Regional power pool gets R25bn facility to build grid
• Fund to focus on projects that connect unconnected protocol members
Members of the Southern African Power Pool (SAPP) have launched a new R24.8bn facility, which will pool public and private capital, to support grid infrastructure developments focused on improving crossborder energy transmission in the region.
The Regional Transmission Infrastructure Finance Facility (RTIFF) will prioritise projects that focus on connecting unconnected SAPP members.
It will also target projects that will help relieve congestion bottlenecks to regional electricity trading, promote intercontinental power trading through transmission corridors, and support the adoption of new-generation renewable energy in the region.
SAPP, which operates a competitive electricity market in the Southern African Development Community (Sadc), said the facility would provide power companies and project developers working to tackle transmission issues with access to “patient capital and development expertise to establish strategic interconnections that allow for increased electricity trade”.
“Access to capital is the number one barrier facing developers of energy transmission infrastructure. RTIFF dismantles this by enabling the private sector to work alongside public sector utilities to roll out new transmission lines at scale,” said SAPP chair Victor Mapani.
The facility, which launches with $20m in commitments from SAPP, targets a first close of $500m in 2025 to be raised from public and private sector investors, including development finance institutions locally and internationally and a final close of $1.3bn within 24 months.
The facility will have a fund life of up to 20-25 years.
SAPP, the members of which include the electricity utilities of 12 Sadc countries such as Eskom in SA, in partnership with Sadc announced on Tuesday that Climate Fund Managers have been appointed to manage the facility. Amit Moham, head of private credit at Climate Fund Managers, said there was an urgent need to mobilise blended finance “at scale and speed” to enable the rollout of additional grid infrastructure in Southern African regions where 180-million people were exposed to ongoing power disruptions.
The facility will comprise a $100m target development that will provide concessional capital, including grant funding, and development expertise such as support on viability studies, legal and financial structuring, planning and ESG compliance.
In addition, a $1.2bn target construction fund will make direct investments through the provision of construction finance and value-add expertise for project builds.
SAPP has already identified eight high-priority transmission projects for the facility.
Kevin Anderson, head of strategic initiatives at Climate Fund Managers, told Business Day that the shortlist of eight projects did not include any SA projects. This was because the focus would initially be on Sadc countries such as Angola that lack interconnectors between countries.
“SA does have good interconnectors that connect its electricity system with neighbouring countries … the primary focus of the initial funding will go to interconnectors. This does not mean it will not benefit SA.
“In SA we are still exporting electrons to neighbouring countries. In the near future there could be a reversal of that where you will see Namibia develop big solar and wind farms and some of those electrons being exported to SA,” Anderson said.
If the interconnectors between SA and Namibia had to be strengthened to allow for this, it would typically be the type of project that the facility would look to fund, he said.