Climate Fund Managers to Manage SAPP’s $1.3 Billion Energy Transmission Initiative

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SAPP

  • New facility to strengthen Southern African power grid by funding cross-border energy transmission infrastructure;
  • Blended finance mechanism enables participation of private and public capital at scale;
  • Enhanced access to reliable, affordable, and renewable energy in 16 SADC member states.

The Southern African Power Pool (SAPP), in partnership with the Southern African Development Community (SADC), 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.

Related Article: BBVA Brings Its Investment in Climate Funds to €108 million

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.


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