Germany backs €500m loan for South Africa energy reform
Solar panels and wind turbines in sunny South African landscape.
Germany has deepened its support for South Africa’s green energy ambitions with the approval of a €500 million loan through its state-owned development bank, KfW. This financing, part of a broader €1.3 billion commitment, aims to accelerate South Africa’s shift away from coal and reinforce the country’s energy security and climate resilience.
The loan is the latest instalment under the Just Energy Transition Partnership (JETP), a global initiative launched at COP26 that includes backing from other major donors such as France, the UK, the US, the EU, and several development finance institutions. The concessional loan is issued on favourable terms, including a 13-year repayment period, a three-year grace period, and a fixed interest rate of 4.31%.
Currently, around 80% of South Africa’s electricity is generated from coal, making it one of the most carbon-intensive economies in the G20. Ageing coal infrastructure has also caused persistent electricity shortages, underlining the urgency of reform and investment in renewables.
South African Finance Minister Enoch Godongwana welcomed the funding, calling it a critical component of the country’s development agenda. He highlighted that the support would help create jobs, stimulate private sector investment, and promote inclusive growth, particularly for disadvantaged communities. The minister also stressed the importance of international partnerships in securing South Africa’s short- and medium-term energy needs while laying the groundwork for long-term decarbonisation.
Cornelia Tittmann, KfW’s Country Director in South Africa, echoed these sentiments, praising the government’s commitment to sustainable reform and expressing confidence that the loan would drive further progress in modernising the energy sector and enhancing bilateral cooperation.
Despite this progress, the full cost of transitioning South Africa’s energy system is estimated at 1.5 trillion rand (around $78.4 billion). However, with continued multilateral support and strategic investment, the country is steadily moving towards a cleaner, more secure, and more inclusive energy future.
