The World Bank Group’s Board of Directors has approved South Africa’s request for a loan valued at US$497 Million for decommissioning and repowering of the Komati coal-fired power plant with renewable energy and batteries.
International assistance for Energy Transition
The last Komati unit was shut down on 31 October. According to national electricity utility Eskom, the shutdown was intended to signal the start of a repowering and repurposing of the site into a centre for renewable energy, storage, production and training.
The World Bank has identified the project as the “Komati Just Energy Transition Project” and will consist of repowering of the plant by means of installing 220 MW of clean energy solutions, including 150 MW of solar PV and 70 MW of wind power, supported by 150 MW of batteries.
The Komati Just Energy Transition Project will be jointly financed by a $439.5 million loan from the World Bank, a $47.5 million concessional loan from Canada’s Clean Energy and Forest Climate Facility and a $10 million grant from the Energy Sector Management Assistance Program.
The announcement for further funding came shortly after the release of the World Bank’s South Africa Country Climate and Development Report, which estimates that South Africa’s transition to net-zero energy by 2050 will require a total of R8.5 trillion in additional financing, and that the financing gap can only be filled with the help of external resources.
South Africa’s Finance Minister Enoch Godongwana reinforced his commitment to the government’s framework for an equitable energy transition.
The financing package was announced just days before the start of the COP27 climate talks in Egypt, where South Africa is expected to present a Just Energy Transition Investment Plan (JET-IP) that could help secure $8.5 billion in climate finance from France, Germany, the United States, the United Kingdom and the European Union.
South Africa’s Minister of Public Enterprises, Pravin Gordhan, said the project was critical to how South Africa could mitigate the socio-economic impact of closing coal-fired power plants through repurposing.
“It is part of the implementation of the country’s 2019 Integrated Resource Plan, which aims to phase out 12 GW of our old and inefficient coal-fired power plants by 2030 and develop 18 GW of renewable energy from the private sector over the same period,” Gordhan stated.
Affected stakeholders
The bank added that under the Komati project, workers would be supported through a comprehensive transition plan. It said Eskom had already either transferred workers to other power plants or planned to include them in Komati’s repowering and repurposing projects.
According to the World Bank, the project will also create opportunities for the affected workers and communities. Eskom has already established a containerised microgrid assembly factory in Komati and recently signed a partnership agreement with the South African Renewable Energy Technology Centre and the Global Energy Alliance for People and Planet to establish a Komati training facility.
The World Bank report also affirmed that renewable energy was the fastest and cheapest way out of South Africa’s electricity crisis and that pursuing such a path would create two to three times more jobs than the 300 000 jobs likely to be lost in the emissions-intensive sectors.
The World Bank stressed that the Komati project is in line with the country’s Just Transition Framework. The framework aims to minimise the socio-economic impacts of climate change, improve the livelihoods of the most vulnerable populations, and seize opportunities arising from change.
The Bank said part of the project financing will also be used to create economic opportunities for local communities, which is expected to benefit about 15 000 people. According to the bank, community-based projects, skills training, business start-up support and business development services for new and existing micro, small and medium enterprises are expected to create jobs in agriculture, local manufacturing and digital technology.
South Africa set to become a global reference
The bank added that the repowering and repurposing of the Komati coal-fired power plant was a benchmark project that could serve as a reference for future fossil fuel conversion projects in South Africa and around the world.
According to the bank, the project will provide learning experiences through a cycle of piloting, monitoring, evaluation, documentation and information sharing.
The closure of the Komati plant represents a good first step towards low-carbon development, they added. The Bank is working with government, civil society and trade unions to create economic opportunities for affected workers and communities.
The bank said the Komati project would also contribute to mitigating climate change as the decommissioning of Komati would lead to an immediate reduction in carbon emissions and an improvement in air quality.
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