All you need to know on SA's energy transition

Podcast transcript: scroll to the areas that interest you

• IR: Iman Rappetti, journalist and host
• CH: Chris Holdsworth, Investec, Chief Investment Strategist
• JM: James Mackay, Energy Council of SA, CEO
• SM: Samantha Mooi, Investec, Head of Sustainability
• MM: Martin Meyer, Investec, Energy and Infrastructure Finance head
• RD: Rudi Dicks, Private office of the President, head of Project Management
• MJVW: Melanie Janse van Vuuren, Investec, Global Sustainability Lead
• CP: Campbell Parry,  Investec Wealth and Investment, Global Resource analyst
• FM: Fanele Mondi, Energy Intensive Users Group, CEO
• QA: Quentin Allison, Investec, Commodity Structuring and Trading head 
• HH: Harold Hutchinson, Investec UK, Alternative Energy business MD
• AG: Ayan Ghosh,  Investec, Cross-Asset Investment Strategy head
• DWT: De Wet Taljaard, SAPVIA, Technical specialist, 
• BG: Bernard Geldenhuys, Investec's Energy and Infrastructure Finance, senior transactor
• MH: Melanie Humphries,  Investec Private Bank, Sustainable Solutions head
• MR: Mark Raine, Mercedes-Benz SA, co-CEO
• NM: Ndia Magadagela, Everlectric, CEO
• AH: Ana Hajduka, Africa GreenCo CEO and founder
• ZS: Ziyaad Sarang, Revego Fund Managers, CIO
• BI: Brian Irvine, Investec, global Head of Export and Agency Finance
• BS: Barry Shamley, Investec Wealth and Investment, Fund manager,
• ZB: Zane Bezuidenhout, Equity Analyst, Investec Investment Management (UK)

• 00:00: Intro

  IR: Since the Industrial Revolution began in the 19th century, the world has largely been built on the energy supplied by fossil fuels. Coal, oil and gas have found their way up from the depths of the earth and into our everyday lives, fueling almost every aspect of the modern world. Adding a layer of complexity to our relationship with fossil fuels is how reliant we are on them, not only for the energy, but for the industries they support.

  Within the South African context alone, two-and-a-half million people are employed in mining, agriculture and manufacturing, all of which rely heavily on these ancient fuels for survival. But it has to change. With climate change now a firm reality, and the realisation that these finite resources will eventually run out, the world has begun focusing on how we can move to solutions that will not only improve the health of the planet, but also provide energy sources that are more sustainable.

  Welcome to The Current, an Investec Focus Radio podcast series on South Africa's energy transition. I'm Iman Rappetti, and over the course of the last nine episodes, I've been joined by industry experts from within Investec and beyond to dissect and discuss how our country can move towards more equitable and sustainable energy solutions.

  With South Africa recently being recognized by the World Economic Forum as being among the top five countries that have achieved the highest levels of relative progress in their respective energy transitions, we also celebrate the successes the country has made. In this tenth and final episode, we revisit some of the series highlights and reiterate the essential takeaways you need to know. So, let's get started. 

• 01:57: The consequences if SA doesn't transition

  IR: In Episode 1, we spoke to James Mackay, the CEO of the Energy Council of South Africa, as well as two Investec experts, Samantha Mooi, Head of Sustainability, and Chris Holdsworth, Chief Investment Strategist. We started our conversation with an overview of the South African energy crisis and the need to move to renewables, with Chris highlighting the economic cost the country will pay if we do not transition.

  CH: It's a fairly complex situation that we face at the moment where we are a) short of electricity, but b) we're producing the wrong kind of electricity and that does pose some risk longer term to the competitiveness of our exports and, broadly speaking, the economy at large.

  We've already agreed to go down this path, the just energy transition, and we've taken money from some of our international partners to do that. So if we were to switch around and say it's too difficult, then we're going to renege on those international agreements.

  A vast array of fund managers across the globe are signatories to what is known as the United Nations principles for responsible investment.

  And these are companies that are obliged to encourage corporates to either emit less or in the case of governments to ensure that there are fewer emissions across the economy.

  And if we say we're just going to keep our coal stations going, we again will be cutting off access to favorable financing from those institutions, both for our companies listed in South Africa.

  And secondly, for the government as well. If we look at places like Europe, they're imposing tariffs to countries that don't have their own internal carbon pricing mechanism.

  And if again, we don't charge for it locally, that means that our exports would be attracting tariffs for Europe and we'd be less competitive.

   

• 03:36: Clean energy's advantages

  IR: The other factor driving the energy transition is, of course, climate change. While a cleaner planet is a vital consideration, for James there is other value that's being unlocked. 

  JM: The energy transition is very important to climate, but actually what is driving it is a technology disruption. So, clean tech is cheaper, better, it's more innovation, it's highly digitized, and it's going to serve consumers better in the future.

• 04:02: What does a Just Energy Transition look like?

  IR: So there are benefits for the environment and for consumers, but what about those who rely on the fossil fuel-based energy industry to earn their living, like the 100,000 people employed in coal mining? I asked Sam where those people fit into this transition.

  SM: The just energy transition cannot happen unless you're thinking about the people at the center of it, because we're such a Carbon intensive economy, there's a lot of jobs attached to that carbon intensity. So how do we shift those jobs, the people in those jobs into cleaner energy jobs, green jobs, that has to be part of the conversation right at the beginning. 

• 04:42: Diagnosing Eskom's woes

  IR: In a South African context, one of the biggest challenges for the future of energy is the role that Eskom, the beleaguered state-owned enterprise, will play. In Episode 2 of the series, we spoke to Rudi Dicks, head of the Project Management Office in the Private Office of the President, along with Investec's Martin Meyer, who heads up the Energy and Infrastructure Finance team. I started with a simple question to Martin: what's at the heart of Eskom's woes?

   MM:  You're sitting with a coal fleet that not only is it aged, but it also hasn't been maintained properly. And when you try to do scheduled maintenance together with emergency maintenance, you do run into issues. So, you may see reliability coming back, but what you're also going to see is trips that you're not expecting because of the state of the fleet. And if we’re just relying on the coal fired fleet to get us through this, we're not going to get there. 

• 06:25: The importance of unbundling Eskom

  IR: One of the boldest moves by government to resolve the electricity crisis is the unbundling of Eskom into three separate entities handling generation, transmission and distribution. Rudi explains how that decision extends beyond just delivering a more robust grid.

   RD: The first element of unbundling is taking transmission out of Eskom and creating it as a subsidiary. And it's going to give the National Transmission Company of South Africa quite important powers. One of the more fundamental powers is giving it the power to purchase on an open competitive market.

  So, when you look at it from a market point of view as more generators come on and electricity has to be competitive from a pricing point of view, you're going to have to bring down the price. And we've seen that from a whole set of studies. Globally, it shows us the electricity pricing comes down when you set up in that way. 

• 07:17: Eskom's turnaround

  IR: Having the right legislative framework and the right technology in place is only part of the solution. Ultimately, Eskom will have to ensure the right people are in place to make sure the utility operates as it should.

  RD: We have a highly motivated engineering team at many of the power stations. But you can be a trained engineer like in any other discipline, but it's the experience that counts, right?

  The business colleagues together with Eskom are supporting the deployment of a number of people that have left Eskom or have the experience as engineers or understood how to run power stations and redeploying them back into the six key power stations where we could get the most number of reliable megawatts from, and that process is underway.

• 08:01: Phasing out of fossil fuels

  IR: This approach, along with other interventions, seems to be paying off as by the end of June 2024, South Africa had experienced a hundred days of no load-shedding after a particularly grueling run of the planned outages. But the future of South Africa's energy industry is not just about a more efficient power utility and public private partnerships. It's part of a global push to phase out fossil fuels, and is underscored by the agreement made by participating nations at COP 28 in 2023. Melanie Janse van Vuuren, Investec's Global Sustainability Lead, outlines the establishment of the agreement.
  

  MJVV: There was a first draft saying it's a deliberate and complete cessation and elimination of fossil fuels. Obviously, most of the oil producing countries were not happy with that. Then they agreed, let's do a phase-down of fossil fuel, a structural reduction towards zero. They don't specify how much and by when, there's no target set for the date to reach net zero, but then they also put in ”just and equitable transition” in the script.

  Basically, as different countries and communities have different needs and dependencies on these fossil fuels, you need to look at the workers in these communities, their livelihoods, the equitable side on the other hand, says the burden. And the benefits need to be distributed fairly across countries and communities. In the past, developed countries was the largest contributors to greenhouse gas emissions, so they should take greater responsibility and provide support to the developing countries in this transition.

• 09:40: Examining humanity’s reliance on coal and oil

  IR: Regardless of the role that each nation might individually play within the parameters of the agreement, a shift away from renewables is understandably complex. And not just because coal, oil and natural gas are cornerstones to critical industries like transportation and electricity generation.

  Their influence runs far deeper than many people might realize, making the job of phasing them out even more of a conundrum. Campbell Parry, Global Resource Analyst at Investec Wealth and Investment, elaborates.

  CP: We use fossil fuels to produce the clothes we wear, the detergents we use, the shaving creams, the lubricants and fuels, the inks and the paints, the plastics, preservatives, pharmaceuticals, cleaning agents. These are just some of these everyday items.

  People don't appreciate the link between fossil fuels and food. Firstly, 80% of the world's sulfur is produced by refining crude oil. That sulfur is used to produce sulfuric acid, and one of the things that it gets used for is to produce phosphate fertilizer for our crops.

  The second thing is natural gas. Hydrogen in methane is reacted with nitrogen from the air in the process to produce ammonia, the precursor for all nitrogen-based fertilizers. 

• 10:53: The mining sector’s contribution to decarbonisation

  IR: One of the biggest moving parts in South Africa's just energy transition will be the mining sector's contribution to decarbonisation. Not only in terms of the power they consume, but how their input will contribute to the shift, and how the people within the sector are included.

  The Energy Intensive Users Group, whose members include Anglo American, Sasol, South32, and Sibanye, among others, is focusing on the energy trilemma. The body's CEO, Fanele Mondi, explains.

  FM: In terms of affordability, most of our members built their facilities on the premise that we had the cheapest electricity in the world at the time. So, if we get out of that space where we become the most expensive, that is going to be a huge challenge. 

• 11:39: The opportunity of PGMs (platinum and palladium)

  IR: A potential growth area directly related to decarbonization is in platinum group metals, or PGMs. This group comprises several minerals, of which South Africa is a leading producer of two, namely platinum and palladium. PGMs may not necessarily be cleaner to extract, but their applications will create an impact in reducing harmful emissions. I asked Quentin Allison, head of Investec's Commodity Structuring and Trading business, how PGMs fit into the picture.
  

  QA: They're used in catalytic converters for engines. That's the predominant use of PGMs today. And in a combustion engine, you typically have carbon monoxide as a direct result of the combustion process.

  Having a PGM catalyst in there can actually switch the carbon monoxide into carbon dioxide, which is more environmentally friendly, and having PGMs actually makes combustion engines more fuel efficient. Carbon capture is a big theme now in PGMs. We've got a good example of fertilizer produced in South Africa, effectively in the fertilizer production process.

  They emit nitric oxide into the atmosphere and they've actually added a catalyst in that industrial process. That catalyst recaptures the nitric oxide before it goes into the atmosphere and makes the whole process cleaner.

• 12:53: Battery innovation

  IR: Fossil fuels will be giving way to a host of renewable energies, some of which like solar and wind, are a familiar part of our awareness of sustainable technologies.

  But there are other players, all promising to power the planet towards net zero. One of those players is battery technology, an essential component in creating baseload power tied to renewables. Here's Campbell again.
  

  CP: The holy grail is to make solar and wind non-intermittent, non-baseload forms of energy. And the way to do that is to develop the right type of battery technology.

  And while the technology is improving, steadily, there are still some limitations and I guess the primary limitation is just it needs a lot of land and you need a huge amount of capacity for just a few minutes of energy supply.

• 13:42: The pros and cons of nuclear

  IR: One of the more controversial elements of a future energy mix is nuclear. It spans an interesting divide in that while it's by no means a new source of power, it's one that is still undergoing development. And of course, it has strong opinions both for and against it. Campbell is an unabashed champion of nuclear. He explains why. 

  CP: Nuclear as an energy source provides clean carbon free baseload power 24/7 for decades and longer and it has very high levels of efficiencies. It's a highly regulated industry globally. Safety issues are quite overblown.

  We know the technology. Some of the new utility-scale reactors that they're designing these days are much more efficient, much easier to run and are very impressive.

  HH:  Harold Hutchinson, Managing Director of the Alternative Energy Business at Investec UK, also sees a future in nuclear.

  One of the debates within the nuclear industry at the moment is, well, perhaps some of these very large-scale power plants, such that we're considering effectively replacing the old sites in the UK, perhaps actually what we should be doing is thinking much more locally and having these smaller nuclear reactors and we have some great companies such as Rolls Royce that would be involved for that. 

• 15:05: Is the promise of hydrogen overstated?

  IR: Another renewable that gets a lot of press is hydrogen, although throughout this series it was clear that there are still some hurdles to overcome before it's a firm fixture on our grids. I asked Ayan Ghosh, Investec's Head for Cross-Asset Investment Strategy, for his opinion.
  

  AG: I think there are a few challenges as we speak. So firstly, transporting green hydrogen from Africa is still a conundrum. The other way to develop or to become an exporter is, can we develop a pipeline between Africa and Europe or to different parts of the world?

  But the question here is, we need a lot of financial muscle and a lot of investment for such infrastructure to play out. For example, if you look into the Africa Green Hydrogen Alliance, which is an initiative launched at COP26, I think the alliance member countries, including Egypt, Kenya, Morocco, Namibia, South Africa, would require a huge investment of $450 billion to $900 billion of investment by 2050.

  So, all I'm trying to argue is I think it's still early days. And I think without adequate government support and without adequate funding, this looks like a challenge for now.

  For Campbell, the case for hydrogen simply doesn't make sense at this point in time.

  CP: It's not so much the constraining factors to producing, it's whether it makes sense or not, and we always think that energy transition can only happen, and in the past have only happened when the thing replacing the older form of energy is cheaper and more efficient, and that's just not the case yet with hydrogen.

  The current podcast series review continues after this.

• 16:46: Investec’s Sustainable Solutions offering

  Considering the current energy crisis and infrastructure challenges in South Africa, Investec aims to provide a tailored and innovative offering to support clients in finding and funding sustainable solutions in solar. If you're looking for a turnkey solar solution for your home, apartment, rental property, or maybe you need a renewable energy solve for your business.

  Investec can provide bespoke finance up to a hundred percent for you or your business. Find out more by clicking on the link in the podcast notes or search Investec sustainable solutions.

• 17:30: SA’s solar awakening

  IR: When it comes to renewable energy technologies, the one that resonates most with South Africans is most certainly solar. Its adoption by consumers has been driven largely as a load-shedding countermeasure, and according to the South African Photovoltaic Industry Association, or SAPVIA, there are now 126,000 households generating 5.4 gigawatts of clean power.

  I asked SAPVIA's Technical Specialist, De Wet Taljaard, how we stack up globally.
  

  DWT: From a global perspective, I'm happy to report that we are on the scoreboard, at least, so from a projected installed capacity point of view in 2024, we’re projected to be number 10 at around 4. 3 gigawatts projected for the year.

  That's by Bloomberg New Energy Fund. At the end of last year, SAPVIA assisted the BNEF team with their projections for 2024. And if you look at that scoreboard, number three is India at approximately 18 gigawatts projected for ‘24, United States is 40 gigawatts, and then far ahead at number one is China at 313 gigawatts. So at least we're on the scoreboard, but there's still a while to go. 

• 18:38: Growth of solar in the commercial and industrial space

  IR: If 86% of all solar installations in South Africa are residential, what's happening in the large-scale commercial and industrial space? Bernard Geldenhuys, a Senior Transactor within Investec's Energy and Infrastructure Finance team, gave us an overview.

  BG: We're seeing a lot of growth. We now have about three-and-a-half gigawatts of renewable energy projects that have been contracted with about 120 megawatts in operation, 2, 200 megawatts in construction, and another 1,200 progressing to financial close. The Risk Mitigation Independent Power Producer Procurement Programme also came to an end recently. About 600 megawatts of firm green capacity will come online in the next 24 months. In terms of overall investment in the REIPP programme up to December 2022, it attracted about R220 billion of total investment, of which 42.6 billion was foreign direct investment, and that's across about 10 gigawatts of renewable energy.

• 19:40: Solar’s appeal

  IR: Clearly, things are picking up in the corporate and industrial sector. Commercially, renewables must be starting to make sense then.
  

  BG: Payback periods are getting shorter. Firstly, the Eskom tariff increases have been excessive over the last couple of years, and we expect to increase by a further 12% for the year 25-26. The second reason is the reduction in the cost of PV modules and battery energy storage systems due to some oversupply in the market - not just South Africa, but also globally. And the third reason is tax incentives. So the first incentive that jumps to mind is Section 12 BA that allows you 125% deduction until 28 February 2025.

• 20:22: Equitable access to renewable energy

  IR: One thing that's particularly important, especially within the South African context, is the concept of equity and equitable access for everyone else. I asked De Wet if there were any schemes that provided renewable energy to underserved communities.
  

  DWT: One example that is quite popular in other countries is this concept of community solar, where you take advantage of economies of scale and install large-scale solar PV and battery energy storage systems at a single feeder point that feeds an entire community.

  And what that would allow the community is to have access to clean, low cost, energy. Unfortunately, the ownership models and the funding models haven't been completely unpacked in South Africa yet, but that is something that we at SAPVIA see as a solution to lower income communities benefiting from solar PV. 

• 21:23: Electricity ‘feedback’ schemes

  IR: If you've invested in rooftop solar at your home, you're probably wondering how soon it will be before you can start making money from feeding the excess electricity back into the grid. And what does this mean for municipalities who make the majority of their revenue from the provision of electricity? De Wet weighs in.
  

  DWT: There are currently 46 municipalities in the country that allow back-feeding of electricity into their network that have some form of remuneration. So, there are municipalities that are seriously looking at embedded generation and solar PV as an opportunity.

  And not necessarily as a danger to their municipal revenue streams. But the cost of the meter is prohibitive at the moment. Luckily, the city of Cape Town came out with a significantly cheaper single-phase meter to allow energy to be fed back into the network.

  But on top of that, I think it's about having a feed in tariff that is high enough to incentivize registration, but not too negatively impact the revenue model of the municipality is really important. 

• 22:34: Are electric vehicles in SA viable?

  IR: In Episode 7 of The Current, we had a fascinating discussion on the explosion of the electric vehicle market globally, and we looked at why South Africa is in the slow lane when it comes to EVs, with just under 1,000 electric vehicles sold in 2023. Mel Humphries, Head of Sustainable Solutions at Investec Private Bank, explains why we're lagging behind.

  MH: At the moment, the import tax on electric vehicles is 25% against internal combustion engine vehicles that is at 18%. And then in addition to that for vehicles over R700,000, there's an additional ad valorem tax of 17% and above.

  IR: Mark Raine, co-CEO of Mercedes-Benz South Africa, agrees.

  MR: Electric vehicles in South Africa are too expensive. And I always lobby for the fact that we need price parity of internal combustion engines and electric vehicles. I'm not even talking about subsidies. I'm just saying, don't put electric vehicles at a disadvantage.

  I could import a V12 super sports car at lesser import duties than electric vehicles, that needs to be matched on the same level that would put electric vehicles at a great advantage, because you can't look at the vehicle purchase price.

  You need to look at what we would call the cost of ownership, looking at the average fuel consumption, average driver of Mercedes Benz. Probably spends R5,000 - R7,000 per month on fuel. If you take an electric vehicle that goes down by two-thirds, at least at the highest rate, which you would be charging your vehicle, but it could go even lower if you're fully off the grid.

   IR: Despite the high costs and other challenges like range anxiety and the perceived lack of EV charging stations, Investec is seeing how some clients are quite literally buying into electric mobility.

  MH: Investec's Private Banking clients are often early adopters in terms of new technology and innovation. We have over 200 new energy vehicles within our book.

  So that includes electric vehicles, hybrid vehicles, hybrid plug in vehicles, and that comprises around 1.5% of the total new energy vehicle fleet in South Africa. In a recent survey, over 30% of our clients said they would actually consider buying an electric vehicle.

   IR: Mark is also bullish on the future of EVs in South Africa.

  MH: South Africa was late to the party, but I still feel that the South African market is predestined to become an electric vehicle market. No other country is as ready to do the energy transition as South Africa is.

  IR: The EV ecosystem is also growing in the country with innovative startups like Everlectric making EVs more accessible for businesses that own fleets like Woolworths and Aramex. Company co-founder and CEO Ndia Magadagela unpacks two key considerations for the organization's clients.

  NM: For players that are doing high number of kilometers, over 3,000 kilometers, it is cheaper to lease an electric vehicle than to lease an internal combustion engine vehicle.

  There are two pain points that market has: one, it is the cost of fuel. The running costs of an electric vehicle are way less, even though the initial purchase price might be higher.

  An electric vehicle is 10% - 20% cheaper if you look at the all-in costs. And then two, it is the ESG commitments. People are actually concerned about their carbon footprint, and therefore, even though they are finding that the cost of buying the electric vehicle is quite high, on the leasing model, it actually works.

• 26:12: Economics of clean energy too good to ignore

  IR: Two episodes of The Current focus specifically on finance and investment. The economic benefits of decarbonization can be overshadowed by the discussion. But for Ana Hajduka, CEO of Africa GreenCo, economic benefits provide the stronger motivation for the shift to clean energy.

  AH: The mitigation of climate change would not be enough to make it economically appetizing as it is at the moment. The reason why it's becoming so prominent is because it's cheaper to deliver and quicker.

  The private sector is also taking the lead on it, and most importantly, the private sector that has taken the lead on it in South Africa are those companies that are mainly industrial and commercial.

  Companies that need to comply with global export and other criteria to make their commodities more competitive on an international market, which currently requires significant proof of compliance with decarbonization targets.

  So, if you look at all of that through an ecosystem lens, then what we are witnessing today is a complete convergence of economic interests between energy decarbonization targets of the critical minerals industries, with the GDP growth of most countries in sub-Saharan Africa, including South Africa, and add to that the global climate targets that we are all trying to achieve.

• 27:39: How to electrify Africa

  IR: Africa's role in the overall global energy transition cannot be overstated. Global energy transition can bring sufficient benefits to the continent because the continent holds 30% of the world's mineral reserves that are required for decarbonization to take place in the first place. So, the renewable energy element is just the one piece of this wider, beautiful convergence that we see is taking place at the moment.
  

   I ask Ziyaad Sarang, CIO of Revego Fund Managers, just what's standing in the way of the continent taking advantage of such a large opportunity?

   ZS: You need certain characteristics for attracting investment. You need a legislative framework to allow the building of power stations, et cetera. You need property rights to own assets. Those are just the core building blocks of an enabling environment.

  You need good regulation. You need attractive financial markets. And if you have those ingredients in place, you're able to attract financing, entrepreneurs, and risk takers. That means you have people coming together, with capital to provide services.

  IR: Is there an opportunity for Africa to leapfrog to green industrialisation?

  ZS: Absolutely. I like to use the example of the parallel market that developed in mobile phones. And if you look at how mobile phones developed in Africa, it leapfrogged all of the cable technology in the telecoms industry.

  I see this parallel for renewable energy. We benefit from the latest technology at the cheapest price. If you look at solar panel prices over the last decade, according to the International Renewable Energy Agency, IRENA, panel prices fell by 82%.

  So, you can re-power the grid at a much cheaper rate now than you did 10 years ago. That allows you to put on power very quickly. And from that perspective, do lots of projects at scale, which is absolutely needed.

  IR: For Ana, overcoming the infrastructure investment challenges will see South Africa reaping tremendous reward given its positioning within the region.
  

  AH: South Africa sits within the context of this incredibly fast growing and evolving regional energy market environment. And I stress that word ‘regional’.

  It's a market environment that has reached a convergence of economic interests between what is required globally on the decarbonization side, and what is required locally when it comes to achieving decarbonization targets. We believe the Southern African Power Pool market, its growth and future integration with East African Power Pool, provides a unique opportunity for South Africa to leverage its access to the regional market for attracting more domestic investment.

  So, taking that power ecosystem context into account is really key. South Africa often looks internally and domestically only because of its huge scale and size compared to its neighbors. However, that scale and size of required generation need is very large in the neighboring countries as well.

  That will allow South Africa to achieve investment not only in itself, but the investment on an off-balance sheet basis. ie- South Africa should not be replicating the REIPPPP contingent liability impact for new generation and transmission investments because it cannot do so and the realization that there is this limited country fiscal space is what necessitates linking the national investment lens with the regional demand.

  IR: One of the ways that Investec is solving for the challenge of building such large-scale projects is by utilizing export credit agency finance. Investec's Brian Irvine looks after a cluster of specialized lending businesses focused on the continent. He explains how the model is particularly well suited to Africa's energy needs.

  BI:  Over 90% of all infrastructure that is required on the continent are not commercially viable projects. These sovereigns are already highly indebted.

  So, it's very difficult to gear and finance these projects off the sovereign's balance sheet. And that's where ECA or Export and Credit Agency Finance as a product brings to bear global capital markets. So, you're financing infrastructure in Africa without taking the Africa risk. And that is how we can mobilize the required capital.

  IR: Helping source some of that much needed capital is the $2 billion Acre Investment Fund, the first ever export finance impact fund in Africa, established to work with banks and export credit agencies to finance green and social infrastructure on the continent.
  

  BI: Investec was the first to invest into the fund as a limited partner. So the investment mandate of the fund covers healthcare, green cities, green transportation, renewable energy, et cetera. So very deliberately, and I got to be very clear about this, we, together with the founding partners, deliberately created an open platform fund.

  What this means is that it's not Investec's fund. We're just the anchor investor. So, originally, the Pan-Africa Infrastructure Development Group supported Acre and the initiative, followed by FSD Africa. The EIB, European Investment Bank, has come in with a significant contribution. 

• 33:10: Incorporating renewable energy into your investment portfolio

  IR: There are also investment opportunities in the energy transition for individuals, and they aren't always directly tied to renewable sources or technologies.

  Barry Shamley, a Fund Manager who's also involved in ESG integration and stewardship at Investec Investment Management, provides just one example.
  

  BS: The companies seeing the biggest benefit right now in South Africa are the construction companies. A large part of their new order book growth is coming from renewable energy space, and that would be both wind and solar.

  So there's nothing direct that you can buy necessarily like you can't say I'm buying a wind company or a battery company or a solar company in South Africa, but you do get companies where it's a growing part of their portfolio and you're going to benefit from some growth where a lot of other parts of their portfolio are not necessarily growing right now because of the slow GDP growth we're experiencing.

  IR: Another opportunity can be found in Investec's Global Sustainable Equity Fund, which provides investors with an opportunity to put money into companies that have business fundamentals guided by the United Nations Sustainable Development Goals, and still make impressive investment returns. Zane Bezuidenhout, a London-based Equity Analyst at Investec Investment Management, explains.
  

  ZB: With our Global Sustainable Equity Fund, we’re continually thinking about ways to invest in the energy transition. Instead of us trying to get overly clever and trying to predict the future as to whether it's a VW or Tesla that wins out in the electric vehicle race.

  We look at the value stream, and where we're seeing the demand - or maybe safety and probability - is upstream. That's where resources are very important because they are the starting point of the whole value chain. There's also got to be complementary storage around that and what that looks like. And then there's the end use application.

  So, instead of guessing how quickly the end use application is going to transition, you spend a lot of time thinking if we sit far upstream, that will provide us with a degree of safety because there will be winners and losers in the energy transition.

  IR: This podcast series covered a number of vital topics related to the energy transition in South Africa. If you haven't already, we suggest you listen to each episode.

  IR: To gain further valuable insights, particularly if you have questions or want to delve deeper into the discussions introduced in the series review, we cover everything from Investec's outlook on sustainable investment to alternative renewables like tidal and biomass, and from smart grid technology, to how you can realize a return on a home solar PV investment.

  There are a number of ways we can choose to look at the just energy transition in South Africa, but perhaps the best summation of what it means for the country is from Investec's Head of Sustainability, Samantha Mooi.

  SM: It will lead to massive energy efficiency and a modernized grid. So, people will not have to worry about load-shedding. We will have cleaner air, we'll have energy security, we'll have green jobs and a sustainable future.

• 36:23: Concluding comments and thanks

  IR: Thanks for listening to this episode of The Current, brought to you by Investec Focus Radio, South Africa. You can find all the episodes on the Investec website, or wherever you get your podcasts. If you enjoyed this episode, please rate it, leave a review, and tell your friends and colleagues.

  The Current is presented by me, Iman Rappetti, and is written and produced by Spike Ballantine.

  Sound engineering by Jason Rademeier at dbo Media. 

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  The views expressed are those of the contributors at the time of publication and do not necessarily represent the views of the firm and should not be taken as advice or recommendations. Investec Bank Limited, an authorized financial services provider and registered credit provider.

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