An Investigation into the Models for Financing Renewable Energy Production in Low-Income Settlements in Gauteng, South Africa

South Africa is challenged by the lack of stable modern electricity which is essential for economic and social development. Many Gauteng communities, especially in rural, informal, and low-income settlements are not connected to the national grid i.e., Eskom, while 39% of the province residents are in the dark relying on paraffin and gas for surviving the cold winter. Further, these two components increase the number of fire fatalities in the informal settlement and the hiking price of electricity, adding to the burden to the poor. The study reviewed existing literature on the available financing model renewable energy and collected primary data in the form of structured interview questionnaires from industry participants and stakeholders. This study focused on models of financing RE in the country are analysed, with focus on suitable financing model and source of financial exposure the project finance, green finance, public, private and partnerships, government grants and private investors also the direct foreign investors, resulting in a mixture of financing model. The study used the mixed methodology approach to develop a framework through which REP development is related to the perspectives of financiers and policymakers to enable reliable and useful research findings. This divergence presents a key obstacle to financing renewable energy. Further, results show that traditional financing methods have been largely ineffective in promoting the development of RE, hence, the need for innovative financing channels to increase RE development in Gauteng and South Africa. Also, the results revealed that financiers of green energy consider renewable energy to be highly risky even when supported by government policies. Therefore, the study proposes financing models that amalgamate financiers into a small financing consortium using mixed financing models to fund localised RE projects, the kind of models that spread risk among several investors, thereby, reducing the potential risks of investments while delivering on the objective and benefits of tax rebates or other allowance when investing in RE.