Africa’s largest bank, Standard Bank, is committed to financing R250 to R300 billion worth of sustainable projects between 2021 and 2026, with an initial target of R50 billion already exceeded.
CEO of Standard Bank’s corporate and investment banking division Kenny Fihla told CNBC Africa that the bank is seeing increased demand for funding from renewable projects across the continent.
Standard Bank wants its lending portfolio to reach net-zero emissions by 2050, and according to Fihla, the bank is well on the way to reaching that target.
Fihla said the company is seeing increased demand from its clients for funding for renewable projects ranging from government-run Independent Power Producer projects to off-grid private sector projects.
Demand has increased exponentially since the government lifted the cap on private generation projects at the beginning of the year.
Standard Bank’s financing of renewable projects has risen with demand to over four times greater than the bank’s funding of non-renewable energy projects.
Fihla said they expect to finance between R250 to R300 billion worth of sustainable projects by 2026.
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.
Fihla said most projects are in South Africa, with the bank starting to see demand pick up in Namibia, Kenya, and Nigeria.
In South Africa, the mining sector is the major player in building large renewable projects to mitigate the effects of load-shedding and diversify their energy streams away from fossil fuels.
However, despite the increased demand, there are significant constraints to the rollout of renewable energy in Standard Bank’s home market.
“There are transmission network constraints, particularly in the Northern Cape, which is ideal for solar projects. Because of this limited capacity, those projects cannot connect to the grid,” Fihla said.
It is not enough to expand the financing of renewable projects. Standard Bank will also have to find ways to support Eskom to expand and upgrade its grid. This will result in load-shedding continuing for longer.
“It will be 18 to 24 months before we can see adequate connections to the grid from projects under construction. That will make a significant impact on energy supply.”