U.S Promises $2B in Renewable Energy Loans to South Africa
Eyeing South Africa’s potential as a key export market, the US is coming up with $2 billion in financing for clean energy projects.
The agreement signed this week between the US Export-Import (Ex-Im) Bank and Industrial Development Corp. (IDC) of South Africa is aimed at supporting solar, wind and other clean-energy projects that use U.S. technologies products and services.
“South Africa is a dynamic market that offers enormous opportunities for American companies,” says Fred Hochberg, chairman of the Ex-Im Bank. “This agreement will help ensure that Ex-Im Bank continues to provide financing to South African buyers that want to buy high-quality US goods and services.”
South Africa is the largest US export market in sub-Saharan African, generating $7.3 billion in 2011. Its economic growth for 2012 is projected at 2.2%.
The loans are intended to support South Africa’s Integrated Resource Plan (IRP), which includes the country’s goals for its entire energy mix and contains coal and nuclear targets; and the South African Renewable Initiative (SARi).
When SARi was formed in December 2011, South African officials pointed to the country’s large potential for renewable energy. The country’s IRP from 2010 calls for 18 gigawatts in renewable energy by 2030; a revision to that plan is expected this year.
Ex-Im Bank is hedging its bets when it comes to South African electricity. In spring 2011, it approved $805 million in funding for one of the world’s largest coal-fired power plants, the 4,800 megawatt (MW) Kusile project. A year earlier, the US withheld its support for a $3.75 billion loan by The World Bank to South Africa’s public utility Eskom, the bulk of which would finance construction of what will be the world’s seventh-largest coal plant.
South Africa has set a target to reduce carbon emissions by 34% by 2020 and by 42% by 2025.
For South Africa’s 2010 energy development plan:
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