Africa Oil & Power spoke with Nedbank CIB’s Amith Singh, Head of Energy; Mike Peo, Head of Infrastructure, Energy and Telecommunications; and Lize Mari Matthews, Associate Energy Finance, about the company’s role in financing South Africa’s renewable energy sector and the value of sustainable investments, following the launch of the fifth bidding window of the Renewable Energy Independent Power Producer Procurement (REIPPP) Program earlier this month.
How is Nedbank contributing to the fulfillment of South Africa’s renewable energy agenda?
Nedbank’s contribution is through its positioning as the leading provider of commercial bank loans to projects in the renewable energy sector in South Africa. Nedbank has funded the full value chain of the renewable energy sector, including Project Debt, BEE funding, hedging products, Working Capital Solutions, Transactional Banking and Trade Finance. Supporting the Engineering, Procurement and Construction (EPC) contractors and operators with all of their banking requirements is also a key offering in this sector. Nedbank is the only commercial bank in South Africa with a dedicated Energy Finance team that services the African energy sector by specializing in the provision of comprehensive funding solutions for companies. The Energy Finance business has financed renewable energy projects from utility scale plants – as part of the REIPPP Program – through to decentralized distributed energy generation systems for industrial and commercial end users.
What has been Nedbank’s involvement in the previous four rounds of the REIPPPP Program?
Nedbank has played a substantial role in the REIPPPP Program by showing continued support of both the Program and the financing of the Independent Power Producers (IPPs) that has been awarded across the various bidding rounds. To date, Nedbank has financed 41 of the IPPs across all of the different renewable energy technologies currently in operation, making it the largest commercial lender to this program.
What are Nedbank’s expectations for the fifth licensing round, which launched earlier this month?
Nedbank expects the bidding process to be a lot more competitive compared to previous bidding rounds and to include changes to the BEE and localization components of the Program. Furthermore, Nedbank expects bids for power plants with capacities to be increased with some element of storage included, following the most recent Risk Mitigation Independent Power Producers Procurement (RMIPPP) Program’s RFP requirements. One can also expect some form of obligation from these projects to forecast their energy production in order for the buyer to manage its grid more efficiently.
How does Nedbank propose to transform sustainable investment into tangible developments?
The impact of load-shedding has been devastating to South Africa’s economy, but by financing renewable energy and modernizing the grid, Nedbank is ensuring energy security, while growing a new sector within the economy. Nedbank is committed to supporting an integrated energy sector, which includes grid modernization to enable renewable energy to be a fundamental part of the energy transition. As such, Nedbank will continue to represent a leading player in the financing of renewable energy opportunities, and through this, Nedbank has become an agent of positive social change, promoting and achieving sustainable economic development goals.
Renewable energy has become non-negotiable in South Africa, given rising environmental and social responsibilities. What role does impact investing play in ensuring long-term and sustainable energy development?
Impact investing has become imperative for much of our investment and is evident through much of our impact statements, such as, “Partner with the bank that puts sustainability at its heart and get tomorrow’s advice today.” Our social impact is described extensively in our published Annual Sustainability Report. Investment in the renewable energy sector will promote growth of the sector, which will decrease the costs of energy and as a result, accelerate access to affordable and sustainable energy solutions.
What have been investors’ response to Nedbank’s Renewable Energy Bond?
Overall, investor and market response to the Nedbank Renewable Energy Bond was extremely positive with the auction of the Bond significantly oversubscribed. This clearly demonstrates market appetite for sustainable finance products.
How does Nedbank plan to drive further investment into South Africa’s renewable industry?
Nedbank’s Energy Finance team will look to support and finance renewable energy developers and IPPs across different sectors, from utility scale energy plants being procured through the REIPPPP and RMIPPPP Programs, to commercial and industrial scale energy plants for energy consumers, such as mines, to small, decentralized distribution scale energy plants. We will also fund the full value chain across these renewable energy projects, such as contractors and operators with their respective banking requirements.
What message does Nedbank have for investors interested in South Africa’s renewable energy sector?
There are still abundant opportunities in South Africa’s renewable energy sector with increasing liberalization of the energy market, moves towards self-procurement through embedded and distributed generation, and the deployment of rooftop solar photovoltaic. As such, South Africa still has massive potential and room for growth. Large industrial and mining companies will also seek to diversify their energy needs by procuring renewable energy from IPPs.