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The Southern African Power Pool (SAPP), in collaboration with the Southern African Development Community (SADC), has announced the appointment of Climate Fund Managers (CFM), a climate-centric blended finance fund manager, to oversee its Regional Transmission Infrastructure Financing Facility (RTIFF). This facility, with a targeted value of USD 1.3 billion, is aimed at enhancing strategic interconnection and cross-border energy transmission within the Southern Africa region.
Transmission infrastructure projects in the energy sector are known for their high risk and substantial capital requirements, making them difficult to finance solely through sovereign capital. The RTIFF’s blended finance approach mitigates this challenge by leveraging public funds to balance risks and attract private investment. It is expected to enhance energy transmission among the 16 SADC member states and other power pools, thereby fostering long-term energy security, economic growth, and climate resilience through the integration of sustainable energy sources.
With an initial commitment of USD 20 million from SAPP, the facility aims for a first close of USD 500 million by 2025, to be sourced from both public and private sector investors globally and locally, with a final close of USD 1.3 billion within 24 months. The facility is expected to operate for 20-25 years.
RTIFF will prioritize projects that focus on connecting currently unconnected SAPP members, alleviating congestion bottlenecks in regional electricity trading, facilitating inter-continental power trading through transmission corridors, and supporting the adoption of renewable energy sources in the region.
SAPP, consisting of 12 Southern African countries represented by their national power utilities and some private utilities under the SADC, operates a competitive electricity market in the region. RTIFF aims to provide power companies and project developers addressing transmission issues with access to patient capital and development expertise to establish strategic interconnections for increased electricity trade.
Victor Mapani, Chairperson of the SAPP Executive Committee, emphasized the critical role of transmission infrastructure in delivering sustainable power. He noted that RTIFF, through its blended finance model, enables public-private collaboration to scale up new transmission lines effectively. CFM, with its experience in the African energy sector, has been entrusted to establish and manage this innovative facility.
Engineer Stephen Dihwa, Coordination Centre Executive Director of SAPP, highlighted RTIFF’s objective of mobilizing investment capital for new cross-border transmission infrastructure and in-country transmission infrastructure, necessary for regional electricity trading. He underscored the economic benefits of prioritized transmission projects, estimating significant savings for the SADC region by 2040.
Amit Mohan, Head of Private Credit at CFM, stressed the urgent need to invest in grid infrastructure to address ongoing blackouts and ensure universal access to reliable electricity, particularly in light of the energy transition towards green sources. CFM looks forward to leveraging its expertise to support SAPP in mobilizing blended finance to expand grid infrastructure in the region.
RTIFF’s fund structure will mirror CFM’s existing blended finance facilities, Climate Investor One and Climate Investor Two, comprising a Development Fund and a Construction Fund, aimed at providing concessional capital, development expertise, and construction finance to support project builds and ensure compliance with environmental, social, and governance (ESG) standards. |
