Eskom has locked down a R1.35-billion loan from the German Development Bank to support the integration of renewable energy projects into the national grid.

The power utility on Friday signed the loan facility with the German bank KfW, on behalf of the German government, according to a statement. The loan is for $100-million, or roughly R1.35-billion.

It will be used to further support investment into the transmission network in the Northern Cape and facilitate the integration of renewable energy into the grid.

Earlier this year 27 renewable energy independent power producer projects (IPPs) were signed, but trade unions were vehemently against this, claiming that it would result in job losses in the coal sector.

Energy Minister Jeff Radebe had told Parliament’s portfolio committee on energy in May that the IPPs had nothing to do with job losses in the coal sector and instead would create 58 000 jobs.

Eskom further explained in its statement that the funding would go towards to the second phase of capacity and reliability improvements in Harrismith, Free State, and the greater East London region in the Eastern Cape.

“These projects will largely enhance network reliability and load-growth,” the statement read.

The loan facility forms part of Eskom’s R72-billion funding requirement for the 2018/19 financial year. Eskom’s board had approved the borrowing plan in April.

The loan facility is also part of the funding Eskom intends to sign with developing finance institutions this year.

“The successful conclusion of this agreement between Eskom and KfW validates the bank’s continued commitment towards Eskom and it is an indication of the strong partnership and co-operation between Eskom and KfW,” said group CEO Phakamani Hadebe.

“The facility demonstrates the improved market sentiment and confidence in the ability of the Eskom leadership to direct the company on the correct path to recovery and sustainability.”

Hadebe also explained that more renewable sources of energy would help reduce the country’s carbon emissions.

The KfW had extended to Eskom a R3.9-billion loan in March 2015 with the introduction of the Renewable Energy Independent Power Producer Procurement Programme. ― Fin24