IFC Grants $3m for fuel cell project in South Africa

20 December 2005 – The International Finance Corporation, the private sector arm of the World Bank Group, has awarded a $3m grant to IST Holdings (PTY) Ltd and Plug Power Inc., who will install 400 fuel cells in remote locations and cities of South Africa over the next three years. The fuel cells will provide a reliable source of electricity and will replace polluting technologies such as diesel generators.

Plug Power, a U.S. company based in Latham, New York, will produce the five kilowatt fuel cell systems, which IST, a South African company based in Pretoria, will import, distribute, install, and maintain. The project is worth a total of $14m. When completed, the fuel cell installations will have the capacity to generate about two megawatts – which is equivalent to the electricity needed to power 1300 households. The electricity is targeted initially for use in backup and prime power applications in telecommunications and other industries across South Africa.

The project will represent the largest number of commercial fuel cells to be installed in a developing country to date. The cells installed using this grant will provide a reliable source of electricity for industrial and information technology applications and for telecommunications systems, including wireless infrastructure. They will help displace highly polluting and noisy diesel generators, providing electricity more efficiently, emitting very little greenhouse gas emission, and operating virtually noise-free.

Rachel Kyte, IFC’s Director for Environment and Social Development, commented, “IFC is committed to helping bring sustainable energy solutions to emerging markets. Cleaner technologies are part of the solution. This project will not only provide a clean energy source in South Africa, but will also provide reliable electricity to remote areas of the country.”

Harry Coetzee, IST’s Group Chief Executive, said, “This project is another major step in IST’s drive to implement leading edge technology on the African continent. For more than 25 years we have been in the business of applying engineering technology, and we look forward to strengthening our presence in this area with our Plug Power partnership.”

Mark Sperry, Plug Power’s Chief Marketing Officer, said, “This funding is essential as we begin to work with IST in the distribution of our fuel cell systems throughout the telecom and utility markets in South Africa. We expect this initiative to positively impact businesses and customers who are regularly affected by power outages resulting in decreased reliability throughout their networks and infrastructure.”

The IFC grant is the first under the Fuel Cell Financing Initiative for Distributed Generation Applications, a $54m programme funded by the Global Environmental Facility. The program aims to bring clean, reliable electrical power to places in developing countries where grid power is either not available or unreliable. Its long-term objective is to catalyze the creation of sustainable markets for fuel cells in developing countries. The initiative is currently the only multilateral program that promotes stationary fuel cells.

In its first stage, the Fuel Cell Financing Initiative will subsidize commercial and pre-commercial fuel cell projects, granting a total amount of $9 million between 2004 and 2008. Projects will be subsidized up to $2000 per kilowatt, or 50% of the capital costs of the units, whichever is lower. During the second stage, the program will provide as much as $45 million in funding, but the subsidy level will be lower and will reflect the near commercial costs of the technologies. Fuel cells use an electrochemical reaction, rather than combustion to produce electricity.