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Alternative Financing for Municipal Embedded Generation

We address the resource and capacity gap of intermediary cities in applying for financing of renewable energy embedded generation projects.

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Years active:

2021 - 2022

Related ICLEI Pathway(s)

Locations

King Sabata Dalindyebo Municipality, Matzikama Local Municipality, Walter Sisulu Local Municipality, Ray Nkonyeni Municipality

Funded by

South Africa UK Pact
Funder
About

Project summary

Local governments in South Africa are looking to develop embedded energy generation projects (solar and wind power technology) to achieve municipal level goals. These projects can assist municipalities to reach climate change targets, provide affordable electricity, reduce load shedding and possibly stimulate local job creation – all desperately needed in the country. Recent policy and regulatory changes now allow certain municipalities to install these projects, however, accessing finance for these initiatives remains a challenge. The Development Bank of Southern Africa (DBSA), in partnership with the Green Climate Fund (GCF), have set up a ~ R4bn Embedded Generation Investment Programme (EGIP) to stimulate growth of embedded generation initiatives in the country. Yet, small and intermediary municipalities struggle to participate in the investment programme, due to lack of capacity and resources to meet the application requirements.

Project aims

The project will assist four intermediary cities in applying to the project preparation facility of the EGIP. From this point, bankable projects can be further developed, and investment by the EGIP leveraged for municipal embedded generation initiatives. The project will entail the following activities:

  1. Municipal policy analysis and recommendations to enable embedded generation
  2. Pre-feasibility studies of embedded generation projects
  3. A financial model for chosen projects
  4. A Capacity building training programme which will cover the following topics:
    • Introduction to climate change
    • Just energy transition considerations for urban planning
    • Gender mainstreaming in the energy sector
    • Embedded energy generation projects for cities
    • Introduction to climate finance
    • Key requirements for project pre-feasibility studies
  5. Final report and resource pack of lessons learned

The outputs from this project will further help financiers, municipalities and national entities understand the requirements for intermediary cities to apply for embedded generation funding in the future.

 

“We are looking forward to learn more, contribute more and be able to change the lives of the South Africans in our corner."
- Honourable Councilor Nyaniso Nelani: Executive Mayor of King Sabata Dalindyebo Municipality

Project highlights

Project launch

On 11 May 2021, together with DBSA, 3E and Rebel Group we launched our UK PACT project.

AFMEG will build the capacity of municipalities to develop policies, a financial model and pre-feasibility studies to access finance for embedded generation projects.

Project partners

Project news updates

team manager

Main project contact

2593

Dr Meggan Spires

Director: Climate Change, Energy & Resilience
Alternative Financing for Municipal Embedded Generation
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