In order to promote photovoltaic investment and solve the problem of unstable power supply, the South African government launched the Energy Rebound Loan Guarantee Scheme (EBB). The scheme was launched in response to South African President Cyril Ramaphosa’s commitment to provide loan guarantees for the installation of photovoltaic systems in South African small and medium-sized enterprises and households. The initiative aims to increase photovoltaic power generation, increase resilience to power shortages and promote the adoption of cleaner energy solutions.
Under the Energy Bounce Back Loan Guarantee Scheme (EBB), the South African government will cover 20% of the initial losses through a government guarantee administered by the South African Reserve Bank. This will give financial institutions the confidence to provide loans for investments in rooftop PV systems, including the procurement of PV modules, PV cells, inverters and associated installation costs. The Energy Rebound Loan Guarantee Scheme (EBB) will operate through several main mechanisms:
• Small Business and Household Rooftop Photovoltaic Loan Guarantee: This program provides loans to small and medium-sized businesses and households investing in rooftop photovoltaic systems, enabling businesses and individuals to transition to cleaner energy.
•Energy Services Company Rooftop Photovoltaic Loan Guarantee: This facility supports energy services companies that provide leases, installment sales and power purchase contracts to small and medium-sized enterprises and households, allowing them to obtain reliable and clean energy without upfront costs.
•Working capital loans for rooftop PV supply chain: Businesses involved in the rooftop PV supply chain can obtain working capital loans to meet growing demand and reduce supply delays.
•The Industrial Development Corporation (IDC) will also introduce a separate mechanism to facilitate the entry of new energy services companies and expand the scale of existing energy services companies through mezzanine financing vehicles.
Eligible businesses with a turnover of up to ZAR 300 million, informal traders and non-bank lending institutions can participate, but must meet the requirements. The scheme will provide loans of up to R10 million to businesses and R300,000 per household to purchase rooftop photovoltaic systems. Loans will be capped at the repo rate plus a maximum interest rate of 6%, promoting interest rate competition among participating banks and financial institutions.
The Energy Rebound Loan Guarantee Scheme is part of South Africa’s wider strategy to encourage the adoption of renewable energy, boost economic growth and mitigate the effects of unstable electricity supplies. The program will last until August 30, 2024.
By providing financial support for investment in photovoltaic systems, the South African government aims to drive the adoption of sustainable energy, increase electricity generation and build resilience to power challenges.