Nedbank specialising in vehicle finance), the bank now provides a PV solar funding solution that is delivered with the efficiency of traditional vehicle and asset finance,” he says.
Last year, Nedbank joined forces with Hohm Energy to finance and install solar power solutions. According to the financial institution, the service is offered to all homeowners, and is not limited to Nedbank mortgage clients.
Says Mpofu: “As the country’s energy crisis has unfolded, there has certainly been an increase in a requirement for funding in line with different load-shedding cycles. The current cycle, coupled with impending power cost increases, appears to be supporting a more consistent demand for funding.
“Nedbank is committed to playing its role in the energy transition through its support for renewable projects at both a retail and commercial scale. Beyond this, the bank has a keen strategic interest in supporting mining projects that will provide the commodities required to fuel the energy transition.”
He points out Nedbank has been able to leverage its position in mining finance and energy finance to provide solutions for organisations.
“In what has been an undeniably evolving landscape, the [Nedbank] teams have been able to provide guidance and insights to help our energy and mining clients land on bespoke solutions to help alleviate increasingly inconsistent power supply from Eskom and contribute to the reduction of their overall carbon footprints.
“An important aspect of this journey has been the overlay of sustainable finance solutions, which give added impetus to an orderly and responsible decarbonisation glide path.”
Armed with the R35 billion kitty, Mpofu reveals the bank’s energy finance team has built relationships with independent power producers to finance the mining sector.
“Noting that the independent power producer cap was only lifted in the last year, we have certainly seen a healthy pipeline of projects coming through, and we do expect successful execution in the coming months.
“In the last year, within the mining space, Nedbank is proud to have acted as joint mandated lead arranger in the funding of a 200MW solar project for Tronox.”
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