SA has an opportunity to vie for its share of global green funds ahead of the UN Climate Change conference in November, Eskom CEO Andre De Ruyter says.
Speaking at the African Energy Indaba, which is taking place virtually this week, De Ruyter said that Eskom’s constrained finances renders it unable to invest in SA’s power generation capacity as required.
SA continues to grapple with a power supply crisis which looks set to widen in coming years as reform of the energy sector remains too slow to stop it.
The conference, also known as COP26, is the foremost global forum for multilateral discussion of climate change matters and, according to De Ruyter, presents an “exciting opportunity” for SA.
“There is a really great appetite leading up to COP26 in Glasgow, to put together green financing deals and we think there is a great opportunity for SA in particular to position itself as one of the countries, ironically with a very large carbon footprint but a carbon footprint that is reaching the end of its life, and [which] therefore can transition in a just way to a cleaner and green future,” he said.
“That is the perspective we at Eskom have of the current crisis but also of the opportunity that this crisis presents for us going forward.”
De Ruyter said the utility continues to work to unbundle itself into three business units — transmission, distribution and generation — in earnest with the establishment of an Independent System and Market Operator being prioritised precisely to enable SA to attract greater private capital to the power generation sector.
Peter Attard Montalto, head of capital markets research at Intellidex, said there is a lot of theoretical interest from international finance institutions and developmental finance institutions in doing transition financing with Eskom, even in very large size, but it’s dependent on the sovereign, not Eskom, making net zero commitments by 2050.
Net zero commonly refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere.
President Cyril Ramaphosa, in his state of the nation address in early February, said Eskom has committed “in principle” to net zero emissions by 2050. But this missed the mark, Attard Montalto said.
“This ignores Sasol, transport and all the other issues,” he said. “[De Ruyter] is saying the right things but is ultimately beholden to the sovereign on making these commitments in a timely manner well before COP26. Funders have set having sovereign net zero as a key condition for such financing becoming available.”
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