The new Blended Finance Taskforce report makes the case for alternative capital structures that can unlock $14-22bn for South Africa’s energy grid.
“Better Finance, Better Grid” was developed with Stellenbosch University’s Centre for Sustainability Transitions and the Centre for Renewable and Sustainable Energy studies. It finds that using catalytic capital to strengthen the transmission grid is both critical and urgent to transition to a more secure and equitable power system.
South Africa needs investment for an eightfold acceleration in its build-rate of transmission lines. Investing in its electricity infrastructure contributes to ensuring energy security, tackling load shedding and delivering low-carbon growth and green jobs.
Alternative capital structures, which allow grid infrastructure to be financed off-balance sheet, can help unlock the capital needed. De-risking proven models like Independent Transmission Projects with catalytic funding from programmes like the just Energy Transmission Partnerships (JET-P) can play a crucial role in accelerating progress. Optimising the existing grid while building new transmission infrastructure is key to bring up to 20 GW of renewable energy online in the next 4-5 years.
”The grid has been the Cinderella of the energy system for many years. It has been neglected, and therefore there are large sections that need to be rehabilitated and major extensions are needed. More than 3 GW of renewable generation projects are not happening because there is no capacity to connect them.
Professor Mark SwillingDirector of the Centre for Sustainability Transitions
The report finds that the only way to add new renewable generation capacity in the short term (4-5 GW per year) is by optimising the use of existing transmission infrastructure capacity. Building new infrastructure typically takes 7-10 years and therefore does not provide a solution for 16-20 GW of new generation capacity to be built and connected in the coming 4-5 years.
The report lays out the options for optimising the use of current infrastructure by (1) focusing new generation projects in areas with existing transmission grid capacity and (2) maximising the amount of generation capacity connected at any specific location. Upgrading infrastructure with additional transformers could unlock up to 17GW of grid capacity, with connecting renewables at decommissioning coal sites and increasing rooftop solar generation potentially adding up to 18GW of additional capacity.
