It has been a big couple of weeks for South Africa’s nascent and, at times, half-heartedly supported just energy transition.
It began on the morning of November 4 when the World Bank Group approved a $497-million package for the ‘Komati Just Energy Transition Project’, which will include both repowering and repurposing activities.
The repowering of the coal site will involve the installation of 150 MW of solar photovoltaic and 70 MW of wind, supported by 150 MW of batteries. The repurposing aspects will include a micro-grid assembly factory, the development of a Komati Training Facility and probably agricultural programmes.
Later on that same day, President Cyril Ramaphosa officially released the much-anticipated Just Energy Transition Investment Plan, or JET-IP, which outlines the R1.5-trillion of investments that will be required over the coming five years to facilitate the transition from coal to renewables in the electricity sector, as well as electric vehicle manufacturing and green-hydrogen production.
Two days later, the JET-IP was endorsed by France, Germany, the UK, the US and the European Union on the sidelines of the COP27 climate talks in Sharm El Sheikh, Egypt, opening the way for the realisation of the Just Energy Transition Partnership, or JETP, unveiled a year earlier at COP26 in Glasgow, Scotland.
Under the JETP, an initial funding offer of $8.5-billion was made to support South Africa’s transition away from coal. And by November 8, the first JETP financing was confirmed when the French and German development banks, AFD and KfW, signed agreements to each extend €300-million in concessional financing to South Africa’s National Treasury.
In addition, the sources of all JETP funding for the coming three to five years were confirmed, including: $2.6-billion from the Climate Investment Funds Accelerating Coal Transition Investment Plan; $1-billion from France; $1-billion from Germany; $1.8-billion from the UK; $1-billion from the US; and $1-billion from the EU.
The funding package will be disbursed through various mechanisms, including grants, concessional loans and risk-sharing instruments and will be directed towards projects outlined in the JET-IP.
Ramaphosa made it clear that he would be seeking yet more funding from these and other sources to support the JET-IP and also indicated that he would be agitating for yet more grant funding to support the ‘just’ components of the transition, especially programmes to support vulnerable workers and communities linked to the coal value chain.
There is no question that the last few weeks represented an important milestone in South Africa’s just energy transition. However, once the JET-IP implementation has been fully canvassed with domestic stakeholders, it is crucial that these funding announcements begin translating into visible projects and programmes.
It is also crucial that the roll-out is sequenced such that the just components receive top priority along with those investments in the electricity sector that will have the biggest impact on loadshedding and sustainable security of supply. In other words, the strengthening and expansion of transmission and distribution grid infrastructure.