Cape Town, South Africa’s second-largest city, has secured a $157 million loan from Germany’s KFW Development Bank to accelerate its transition to green energy programs and enhance energy security.
The funding, which was agreed in December 2024 and will be signed this week, is expected to support renewable energy projects, reduce the city’s dependence on South Africa’s struggling national grid, and foster sustainable development.
The development bank said the loan will be used to bolster the city’s power grid and allow the generation and transmission of more renewable energy.
“The purpose of the investment is to improve the grid infrastructure of Cape Town to allow for the future integration of more renewable energy and an increase of grid-connected households,” an emailed response from KWF reads.
Highlighting the potential benefits of the investment, Christoph Rauh, KFW’s Director for Southern Africa said:
“Germany is proud to support Cape Town’s green energy ambitions. This partnership reflects our shared vision for a sustainable future and underscores the importance of international collaboration in addressing climate change.”
The loan agreement comes at a crucial time as South Africa continues to face energy supply challenges.
Cape Town plans to use the funds to develop solar and wind power projects, improve energy storage capacity, and modernize grid infrastructure.
Cities across South Africa are gradually reducing their reliance on the state-owned utility, Eskom Holdings SOC Ltd., which has been managing power cuts amid surging electricity prices.
Earlier this week the country was hit with its worst rolling blackouts in almost a year after units at some of Eskom’s coal-fired power plants tripped.
However, three days ago, the power utility scaled down electricity outages following the recovery of multiple generation units.
Reacting to the news Geordin Hill-Lewis, Mayor of Cape Town hopes the funding will be a game changer for the people of the municipality.
“This loan marks a significant step in Cape Town’s commitment to building a resilient and sustainable energy future. With the support of KFW, we can invest in renewable infrastructure and reduce load shedding impacts on our residents and businesses,” Geordin said.
With this funding, Cape Town aims to build an homegrown energy solution that will gradually reduce its reliance on the embattled Eskom, which now approaches the government for bailout to resolve municipal debt that has topped 95 billion rand ($5.2 billion).
