The Development Bank of Southern Africa (DBSA) and the European Investment Bank (EIB) have approved a $220mn package to support the growth of South Africa's renewable energy sector.

Announced in a joint release on September 11, the loan is in addition a $440mn facility they unveiled at COP27 in Egypt in 2022 to back private sector solar and onshore wind energy project in Africa's most advanced economy, whose energy mix is also its most coal-reliant.

The EIB will provide $110mn which the DBSA will match. 

"Our enduring and strong partnership with the EIB has taken an exciting step forward as we increase our financial support for renewable energy," commented DBSA chief executive officer, Boitumelo Mosako.

"This collaboration reflects our shared commitment to a greener future. We continue to work closely with our stakeholders, supporting South Africa’s Just Energy Transition (JET) journey. With funded projects now coming online and contributing to the energy grid, we are proud to play a role in driving sustainable growth and energy resilience for South Africa.”

The financing initiative, expected to produce 384 megawatts (MW), is part of Global Gateway, Europe’s external strategy for clean and sustainable infrastructure. It is aligned with the Just Energy Transition Partnership (JETP) to support South Africa's decarbonisation efforts, with a focus on the electricity system, and comes on top of the EIB’s $1.1bn commitment under JETP.

About 80% of South Africa’s energy is produced by coal-fired plants some of which are getting too old and inefficient.  

“We are proud of the progress of this initiative and our partnership with DBSA,” said EIB vice-president Ambroise Fayolle.

“Investing in renewable energy is not only imperative to combat climate change, but it will also lead to more reliable energy supply, which businesses need in order to grow.”

Since the EIB started operating in South Africa in 1995, it has cooperated with DBSA to invest in local water, sanitation, climate action and education programmes.

"This initiative is a concrete example of the close cooperation between the European Union and South Africa to advance the just energy transition in a way that is sustainable and adds value to South Africa’s economy,” said Sandra Kramer, Ambassador of the European Union to South Africa.