UK Government commits £2.4 million for tech assistance in four energy sector projects in South Africa

  • The UK and South Africa have committed to working together to accelerate action on climate transition.
  •  The UK Government has committed up to £2.4 million to finance four new technical assistance projects in the energy, finance and green hydrogen sectors. 

Two of the four new projects will support the municipal energy sector, with one project exploring electricity pricing and market design barriers to the just energy transition in South Africa and the other enabling municipal energy procurement and generation through contract development and capacity-building. A third project will be supporting the advancement of the hydrogen economy, analysing the infrastructure demands and viability of the production and export of green hydrogen from the Eastern Cape. Finally, technical assistance within the finance sector will improve South Africa’s alignment with global green taxonomies, supporting the global flow of capital to leverage greater green investment for South Africa.

These just energy transition projects are strategically aligned to national priorities and key policy areas, identified through consultations with government counterparts. They will support the Government of South Africa’s commitment to reducing carbon emissions in accordance with the highest end of its Nationally Determined Contribution (NDC).

What new projects is South Africa-UK PACT funding?

  • Rebuilding the grid from the bottom up: led by Sustainable Energy Africa, this project will enhance stakeholder capacity for sector reform through targeted research. Across a series of policy briefings papers and public videos, this project will unpack electricity sector risks in South Africa and propose mechanisms to safely transition to a liberalised electricity market. It will also improve understanding of pricing trajectories and their impacts on social transfers. The project will drive collaborative thinking and consensus-building in the energy sector around these themes. It will inform the development of South Africa’s electricity sector to maximise the benefits of private sector participation and cost-competitive renewable energy.
  • Enabling municipal energy procurement and generation, support to the South African Local Government Association and selected municipalities: The project comprises two streams, the first stream, led by the University of Pretoria, will equip municipalities with reference guides and procurement materials to enable them to run programmes to procure the services of independent power producers. These materials will accommodate several different renewable energy technologies and will take into consideration different types of municipalities. Through a comprehensive training programme, key personnel in municipalities will be empowered to effectively implement a reliable initiative for independently procuring energy, with the ultimate goal of increasing capacity to implement a just energy transition. The second stream, led by Sustainable Energy Africa, will focus on municipal-owned renewable energy generation. A series of contracts templates and guidelines will be developed in collaboration with three pilot municipalities, who will be supported to embark on the process of procuring renewable energy generation assets. These municipalities will be equipped with essential capacity and skills, to create businesses centred on sustainable network services, and will provide extended legal, financial and technical support along their procurement journey. Success in these municipalities is expected to lead to replicable and scalable impact in areas where it is most needed.
  • Eastern Cape green hydrogen production and export infrastructure feasibility study: led by Nelson Mandela University, this project will produce a detailed feasibility study focusing on infrastructure needed to enable green hydrogen production and export from the Eastern Cape region. The project aligns with South Africa’s Green Hydrogen Commercialisation Strategy, which emphasises green hydrogen export as one of the sector’s key strategic objectives, aimed at enabling the country to secure an early position in the global H2 export market and further develop a competitive trade position. The outputs of this study will be crucial in accelerating efforts led by multiple stakeholders to advance the green hydrogen export agenda in the Eastern Cape, whilst considering the associated socio-economic and environmental opportunities for the region.
  • Increasing international alignment and interoperability of South Africa’s Green Finance Taxonomy: led by GreenCape Sector Development Agency, this project will build on the development of South Africa’s green finance taxonomy. It will enhance the integration of South Africa’s green finance taxonomy, data disclosure standards, and methodologies with those of the UK and other markets. The goal is to simplify the reporting requirements and lower compliance costs for cross-border green investments entering South Africa. With 91% of South Africa’s tracked climate finance sourced domestically and the remaining 9% sourced internationally, an aligned green finance taxonomy should act as a catalyst for more international finance into South African climate-related projects, further driving jobs and investment. The project will further address barriers affecting the alignment of South Africa’s decarbonisation pathways and investment trajectories with global scenarios and benchmarks.

Author: Bryan Groenendaal

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