FRB CLIMATE ACTION FACILITY

The facility will provide funding to FirstRand Bank Limited (FRB) to support the development and upscaling of solar photovoltaic and wind renewable energy investments in South Africa, in line with the EIB Climate Action eligibility criteria.

The aim is to enhance access to finance for independent power producers operating in South Africa to implement low-carbon and climate resilient project, which will lead to a substantial reduction of carbon emissions.

The present operation will finance 100% Climate Action investments in solar photovoltaic and onshore wind renewable energy embedded generation projects in South Africa, by providing an intermediated Framework Loan to one of the main finance institutions in South Africa. Projects under this operation will enable investments into renewable energy, leading to carbon emission and air pollution reductions by promoting additional renewable generation capacity in the country. This Framework Loan is therefore in line with EU priorities in the country objectives, while addressing the existing failures of the energy market, namely negative environmental externalities and incomplete markets.

The operation demonstrates strong strategic alignment with the Multiannual Indicative Programme (2021-2027), which lists Environment/climate change" as a cross-cutting issue, and with EU policy goals in South Africa, while addressing the existing failures of the energy market, namely negative environmental externalities and incomplete markets.

The project quality and results for this operation are deemed to be very good mainly due to the high social benefits expected by generating clean and renewable power at a lower cost compared to the fossil-fuel based alternatives in the country.

This operation will contribute to improving FRB's funding terms in the renewable energy sector. It will provide FRB a long-term table source of funding with a choice of currency, including ZAR.

The operation intends to generate environmental benefits by supporting renewable energy (i.e. solar photovoltaic projects, onshore wind) schemes that help to mitigate climate change. The underlying schemes would fall under the Annex II of the Environmental Impact Assessment (EIA) Directive 2014/52/EU (amending Directive 2011/92/EU), if located within the EU, requiring the competent authorities to determine whether an environmental impact assessment is required. In such case, the Borrower will ensure that an Environmental and Social Impact Assessment is carried out and that public consultation is undertaken in accordance with national legislation and the EIB environmental and social standards. The EIB will assess the capacity and procedures of the Borrower to ensure the underlying schemes' compliance with national environmental, social and biodiversity regulations, as well as with the EIB's environmental and social standards.

The EIB will require the Borrower to ensure that implementation of the underlying schemes will be done in accordance with the EIB's Guide to Procurement.