Perceptions of Senior Bankers on the Role of South African Banks in Large-Scale Renewable Energy Projects

Abstract

South Africa’s urgent need to address its energy crisis and meet climate goals is heavily dependent on private capital for large-scale renewable energy projects. However, the perspectives of commercial banks - the key financiers - are not fully understood. This study explores the perceptions of senior bankers on the role of South African commercial banks in financing large-scale renewable energy projects. The study was motivated by South Africa’s ongoing electricity crisis, Eskom’s financial constraints, and the urgent need for private capital to enable renewable energy expansion. Using a qualitative, phenomenological design, semi-structured interviews were conducted with purposively selected senior bankers involved in renewable energy financing. The study adopted Green Finance Theory and Institutional Theory as conceptual lenses. The data were analyzed using thematic analysis. The findings reveal that clear and stable government policy, such as the Integrated Resource Plan (IRP) and Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), is perceived as the most critical enabler for investment. Banks mitigate risk through established project finance structures, while Environmental, Social, and Governance (ESG) criteria are being progressively integrated into their investment decisions. However, significant barriers, particularly grid capacity constraints and regulatory ambiguity, are identified as major impediments to accelerating the energy transition. In summary, commercial banks view themselves as important actors in financing; thus, influencing policy, regulatory compliance, and project bankability remain critical barriers.