Context
South Africa’s greenhouse gas (GHG) emissions remain high in both absolute and per-capita terms, largely due to continued reliance on coal-based electricity and inefficient energy use. Public buildings and infrastructure represent a major opportunity for reducing emissions and lowering operating costs through energy efficiency (EE). However, despite strong financial savings potential, implementation of EE measures in the public sector remains limited. Key barriers include capital constraints, limited internal resources, and a lack of scalable mechanisms to identify, finance, and implement projects at municipal, provincial, and national levels.
Goals and approach to transformational change
The project catalyses an EE transformation in the public sector by mitigating investment risks and providing technical support. It establishes a comprehensive framework for the promotion, identification, financing, procurement, and implementation of EE measures in public buildings and infrastructure. Direct beneficiaries include municipalities and provincial and national government entities as owners of public assets. Indirect beneficiaries include energy service companies (ESCOs), which gain improved access to finance and clearer, more transparent procurement processes. The programme strengthens the ESCO market, builds skills, and supports job creation and enterprise development, particularly for emerging small and medium-sized enterprises (SMEs).
Components and support mechanisms
As part of its Financial Cooperation (FC) component, the project provides EUR 10 million to establish a Partial Credit Guarantee scheme that reduces risk for lenders and ESCOs and incentivises EE investments in the public sector. The programme leverages additional financing of EUR 23 million from the public sector and EUR 71 million from the private sector. The guarantee is designed as a catalytic instrument, enabling more public-sector entities to access financing and accelerating investment flows into EE measures.
The Technical Cooperation (TC) component support strengthens the ability of public entities and ESCOs to prepare and implement projects. It supports the development of a pipeline of bankable interventions, improves standardised procurement and contracting approaches, and increases technical and financial capacity for implementation. This strengthens transparency, reduces transaction costs, and supports long-term market development for EE services.
Long-term impact
The project aims to directly mitigate 2 MtCO2e during the project duration and 4.2 MtCO2e over the lifetime of technology at a cost efficiency of 16 EUR/tCO2e.
