Standard Bank to pump R65 billion into renewables by 2025

Standard Bank aims to have financed R65 billion worth of renewable energy projects by the end of 2024 as part of its targeted R250 billion of sustainable finance by the end of 2026. 

This was revealed in Standard Bank’s results presentation for its 2023 financial year, where the bank posted record profits and provided an update on its progress in achieving the ambitious goals listed in its 2022 Climate Policy. 

Standard Bank’s financing of renewable projects has risen with demand to over five times greater than the bank’s funding of non-renewable energy 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. 

Now, Africa’s largest bank by assets aims to fund R65 billion worth of renewable energy by the end of 2024. 

Demand in South Africa, in particular, has increased exponentially since the government lifted the cap on private generation projects at the beginning of the year. 

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. 

To meet this demand from large clients looking to go completely off-grid in South Africa, Standard Bank funded over 1,800 MW worth of renewable energy projects. 

The bank also provided over R2 billion in loans to small businesses to help them access alternative energy sources. Over R145 million was disbursed to individuals to install solar in South Africa. 

Demand for home solar solutions in South Africa jumped 400% last year, with Standard Bank’s LookSee growing its lending to nearly R3 billion. 

This forms part of the bank’s overall target of R250 billion in sustainable financing by the end of 2026. So far, it is 42% of the way to completing this target. 

Over R50 billion was mobilised towards sustainable finance in 2023, with most of the funding going towards South African clients. 

However, the bank has noticed a pickup in demand in the rest of the continent, including Namibia, Kenya, and Nigeria. 

R1 trillion up for grabs

Standard Bank South Africa CEO Lungisa Fuzile

South African banks are competing to dominate the financing of South Africa’s rapidly growing renewable energy sector, with an investment opportunity valued at R1 trillion

While this is partly driven by the need for businesses to reduce their carbon footprint, the main driver in South Africa is the need to provide a solution to the country’s energy crisis. 

Standard Bank South Africa CEO Lungisa Fuzile said late last year, “We have to balance addressing the challenge of the energy crisis with the opportunities for the just energy transition.”

The bank estimates the value of the energy transition in South Africa to be R1 trillion, and it wants to capture a significant portion of the value. 

“When we are successful, Standard Bank can capture a significant portion of the estimated R1 trillion renewable energy investment opportunity,” Fuzile said. 

“We ought to be the go-to financial services provider for the energy transition in Africa as the continent’s largest bank.”

The bank calculated that – of the 1.6 million South African households that are bondholders – about 1 million may be able to take on more credit comfortably. 

If each of them did solar installations or other alternative energy solutions with R250,000 for their homes, the total credit opportunity for banks would be R250 billion. 

Corporations and businesses consume most of the electricity used in South Africa (80%), with households using the rest (20%). 

However, some industries, such as mining, have a lot of money and don’t need to borrow money to pay for their energy needs. 

So, it assumed that corporations and businesses would invest three times more in energy solutions than households, which would mean an investment of R750 billion.