Germany’s KfW Group loaned Eskom Holdings SOC Ltd., which supplies 95 percent of South Africa’s electricity, 4 billion rand ($338 million) to make the nation’s power grid fit for an increasing share of renewable generators.
The loan will help connect solar and wind power plants by modernizing transmission and distribution networks, KfW said Wednesday in an e-mailed statement. It’s KfW’s biggest local currency financing yet to an emerging economy.
“This adjustment of the energy supply is a big step for South Africa away from dependency on coal and toward sustainable power generation,” Norbert Kloppenburg, a management board member at KfW, said in the statement.
South Africa’s electricity supply system has been plagued by rolling blackouts that have curbed mining and manufacturing, both knocked by strikes that limited 2014 growth to the slowest pace since a 2009 recession. The country’s economy could have been 10 percent larger if power shortages hadn’t stifled growth and investment and put the nation’s debt at risk of being cut to junk, economists’ estimates show.