German state-owned investment and development bank, KfW, has entered into an agreement with South African development finance institution, Industrial Development Corporation (IDC), for the provision of €23.1 million for the country’s transition to renewable energies.
KfW is issuing the funds on behalf of the German Federal Ministry for Economic Cooperation and Development.
The IDC will use the funding to enhance the country’s green hydrogen value chain through the implementation of large-scale projects for production and application. The funds will also address the current impediments to industry growth by mitigating the high production costs of green hydrogen products, thereby enhancing market profitability and fostering increased interest from the private sector.
Christiane Laibach, Member of the Executive Board of KfW Group, stated that the development will help South Africa maximize the exploitation of its vast land and renewable energy potential to position itself as a globally competitive green hydrogen exporter.
“At the same time, our support makes a significant contribution to South Africa’s economic development and job creation, thus contributing to a socially acceptable energy transition in South Africa,” Laibach added.
The financing package falls under the Just Energy Transition Partnership – a program aimed at fostering the growth of South Africa’s renewable and green hydrogen economy. The partnership has already raised $9.6 billion from western governments to support the deployment of renewable energy technologies.