Loan financing for energy efficiency

Submitted by: Margaret McKenzie, Monday, October 24, 2011

Energy efficiency is often an excellent investment for business, with the upfront costs being paid back through savings in a relatively short time. However, many businesses are constrained by the inability to access capital for the initial costs.  

The Industrial Development Corporation (IDC) in association with German development bank KfW has announced a R500 Million Green Energy Efficiency Fund aimed specifically at businesses without the access to ready capital to finance efficiency interventions. The fund offers loans at prime minus 2% for anything from R1 Million to R50 Million. The loan period will vary depending on expected payback, but can be up to as much as 15 years.

Who is eligible to apply?

The fund specifically targets Private Sector Companies that are registered and operating in South Africa. Priority will be given to companies that have less than or equal to:
a) R51.0 million turnover or
b) R55.0 million assets or
c) 200 employees

What can be funded?

The fund is for equipment and technologies that do one or more of the following:
a) Perform multiple functions in one pass rather than separate passes or that benefit from variable controls.
b) Produce a higher quantity of products with less defects/wastage and ultimately results in lower energy use per unit of useful products produced.
c) Use less energy to provide the same amount of useful work such as high efficiency modernized boilers, compressors or insulation materials.
d) Make use of renewable sources rather than from fossil fuels (solar heat, boilers fuelled by wood, straw, electricity generation, wind turbines etc)

What is the application process?

Interested business should complete the application form on the IDC website. The IDC will then review the application to determine if it eligible. Once eligibility has been determined applicants will have to complete a detailed business plan.

Additional Benefits

The IDC has also indicated that it will make technical experts available to support enterprises that are eligible for funding. The experts can assist with energy audits, identification of energy solutions, the development of investment proposals and the selection of appropriate equipment and technologies.

Margaret McKenzie