$1.3 Billion Fund to Strengthen Southern African Power Grid

The Southern African Power Pool (SAPP), in collaboration with the Southern African Development Community (SADC), has unveiled a groundbreaking initiative aimed at bolstering the region’s energy transmission infrastructure. Climate Fund Managers (CFM) has been appointed to manage the Regional Transmission Infrastructure Financing Facility (RTIFF), a targeted USD 1.3 billion fund dedicated to enhancing strategic interconnection and cross-border energy transmission in Southern Africa.

Energy transmission projects are traditionally challenging to finance due to their high risk and capital intensity. The RTIFF adopts a blended finance approach, leveraging public capital to mitigate risks and attract private investment. This innovative model seeks to improve energy transmission within and between the 16 SADC member states, fostering long-term energy security, economic growth, and climate resilience through sustainable energy sources.

The facility, commencing with USD 20 million commitments from SAPP, aims for a first close of USD 500 million by 2025, with subsequent fundraising from public and private sector investors locally and internationally. The final close is targeted at USD 1.3 billion within 24 months, with a fund life of up to 20-25 years.

RTIFF will prioritise projects focusing on connecting currently unconnected SAPP members, alleviating congestion bottlenecks, promoting intercontinental power trading, and facilitating the adoption of renewable energy sources in the region.

Victor Mapani, Chairperson of the SAPP Executive Committee, emphasised the critical role of capital access in energy transmission infrastructure development. RTIFF’s innovative approach enables private sector collaboration with public utilities to deploy new transmission lines efficiently, ultimately ensuring sustainable and resilient energy supply across the region.

The lack of investment in grid infrastructure has contributed to ongoing blackouts in many parts of Southern Africa, affecting approximately 180 million people. Amit Mohan, Head of Private Credit at CFM, underscored the urgency of investing in grid infrastructure to address these challenges and support economic activities, emphasising the importance of embracing renewable energy for future sustainability.

RTIFF’s fund structure mirrors CFM’s successful blended finance facilities in the renewable energy and water sectors. The facility comprises a Development Fund, providing concessional capital and development expertise, and a Construction Fund, facilitating direct investments in project builds.

This initiative marks a significant milestone in addressing energy transmission challenges in Southern Africa, paving the way for enhanced regional integration, economic development, and sustainable energy transition.