Spain invests $2.3 billion in South Africa's energy transition

Spain has raised €2.1 billion ($2.3 billion) through a variety of financial instruments to invest in South Africa's energy transition and water requirements. To establish a "tailored" funding structure, the government is collaborating with its development finance institution, COFIDES, and the Industrial Development Corporation of South Africa.

South Africa produced an energy transition investment plan in 2022, estimating it would need at least $96 billion over the next five years to fund its transitioning programme. At COP 26 in November 2021, the governments of South Africa, France, Germany, the United Kingdom, the United States of America, and the European Union announced a new ambitious, long-term Just Energy Transition Partnership (JETP). The Spanish initiative is consistent with the goals of the Just Energy Transition Partnership, despite not being a part of it.

The $2.3 billion funding comes at a time when frequent breakdowns of aging coal-fired plants have subjected the country to a rotational loadshedding lasting more than six hours a day. The funding will assist in achieving the objective of accelerating the decarbonization of South Africa's economy in order to achieve the ambitious objectives outlined in South Africa's updated Nationally Determined Contribution emissions targets.