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Case study

DBSA’s innovative blending financing mechanism to catalyze small scale renewable energy market in South Africa

In line with DBSA mandate on financing energy infrastructure, a strategic decision was taken at board level to provide financing resources that would help catalyze the small scale renewable energy sector in South Africa. DBSA as an agency of the Global Environmental Facility (GEF), further mobilized equity funding for the small scale projects.
Key points
  • It is crucial for the DFIs to align their strategic priorities to national policies in this case, the SA National Development Plan 2030, the Integrated Resource Plan (IRP) 2030 and SA’s Nationally Determined Contribution (NDC).
  • It is essential for DFIs to support governments in implementation and realization of national policy and established targets in building a low carbon and resilient transition process thus creating an enabling environment that opens up new technologies particularly in both the small and large scale RE market, as is the case in South Africa.
  • Initiatives that incorporate the climate change phenomenon into a country’s strategic priorities such as an energy mix benefit from early senior leadership buy-in at all stakeholder levels.
  • DBSA’s partnerships with other climate financing mechanisms such as GEF and IIPSA funding were crucial in establishing innovative blended resources, particularly for risky markets.