Namibia’s first listed green bond has raised N$66 million, funding the generation of various types of renewable energy around the country, envisioned to reduce the country’s carbon footprint.
The funded renewable energy projects are expected to generate 77,9 million kWh of electricity in the next five years and reduce 305 710 tonnes of carbon dioxide-equivalent greenhouse gasses in the next 25 years.
This was revealed by a Bank Windhoek assessment in the Green Bond Impact Report released a week ago.
The report indicated from the initial issuance of the green bond it raised N$66 million from the capital market (from institutional and individual investors), which was used to fund seven solar photovoltaic-generating (S-PV) projects.
Collectively, the projects have an installed power-generating capacity of 6 350,8 kW and can contribute 15,6 million (kilowatt-hours (kWh) of electricity annually to the country’s overall electricity production – which currently meets only around 40% of its local demand.
Out of the seven S-PV projects, three are to power agricultural projects.
Combined, they have installed capacity of 69,8 kW, and can generate 123 570 kWh of electricity together annually.
An S-PV can also be off-grid system provides users the opportunity to produce and store electricity where no connection to the utility grid is available or undesirable.
The other four projects that are also grid-tied-generating systems connected to the utility (NamPower) grid, enabling the consumer to use as much power from the S-PV system possible during the day, and in the event of no electricity being generated by the solar PV system, power is drawn from the grid.
The biggest of all the funded projects is the S-PV ground-mounted system with integrated axis tracking, located at Okatope in the Ohangwena region, in the north.
According to the report, it has a 5,74 MegaWatt (MW) capacity and has a power purchase agreement (PPA) in place, with NamPower to supply renewable energy for 25 years.
On a yearly basis, it can generate 14,6 million kWh of electricity while reducing 14 350 tonnes of carbon dioxide-equivalent (tCOe2) greenhouse gasses.
The Okatope project took up N$57,2 million of the funds raised by the bond.
The second largest project to be funded is the commercial roof-mounted grid-tied solar PV system, with an installed capacity of 300 kW.
The configuration is estimated to generate 452 345 kWh during the first year of operation, at the same time reducing 443,35 tCOe2 annually.
The projected annual savings on electricity costs amount to N$788 168 during the first year and is expected to increase by 6% on average per annum, the report stated.
The severe drought experienced across the country, increasing energy costs and the country’s reliance on Eskom for electricity imports have put sustainability and investment in energy production at the top of many business and household agendas.
Namibia’s hot and dry climate and abundant sunlight for more than 300 days a year, means up to 2 200 kilowatt-hours kWh) per square metre are recorded annually in the country.
This serves as evidence that Namibia is the ideal spot to harness sun energy.
Green bonds are generally fixed-income instruments of which the proceeds are exclusively applied to financing or refinancing new or existing eligible green projects.
The green projects need to be aligned with the four core components of the International Capital Market Association’s (ICMA) Green Bond Principles (GBP).
The bank raises a fixed amount of capital, repaying the capital and accrued interest over a set period of time.
The bond was launched to ensure potential clients have sufficient access to funding that supports Namibia in its transition to an environmentally sustainable and low-carbon economy.
Bank Windhoek is an implementing partner of the Sustainable User of Natural Resources and Energy Finance (SUNREF) programme by Agence Françoise de Development (AFD).
The green bond is part of Bank Windhoek’s aims to obtain additional sources of funding for its green lending activities by raising funds in the debt market through a local green bond issuance.
Namibia is self-sufficient in about 40% of its electricity demand, and imports up to 61% of its power supply, according to the report.
At the time of reporting, the impact report stated 70 MW of renewable energy for the national power grid was generated from 5MW PV as part of the Namibia Renewable Energy Feed-in Tariff (REFIT) programme.
In total, 19 independent power producers have signed power-purchasing agreements with NamPower to supply a total of 175,5 MW from renewable energy sources by the end of 2020.
In addition, according to the National Renewable Energy Policy, Namibia should aim to become energy secure and aim to be a net exporter by 2030 by leveraging renewable resources.
This translates into a commitment that at least 70% or more of Namibia’s electricity capacity should be from renewable sources by 2030.
The Modified Single Buyer Model (MSB) and the IPP policies are envisioned to increase domestic supply and curtail imports.
The MSB market model will allow eligible IPPs to generate and sell electricity directly to customers, such as regional electricity distributors (REDs), large industrial and mining companies, municipalities and local authorities.