StanChart pledges $300 billion for green energy

From the newsletter
British multinational bank, Standard Chartered (StanChart), has pledged to mobilise $300 billion in green and sustainable financing by 2030. This announcement was made by Kenya and Africa CEO Kariuki Ngari at the Energy Summit in Dar es Salaam this week. The bank projects $1 billion in income from sustainable energy projects in 2025.

• This commitment comes at a time when Africa is pushing to electrify 300 million people by 2030. Access to capital remains a challenge for many energy companies, and StanChart is seizing the opportunity to tap into this growing market.

• The UK-based lender has been active in financing renewable energy projects and was amongst the first banks to venture into this sector. It aims to be net zero in its financed emissions by 2050 and in its own operations by 2025.

More details

• Banks are increasingly investing in renewable energy. Renewable energy technology, once risky and less mature, has become more developed, less risky, and less costly, with prices for solar more than halving in the last decade. Banks are adopting these technologies to achieve their sustainability goals. They now have firsthand experience with the technologies and confidence. The market is growing, and adoption is accelerating.

• Despite this progress, many energy companies still struggle to get financing for their projects, especially large ones.  However, banks are stepping in to facilitate financing, even for gigawatt-scale projects. 

• Standard Chartered Bank, in particular, has financed projects across different regions and technologies. It financed $1.34 billion in solar PV projects in Angola to electrify 203,000 households in rural areas. It also financed $107 million for 50,000 solar-powered street lights across rural areas in Senegal.

• African banks are also stepping up. The South African market, in particular, is seeing many of its banks finance renewable energy projects. Nedbank has financed numerous wind and solar projects, including some large-scale independent power producer projects. For example, a $130 million funding for IPPs to deliver 1.1 GW of clean energy. It also financed, together with the AfDB and Standard Bank, Kenya's largest wind farm, which cost over $853 million. Standard Bank has also recently provided $140 million in debt funding to renewable energy company CrossBoundary Energy.

• Beyond South Africa, Equity Bank in Kenya is increasingly focusing on sustainable finance. They have been involved in financing renewable energy projects in East Africa, including solar and mini-grid projects, with a focus on supporting smaller-scale renewable energy development.

• NCBA Kenya provides two leasing solutions for solar PV: Solar PV and Executive leasing solutions. The bank aims to focus on providing businesses with flexible financing solutions to transition to renewable energy, reduce their carbon footprint, and lower energy costs.

Our take

• Banks play a crucial role in the expansion of renewable energy. Financing remains a big challenge for many energy companies. Direct involvement from banks can help bridge this funding gap, enabling more renewable energy initiatives to come to fruition.

• Energy companies can leverage increased bank participation to scale their operations. This allows them to expand their projects and target more clients.

• Banks can also target commercial and industrial customers directly and provide financing options to this group of customers who need financing. This category has especially shown great interest in renewables, but the majority lack the capital to purchase energy equipment. With renewable energy technology now more mature and less risky than before, more banks should enter this market. This competition will drive innovation in financing solutions and potentially lower costs for energy developers.