By Wallace Mawire
The Southern African Power Pool (SAPP), in partnership with the Southern African Development Community (SADC), have announced the appointment of climate-centric blended finance fund manager Climate Fund Managers (CFM) to manage its Regional Transmission Infrastructure Financing Facility (RTIFF), a USD 1.3 billion target facility focused on improving strategic interconnection and cross-border energy transmission in the Southern Africa region.
Energy transmission infrastructure projects are notoriously high-risk and capital-intensive, making them challenging to fund independently through sovereign capital alone. RTIFF’s blended finance model overcomes this by utilizing public capital to balance risk and enable private capital to enter. The facility will improve energy transmission within and between the 16 SADC member states and with other power pools, generating long-term energy supply security, economic growth, and climate resilience through the inclusion of sustainable energy sources.
The facility, which launches with USD 20 million in commitments from SAPP, targets a first close of USD 500 million in 2025 to be raised from public and private sector investors locally and internationally and a final close of USD 1.3 billion within 24 months. The facility will have a fund life of up to 20-25 years.
RTIFF will prioritize projects that focus on connecting currently unconnected SAPP members, help relieve congestion bottlenecks to regional electricity trading, promote inter-continental power trading through transmission corridors, and support the adoption of new generation renewable energy space in the region.
SAPP is a cooperation of 12 Southern African countries represented by their national power utilities and some private utilities under the auspices of the SADC. SAPP members Angola, Botswana, Democratic Republic of the Congo, Eswatini, Lesotho, Mozambique, Malawi, Namibia, South Africa, Tanzania, Zambia, and Zimbabwe have created a common power grid between their countries. The SAPP operates a competitive electricity market in the SADC region. RTIFF will 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.
Victor Mapani, Chairperson of the SAPP Executive Committee said: “The provision of sustainable power can be distilled into three activities: generation, transmission and distribution. While generation receives the lion’s share of attention, the importance of delivering that power to where it is needed is equally critical. 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. We are delighted to have appointed CFM with their strong track record in the African energy sector to establish and manage this innovative facility and to help our member states finally secure a sustainable, resilient energy supply.”
Engineer Stephen Dihwa, Coordination Centre Executive Director of SAPP said: “RTIFF aims to mobilize the substantial investment capital required to invest in new cross-border transmission infrastructure as well as relevant in-country transmission infrastructure required for regional electricity trading to enable SAPP members to increase and improve trading volumes, alleviate congestion on the existing network, incorporate new and green regional power generation resources, improve reliability and create adequate redundancy in the system. Interconnection across SAPP via strategic transmission corridors can save the SADC region an estimated US$37-42 billion in Net Present Value (NPV) by 2040. We have identified eight high-priority transmission projects for RTIFF that will bring economic benefits of US$4.3 billion in NPV.”
Amit Mohan, Head of Private Credit at CFM said: “The lack of investment in grid infrastructure is one of the reasons for ongoing blackouts in many parts of Southern Africa. With roughly 180 million people living in the region exposed to ongoing power disruptions, universal access to reliable electricity will improve people’s health, safety, financial inclusion, and economic activities. If we don’t invest in grids today, we will face gridlock tomorrow. This is even more pressing from an energy transition perspective as the world needs to embrace green electrons on the grid. CFM is proud to be associated with SAPP and appointed as the manager of RTIFF as there is a deep need to mobilize blended finance at scale and speed to enable the rollout of additional grid infrastructure in the region.”
RTIFF’s fund architecture will follow the structure of CFM’s flagship emerging market blended finance facilities Climate Investor One, focused on renewable energy generation and transmission, and Climate Investor Two, focused on water, sanitation, and ocean infrastructure. It will comprise a USD 100 million target “Development Fund” to provide concessional capital and development expertise including support on viability studies, legal and financial structuring, planning and ESG compliance and a USD 1.2 billion target “Construction Fund” that will make direct investments through the provision of construction finance and value-add expertise for project builds.
The Southern African Power Pool (SAPP) was created in 1995 at the SADC summit in Kempton Park, South Africa, when member governments of SADC (excluding Mauritius) signed an Inter-Governmental Memorandum of Understanding for the formation of an electricity power pool in the region.
The ministers responsible for energy in the SADC region signed the Revised Inter-Governmental Memorandum of Understanding on 23 February 2006. The SAPP has twelve member countries represented by their respective electric power utilities and some private utilities organized through SADC. SAPP members are electricity utilities in: Angola, Botswana, Democratic Republic of the Congo, Eswatini, Lesotho, Mozambique, Malawi, Namibia, South Africa, Tanzania, Zambia, and Zimbabwe.
The Southern African Development Community (SADC) is a Regional Economic Community comprising 16 Member States; Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic Tanzania, Zambia and Zimbabwe. The mission of SADC is to promote sustainable and equitable economic growth and socio-economic development through efficient, productive systems, deeper cooperation and integration, good governance and durable peace and security; so that the region emerges as a competitive and effective player in international relations and the world economy.
Climate Fund Managers (CFM) is a leading climate-centric blended finance fund manager. It raises and deploys climate finance funds in partnership at scale and pace. Through its award-winning model, CFM has created a blueprint for a new generation of climate financiers whose collective impact can help end the climate crisis.
CFM currently manages two emerging market infrastructure funds focused on climate change mitigation and adaptation: Climate Investor One, a c. USD 1 billion fund focused on renewable energy, and Climate Investor Two, a c. USD 1 billion fund focused on water, sanitation, and ocean infrastructure. CFM is currently implementing further blended finance initiatives in the green hydrogen, power transmission and cities sectors focused on development, equity, debt and guarantee financial instruments. Established in 2015, CFM is a joint venture between the Dutch development bank, FMO, and Sanlam InfraWorks, part of the Sanlam Group of South Africa with offices in The Hague, Cape Town, Singapore, and Bogota.
