Africa is at a pivotal moment in its fight against climate change and South Africa, is increasingly vulnerable to its impacts, facing significant environmental challenges related to water scarcity, extreme weather events, and energy transitions.
Innovative climate tech solutions offer a path toward resilience and sustainability, but the road to success has challenges – in particular four key elements to be overcome to enable the success of climate tech startups in South Africa. Those key elements include blended finance, local partnerships, regulatory support, and innovation in technology deployment.
Blended Finance to unlock capital for local innovation
Blended finance, which combines public, private, and philanthropic capital, is a powerful tool in achieving the UN Sustainable Development Goals (SDGs) related to climate action, affordable clean energy, and infrastructure innovation. In a landscape where traditional venture capital is still developing, particularly in Africa, blended finance structures can unlock significant opportunities for scaling climate tech innovations.
Josh Romisher, CEO of Holocene, highlights the importance of blended finance in addressing the unique challenges faced by African startups: “Blended finance de-risks investments in climate tech, making it more attractive for private investors. In leveraging different funding sources, we can mobilise the capital needed to scale critical innovation and positively impact many lives.”
The Green Outcomes Fund, a partnership between National Treasury’s Jobs Fund and GreenCape, is designed to provide incentives to local fund managers to increase investment in green small and growing businesses. The fund leverages both public and private capital to support initiatives focused on water management, waste reduction, renewable energy, and sustainable agriculture – helping climate tech startups through financial support and expertise, driving scalable green innovations across South Africa.
Local Partnerships to build a supportive ecosystem
The development of climate tech solutions in South Africa requires local tailoring, which raises costs and adds complexity. This underscores the importance of building strong local partnerships that can provide the necessary infrastructure, local knowledge, and market access.
“Collaborative through local partnerships, is essential for empowering startups to innovate effectively within the South African context,” says Romisher. “The partnerships help navigate the challenges of inadequate infrastructure, unreliable power supply, and regulatory complexities.”
Local start-up Holocene, has focused on climate resilience through data-driven solutions and successfully partnered with local municipalities and universities to leverage local expertise and infrastructure, resulting in more accurate climate risk assessments and tailored solutions for communities vulnerable to climate change. The impact to date has improved disaster response planning and enhanced community resilience in key areas like the Western Cape.
Through local partnerships, Holocene has also facilitated the creation of a supportive ecosystem through education and training that addresses gaps in R&D facilities and increasing local STEM talent. This holistic approach will ensure that startups have the resources and networks needed to thrive.
Create an enabling environment through regulatory
The regulatory landscape in South Africa presents both opportunities and challenges for climate tech startups. While the country has made strides in creating policies that support innovation, navigating the complex regulatory environment remains a critical task. Startups must engage with local policymakers to advocate for regulations that foster growth and sustainability.
Majaja emphasizes this need: “In South Africa, regulatory support is key to driving innovation. Startups should collaborate with regulators to shape policies that encourage cleantech development. We have seen progress with the Government’s Green Economy Accord, which incentivizes green technology adoption and provides financial support for sustainable startups, helping to create a more favourable environment for growth and investment”.
The South African Renewable Energy Business Incubator (SAREBI), supported by the Industrial Development Corporation (IDC) and the Department of Trade, Industry and Competition (DTIC), is another example of blended financing in action to support renewable energy entrepreneurs and startups. The initiative helped climate tech companies access the resources they need to develop and commercialize renewable energy solutions, with a focus on solar and wind energy technologies.
The Climate Technology Centre and Network (CTCN), in partnership with the South African Department of Environmental Affairs and other local institutions, has facilitated blended financing for projects like the development of a South African climate innovation centre. Climate tech startups, receive business development support through a combination of public funds, international donor support, and private investments. The centre focuses on the energy efficiency, waste management, and sustainable agriculture sectors.
Scaling through innovative tech deployment
“The ability to deploy innovative technologies at scale is critical for the success of climate tech startups. This includes leveraging advanced technologies like smart grids, renewable energy solutions, and sustainable infrastructure to address the specific challenges faced by South Africa. Startups like Zimi Charge and Plentify are prime examples of how deployment can drive success”, adds Romisher.
Founded in 2021, Zimi charge has quickly expanded its electric vehicle (EV) charging network across South Africa to provide accessible and sustainable charging solutions. This has enabled EV owners to reduce fuel costs by up to 90%, while and contribute to a reduced carbon footprint.
SA start-up Plentify’s smart energy management solutions have made significant strides in optimising energy usage and reducing carbon footprints. Their flagship offering, “HotBot,” integrates with the electrical grid to manage energy consumption efficiently, reducing peak energy use by 40% and maximum monthly demand by 50% which provides tangible financial benefits to consumers.
The success of climate tech startups in South Africa hinges on the strategic integration of blended finance, local partnerships, regulatory support, and innovation in technology deployment. By addressing these four key elements, startups can overcome the unique challenges of the African market, scale their operations, and drive meaningful impact in the fight against climate change.
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