Standard Bank’s financing of renewable power generation projects out-strips fossil fuels power generation projects by 439%
Standard Bank is accelerating its financing of renewables to catalyse Africa’s energy transition, its financing of renewable power generation exceeding its non-renewable energy power generation by a ratio of 4.9 to 1.
“This means our financing of renewable energy is 439% greater than our financing of non-renewable energy. Put differently, Standard Bank financed R4,39 in renewable energy for every R1 lent to non-renewable power in 2022. This is a strong indication of our commitment to support sustainable finance and renewable energy efforts, and how Standard Bank is sharpening its focus on renewable energy initiatives on the continent,” said Standard Bank’s Chief Executive for Corporate and Investment Banking, Kenny Fihla.
He noted that this achievement is significant, especially when compared with world’s largest financiers. A recent study found that global financial institutions belonging to the Net-Zero Banking Alliance (NZBA) are lagging far behind the energy supply banking ratio of 4 to one (i.e., financing for low-carbon energy projects relative to financing for fossil fuels), recording a 0.92 to one ratio.
Briefing the media on the progress the bank has made since the launch of is climate policy in March 2022, Fihla said Standard Bank was tracking ahead of its target to raise a cumulative amount of between R250 billion to R300 billion for sustainable finance by the end of 2026.
“We exceeded our R40 billion 2022 goal by executing 29 sustainable finance transactions with a total value of R55 billion as we ramped up our origination efforts to support our clients to achieve their climate and sustainability goals. Our 2023 run rate to date is tracking higher compared to the same period last year, and this – together with our rich project pipeline – bodes well for this year’s R50 billion mobilisation targets,” said Fihla.
Standard Bank takes Africa’s social, economic and environmental context as the starting point for its climate policy commitments. It aims to achieve net zero carbon emissions from its own operations by 2040 and from its portfolio of financed emissions by 2050, aligned to the Paris Agreement.
The bank’s climate policy sets out progressive short, medium, and long-term targets to reduce its contribution to carbon emissions and accelerate its sustainable finance commitments with a focus on renewable energy projects across Africa. It has set commitments and targets for thermal coal, oil and gas, and is in the process of setting targets for commercial and residential property, based on their identified levels of elevated climate risk.
Fihla said most of Standard Bank’s renewable energy projects are currently under construction, largely those awarded during Bid Window 5 of the Renewable Energy Independent Power Producers Procurement Programme, and the Emergency Energy Round of initiatives in South Africa. Others relate to self-generation by mining companies and other large corporates.
The total energy output expected from these projects is 900 MW, equivalent to about 20% of Eskom’s currently installed capacity, with Standard Bank Group supporting nearly 30% of these.
Fihla added that Standard Bank had also taken a decision to support Eskom to the tune of R10 billion to roll out its transmission network. However, this did not constitute the bank’s exposure to fossil fuels, but to help Eskom expand its transmission network to connect to the renewable projects, largely in the Northern Cape. “Protecting Eskom is key to the continued function of the South African economy,” said Fihla.
Looking ahead, Fihla said Africa’s energy transition opportunity is huge, but local financial institutions lacked sufficient capital muscle to seize it meaningfully. To this end, Standard Bank has identified six energy transition levers that will drive its origination of energy opportunities underpinned by an ambition to be the leading enabler and go-to financial services provider for Africa’s energy transition.
- Renewable energy
- Decentralised Energy
- Gas as a Transition Fuel
- Critical Minerals
- Green Hydrogen; and
- Revolution in Transport
“As Standard Bank Group, we need to tap into different sources of funding in order to make a meaningful impact by forging better relationships with development finance institutions who want to invest in these opportunities, but they do not have the origination, credit and risk management capabilities on the continent. We want to structure our deals in a manner that will allow investors to come in to free our hands in order to support more clients”.
Other Standard Bank 2022 highlights:
- Arranged three sustainable finance bonds to the value of R2.8 billion
- Raised three treasury transactions in a sustainable format across the group amounting to R14.8 billion
- Enabled access to renewable by energy and energy efficient solutions for homeowners and businesses by financing solar photovoltaic (PV) installations with 147 GWh of green energy capacity per annum
- Helped 365 green energy solution providers grow their businesses
- Saved homeowners more than R5.5 million through solar installations and smart home solutions
More recent highlights
- Interest in our home efficiency platform LookSee has grown by 550% in the last year.
- Our Solar Score tool has seen an astonishing increase in its use. Since the release of the LookSee Solar Score in early December 2022, there has been a 2 839% increase in the number of unique visitors using this score calculation feature.
- To date we have generated more than 10,000 home power analyses to help home owners understand their solar and back-up needs.
Residential solar lending
- In the past 6 weeks, we have seen over R140m worth of accepted quotes for Future Use allowances with new home loan applications for Solar and other home improvements in our home loans portfolio
- Received more than R60m worth of Readvance requests in 2023 for existing home loan customers specifically wanting to install solar
- We are gearing up to participate in the recently announced SARB Solar Bounce Back programme
- We are also actively doing our bit in helping with demand management, and have installed over 1300 Smart Geyser devices into homes. This assists with reducing the burden on the grid that geysers impart by managing temperature and water heating time.
FOR MORE INFORMATION CONTACT:
Standard Bank Media Relations
Email – [email protected]