The deal involves US$52million for financing commercially viable clean energy projects, said the banks head of business markets Marcel de Klerk.
The agreement will enable viable renewable energy developers to access, under concessional terms, up to $13.2 million for their projects, which are critical to South Africas long term strategy to reduce the countrys carbon emissions.
At least 18 photovoltaic IPPs have been picked as preferred bidders for the generation of 631.8 megawatts (MW) in South Africa during the first bid window by the Department of Energy, and have up to next June to roll-out their investments. The proposed capacities range between five and 75 MW.
"It is for this reason that Absa has launched this loan facility to promote medium to large energy efficiency and clean production investments, with a minimum of R10 million ($1.3million) and a maximum R100 million ($13.2million), specifically within the South African market," Klerk said.
Last year, Absa Bank, through its corporate and investment banking division, Absa Capital, gave out slightly over $1billion in loans for renewable energy projects, including for photovoltaics, in support of South Africas 20-year energy expansion plan, the Integrated Resource Plan (IRP).
AFD deputy director, Damien Navizet blamed the slow pace of renewable energy expansion in South Africa to a lack of financing. "It is critical that banks understand both the risks and financial merits of clean energy and energy efficient projects, so that they are willing to create new lines of business to assist owners of such projects," he said.
Currently several photovoltaic projects are underway in the country, which can look forward to achieving financial close in the coming months. They include those being developed by The Power Company/Built Africa, Solar Capital, Italgest and AMD Energia.
The financing deal by Absa Bank comes less than six months after the African Development Bank announced a $365million deal with South Africa state-owned power generator and supply monopoly, Eskom. The loan is for the utilitys photovoltaic and wind energy projects, and is guaranteed by the government.