Eskom secures $57.6m loan approval from African Development Bank

Africa’s largest power utility, Eskom, has been approved for a $57.67-million loan from the African Development Bank to boost electricity generation from renewable energy.

Dr Daniel Schroth, African Development Bank’s acting director for renewable energy and energy efficiency, said the loan is based on a multidonor financing programme initiated in 2011 by leading development institutions under the Eskom Renewables Support Project to support Eskom in accelerating the development of large-scale renewable energy capacity to support long-term carbon mitigation in South Africa.

“In this regard, the African Development Bank approved the concessional loan amounting to $57.67-million from funds administered by the bank on behalf of the Climate Investment Funds (CIF).... The duration of the loan is… 40 years,” he said.

Schroth said the loan would finance the Battery Energy System Storage (Bess) project, which consists of the design, engineering, supply, construction, installation, testing and commissioning of distributed battery storage infrastructure at seven sites in the Western Cape, Northern Cape, Eastern Cape and Kwa-Zulu Natal.

“The sites are at Eskom substations located at existing variable renewable energy plants and sites earmarked for distributed solar PV. The installed capacity is 200MW of Bess providing four hours of storage,” said Schroth.

“The Bess project will increase efficiency and reliability of electricity supply to the grid from variable renewable energy through dispatchable battery energy storage systems and reduce greenhouse gas emissions. 

“Specifically, the Bess will enable Eskom to use electricity from renewable energy sources that would otherwise have been wasted, reducing reliance on fossil fuel-generated electricity during times of peak demand.” 

Upon going onstream, Eskom will be able to dispatch electricity generated from renewable sources that would otherwise go to waste, which will reduce reliance on fossil fuels at peak times of the day.

When Eskom was contacted by Daily Maverick, the power utility said it was not in a position to comment as it had not yet concluded or signed the loan agreement.

“Once the facility is advanced and concluded, Eskom may be in a better position to provide colour,” read the response.

Schroth said the African Development Bank’s approval of the Climate Technology Fund facility showed the bank’s strong commitment to supporting South Africa’s just energy transition plans, prioritising investment in new low-carbon generation capacity and new technologies such as battery storage.

“This comes at a critical moment as the world is gearing up for action at the 2021 United Nations Climate Change Conference,” said Schroth.

He added that this large utility-scale battery storage project is the first of its kind in Africa, and is expected to reduce CO2 emissions by as much as 0.292 million tonnes.

“It will also inform the roll-out of similar projects across the continent. Many African countries are implementing an energy transition as they strive to meet net zero emissions targets.”  

Schroth said the project also contributes to South Africa’s ambitious Nationally Determined Contribution, part of compliance with the Paris climate agreement.

“The $5.4-billion Clean Technology Fund promotes low-carbon technologies with significant potential to reduce long-term greenhouse gas emissions. The African Development Bank has been an implementing entity of the Climate Investment Funds since 2010,” Schroth said. DM/OBP

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