Expand grid, address Eskom solvency to unlock private investment, says US Treasury rep | Fin24

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International partners of the $8.5 billion COP26 pledge to support South Africa's transition to a low carbon economy highlight the need for further private investment.

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International partners have committed to help South Africa's transition away from coal and towards clean energy.The US Treasury's John Morton notes progress SA has made to unlock private investment, but Eskom's solvency and the expansion of the transmission network are still crucial to address.German Consul-General Tanja Werheit says the country has committed $800 million to support SA's transition, most which is loans.

The US, along with Germany, France, the EU and UK, last year at COP26 committed to mobilising $8.5 billion (~R130 billion) in the next three to five years to support South Africa's efforts to decarbonise. The funding is targeted at the energy sector and the development of the hydrogen economy and the electric vehicle industry.

Germany's Consul General Tanja Werheit, highlighted that the country's contribution is $800 million. It comprises grants – which make up 20% of the contribution – and the rest is loans.While the partners acknowledge the funding must support South Africa's development objectives, Morton said that the US would be"concerned" about"public steps" that suggest new coal has any place in South Africa's energy mix.

He acknowledged the progress South Africa has made to attract private investment in the electricity sector. Morton said that the licensing threshold for generation projects being lifted from 1MW to 100MW is among the key policy reforms that signal that the South African government is serious about reforming the energy sector. Another critical factor is the unbundling of Eskom.

Part of the $8.5 billion funding will support the rollout of the grid to connect new renewable energy projects and move that power to where it is needed. Between 8 000km and 10 000km of new transmission lines are required and it will take about 10 years to build, he explained. It will cost about R131 billion to expand the transmission network, he added.

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