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A Clean Utilities Model for Affordable Housing in South Africa

Renewable Energy
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 energy and water solutions tailored for South African affordable housing.

A clean energy intermediary advancing a just energy transition

Mzansi Clean Energy Capital, a South African clean energy start-up, aims to advance a just energy transition in South Africa by aggregating capital to create, own, operate, and finance a portfolio of clean energy and water projects, providing reliable, consistent, and affordable services to housing clients.

Recognizing limited financial innovations in services and infrastructure targeting the low-income bracket, Mzansi’s funding model incudes an innovative fund instrument that unlocks blended finance for energy infrastructure projects from a wide variety of funders, with a focus on investors with interest in climate adaptation projects in urban areas. The independent fund will take ownership and operational responsibility for the alternative energy technology equipment, collaborating closely with affordable housing landlords to offer offtake guarantees, thus mitigating risk for all involved stakeholders.

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,
Co-Founders, 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.

The pilot initiative led by the fund entails the establishment of a solar-hybrid mini-grid pilot, catering to 725 low- to moderate-income households (encompassing over 2000 individuals) and 30 micro-businesses in Johannesburg. This project is projected to prevent the emission of an estimated 5 kilotons of CO₂ equivalent by curbing the necessity for 22.6 gigajoules of electricity annually.

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 USD35m, the fund is expected to deliver over 12 MW of solar energy, avoiding over 15,000 tons of C02 emissions. Over 6,000 affordable housing residents could benefit from more secure and affordable energy.

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, 
Co-Founders, Mzansi Clean Energy Capital