South Africa’s Renewable Energy Investment Hinges on Legislative Stability

Consistent Laws Crucial for Green Energy Progress in South Africa

by Ikeoluwa Juliana Ogungbangbe

 Following recent governmental shifts after South Africa’s May 29 elections, experts emphasize the importance of maintaining a stable and clear legislative environment to encourage continued investment in renewable energy. In a recent media roundtable at Absa Corporate and Investment Banking’s headquarters in Sandton, Msizi Khoza, the head of environmental, social, and governance, stressed the critical need for clear regulations to sustain and enhance green energy initiatives.

Khoza highlighted that historically, the renewable energy sector has experienced significant growth when supported by consistent and straightforward legislation. He explained that the sector witnessed massive investments and capital inflow following legislative changes. With the current governmental changes, he emphasized the importance of continuous support for renewable energy targets, particularly through the Renewable Energy Independent Power Producer Procurement Programme, to maintain investor confidence and ensure steady progress in the sector.

The dialogue also covered the broader challenges faced by South Africa and Africa in accessing global capital flows dedicated to climate change initiatives. Khoza elaborated on the major barrier of the lack of a clear roadmap, pointing out that the Climate Change Bill is a critical piece of legislation that needs more focus. He argued that clear legislation is pivotal for boosting investor confidence and facilitating investments in sustainable projects.

Linda Sing, Absa’s executive for regional operations strategy and business transformation, expressed concerns about the potential exclusivity of sustainability investments. She remarked that true success lies in how well sustainability integrates into community levels and advocated for greater inclusion and grassroots engagement in sustainability efforts.

Sing also highlighted the need for significant and substantial partnerships with communities to ensure a lasting impact and support sustainable national development, emphasizing that sustainable finance should be more accessible to smaller businesses.

Manuele Battisti, the country manager for Enel Green Power Southern Africa, spoke about the necessity of a stable investment framework to support long-term sustainability projects. He explained that predictability in investments, spanning at least three to six years, is crucial for large companies and noted the stabilization of these frameworks in key African markets, which is vital for the electricity sector.

Discussing financing, Khoza reiterated Absa CIB’s position on funding energy projects. He stated the bank’s commitment to not supporting new coal-fired power generation projects but considering opportunities for financing components like carbon capture. Their focus is on supporting a balanced energy mix crucial for transitioning to more environmentally friendly energy solutions while recognizing the current dependency on coal and the need for enhancing its efficiency and reducing its environmental impact.

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