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Africa’s Standard Bank and the Industrial and Commercial Bank of China (ICBC) have signed a US$2bn agreement to fund renewable energy projects in South Africa

wind  vaxomaticThe deal highlights South Africa's commitment to the renewable energy sector. (Image source: vaxomatic/Flickr)

“The transaction is extremely important as it highlights the bank’s commitment to the renewable energy sector," said Standard Bank CEO, Ben Kruger.

“ICBC’s aim is to promote the use of renewable energy in South Africa in support of the South African government’s renewable energy programme, and through this partnership, to help save the environment."

The two lenders will jointly supply debt financing to firms that have been granted preferred bidder status under the country’s Renewable Energy Independent Power Producer (IPP) Procurement Programme.

This will relate to programmes where Standard Bank has been or will be assigned as a lead arranger of the transactions.

South Africa is currently holding a series of tenders primarily for wind and solar energy projects. The country has plans to supplement its energy mix, which is still heavily reliant on aging coal-fired power stations. By 2030, the country aims to increase renewables to eight per cent of energy output, from less than one per cent now.

The focus on renewable energy in South Africa has come as state power company, Eskom Holdings, is struggling to finance the expansion of its coal-power stations and meet growing demand.