A Clean Utilities Model for Affordable Housing in South Africa
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Affordable energy access in South Africa
95% of South African households are classified as low to middle-income, facing rising energy demands and unable to sustain increasing utility bills. South Africa is amid an energy crisis, exacerbated by an aging fleet, and requires around 6000MW of additional capacity to address the current deficit. The country aims to increase renewable energy generation from 4GW to 13.225GW by 2025. While local and decentralized renewable energy generation could provide a solution, the low incomes of tenant households mean that landlords cannot afford the upfront costs to install these technologies.
Mzansi Clean Energy is paving the way forward, bridging the affordability gap by developing reliable and cost-effective clean utilities solutions tailored for South African affordable housing.
A clean energy intermediary advancing a just energy transition
Mzansi Clean Energy Capital is an emerging Clean Utilities Fund partnering with landlords to catalyse investments in clean utilities infrastructure projects targeted at low-to-moderate income households in Southern and East Africa.
Mzansi Clean Energy Capital will mobilize concessionary capital to expand access to clean utilities for vulnerable households. The fund’s innovative business model, built on partnerships with major landlords, aggregates utility demand and enhances credit quality to catalyze commercial capital at scale.
At Mzansi We believe clean energy should not just be accessible but affordable. Our dedicated team brings together expertise in urban development, climate finance, and sustainable energy solutions. Our mission is to improve supply, efficiency and cost effectiveness of energy and water services provided to LMI households.
Jackline Okeyo and Umar Taiwo Salman,
Mzansi Clean Energy Capital
Another critical challenge addressed by the initiative is the widespread lack of awareness and understanding regarding the adoption of renewable energy solutions, despite the urgent need for energy transition. Central to the project's success is the cultivation of awareness among residents, landlords, and housing stakeholders through targeted campaigns and tailored engagement plans.
Partnerships and collaborations
Mzansi’s innovative instrument is supported by the Climate Policy Initiative’s The Global Innovation Lab for Climate Finance, the team also participated in the Global CleanTech Innovation Program. Mzansi intends to forge partnerships with local governments such as the City of Johannesburg, Cape Town, and the eThekwini Metropolitan Municipality. These partnerships aim to address feed-in tariff schemes, Eskom’s grid access requirements, and to expand clean energy infrastructure beyond the pilot sites and extending services to other low to moderate-income communities.
Additionally, the Department of National Treasury plays a crucial role as a stakeholder. Their commitment to providing renewable energy funding incentives for households will be instrumental in scaling up the impact of the fund.
Projected impact and contributing to sustainability goals
At its target scale of $55m, the clean utilities fund will enable the low-carbon energy transition through the rapid adoption of clean energy solutions. The Fund aims to enable the installation of 65 MWp of solar energy for affordable housing developments in its first phase, providing affordable clean energy to 28000 low-to-moderate income households. Over the 15-year project lifecycle, 1,352 GWh of renewable energy will be generated, avoiding 1,369 ktCO2e by replacing grid-tied electricity, the bulk of which is reliant on coal.
After completing the new Self-assessment workbook against environment, resilience, social and governance dimensions the project successfully earned the FAST-Infra Self-assessed Label by demonstrating positive contributing in three key areas: climate change mitigation, resilience and climate adaptation, and inclusivity and gender.
How is the FAST-Infra Label helping unlock value?
The FAST-Infra Label acts as a catalyst, amplifying project potential and positioning them as irresistible opportunities for financial institutions. By integrating industry-leading standards and best practices, it offers invaluable technical guidance, ensuring meticulous project planning and precise projections for future operations. For Mzansi, this entailed conscientiously considering principles of circularity and strategizing for long-term maintenance and responsible disposal of renewable energy infrastructure to mitigate pollution risks.
We've garnered immense value through our engagement with the FAST-Infra Label. It has granted us access to industry best practices and tools, enabling us to structure our projects more effectively and anticipate future operational challenges. The stakeholder engagement plan, in particular, has proven invaluable in highlighting the importance of collaborating with our key stakeholders, landlords, tenants and municipality, to build the capacity required to deliver on our projected sustainable outcomes.
Jackline Okeyo and Umar Taiwo Salman,
Mzansi Clean Energy Capital
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