Standard Bank helping companies kiss Eskom goodbye

Standard Bank has committed over R250 billion to financing alternative and renewable energy generation in South Africa, helping key industries reduce their reliance on Eskom and slash emissions. 

Since restrictions were lifted on independent power production for companies and households, money has flooded into private generation projects. 

This is one of the main reasons why South Africa has not experienced load-shedding for over 110 days. 

A rapid uptick in private generation has significantly reduced Eskom’s demand for electricity, giving it the space to perform maintenance. 

The reduced demand for the utility’s electricity, particularly during the day from solar users, has enabled Eskom to build up reserves to run its Open-Cycle Gas Turbines (OCGTs) during the evening peak. 

Standard Bank’s head of power, Rentia van Tonder, said they have noticed sustained demand for its energy-financing solutions. 

Its financing of renewables has risen to over four times the bank’s funding of non-renewable projects. 

The bank set an initial target of financing R55 billion worth of renewable energy projects in Africa within two years from 2021. This target was reached in less than one year. 

Standard Bank South Africa CEO Lungisa Fuzile said the bank has set more ambitious targets for the next few years, with a total of R300 billion in sustainable financing solutions mobilised by 2026. 

This is not limited to loans and advances. The bank is also looking to expand its underwriting portfolio and arrange activities in South Africa undertaken on behalf of clients. 

Van Tonder said energy-intensive sectors such as mining, manufacturing, and retail have driven the demand for financing. 

Over the past two years, Standard Bank has supported the development of over 500 MW of renewable capacity in South Africa – enough to power 40,000 homes. 

Since 2011, the bank has committed over R250 billion to alternative and renewable energy sources and plans to increase its lending in this sector. 

“New developments through the adoption of policies towards an open market for power, including provisions in the Electricity Regulation Amendment Act (ERA) for power traders and aggregation is driving the decentralised energy models in South Africa,” Van Tonder said. 

Miners dumping Eskom

Mining companies are leading the charge with regard to reducing reliance on Eskom and slashing emissions to make their exports more competitive. 

In 2022 and 2023 alone, Standard Bank provided finance for 368MW of decentralised power. This included the Sola Group and African Rainbow Energy and Power project to power African Rainbow Minerals’ platinum mining operations using solar energy. 

The Cennergi’s Lephalale Solar Project involved project financing for a 68MW solar project to power Exxaro’s Grootegeluk coal mine, reducing emissions by 36% and supporting Exxaro’s renewable energy transition. 

More recently, Standard Bank closed and started construction on the 155 MW wind project through Seriti Green.

These projects are only a small part of mining companies dumping Eskom. From 2019 to May 2024, 16 miners registered private generation projects with Nersa. 

In 2023, Harmony Gold said its solar installations would save the mining company R425 million a year in electricity costs and help it reach net zero by 2045. It plans to finish installing solar power at its mines by 2025.

Mining is an energy-intensive industry, and Eskom’s load-shedding and load-curtailment have severely undermined real mining production in South Africa.

Minerals Council SA chief economist Hugo Pienaar said Eskom’s load-shedding and load-curtailment have harmed mining production in South Africa.

Pienaar noted that in November 2023, the country’s real mining output was still almost 4% below its pre-Covid-19 level in December 2019.

Former Reserve Bank deputy governor Kuben Naidoo said the mining sector’s declining output has saved the country from load-shedding in the past few months.

He explained that South Africa’s mining sector is the country’s largest electricity consumer, and its declining output over the past two years has substantially reduced its demand for energy. 

Lower commodity demand, elevated operating costs, and logistical bottlenecks have effectively capped the mining sector’s growth and, thus, its demand for electricity. This has unintentionally helped Eskom stave off load-shedding.

“My personal view is that half of the reason we don’t have load shedding is because the mining sector is in a deep recession,” Naidoo said. 

“If you switch on the mining sector, I think load shedding will return, so we still need to continue investing in renewable energy and other energy sources to break that constraint.”