UK Climate Investment and Norfund in US$100m renewable energy equity deal in South Africa

SOUTH AFRICA – UK Climate Investment (UKCI) and Norfund have announced that they will finance what will become one of South Africa’s largest renewable energy equity deal valued at around US$100 million, reports ESI Africa.

The financing is a joint venture between H1 Holdings and Pele Green Energy for a 40% equity participation in a 700MW portfolio of onshore wind farms.

Both partners will invest alongside Enel Green Power who will retain a 60% ownership interest.

UKCI and Norfund’s commitment is aligned with the UN’s Sustainable Development Goal number seven to increase access to clean, reliable and affordable energy which is a critical enabler of social and economic development.

Despite having some of the world’s best renewable energy sources, almost 600 million people in sub-Saharan Africa live without access to electricity and whilst this number has been in steady decline over recent years, the COVID-19 pandemic has halted progress, 13 million more people lacked access to electricity in 2020 compared to the previous year.

In addition to tackling this challenge, UKCI and Norfund’s investment will also aim to accelerate South Africa’s transition to a low carbon economy, with a strong emphasis on enhancing Broad-based Black Economic Empowerment (B-BBEE).

To this end, the portfolio will make annual social investments in their host communities which have historically been disadvantaged. These B-BBEE investments will reinforce the joint venture partners as leading independent power producers (IPPs).

The investment from UKCI strengthens the UK Government’s commitment to supporting a green post-COVID-19 recovery in South Africa and also exemplifies the kind of innovative climate financing and partnership between development finance institutions and the private sector promoted through the Climate Finance Leadership Initiative (CFLI).

“It is vital that we maximise the potential of renewable energy as South Africa looks to tackle its current energy deficit and deliver their ambitious Nationally Determined Contribution (NDC) with its targets for emissions reductions by 2030”

Antony Phillipson, British High Commissioner to South Africa said: “The UK Government is committed to making sizeable climate finance investments here in South Africa. This latest initiative from UK Climate Investments will support the expansion of renewable energy and boost local ownership in the sector. It is vital that we maximize the potential of renewable energy as South Africa looks to tackle its current energy deficit and deliver their ambitious Nationally Determined Contribution (NDC) with its targets for emissions reductions by 2030. This is a key part of delivering a just transition.”

“We are proud to partner with leading global investment firms such as the UKCI and Norfund to drive a just energy transition in South Africa. This investment expands our operational involvement in wind farms across South Africa but of more significance is the offshore direct investment being attracted into the South African economy. We are humbled to continue serving the objectives of the National Development and Integrated Resource Plans, as these projects form part of the government’s Renewable Energy Independent Power Producers (REIPPP) Programme,” said Gqi Raoleka, Managing Director of Pele Green Energy.

Pele Green Energy, which will assume a more operational role across the portfolio, will bring technical expertise given its unique position as one of the few South African IPPs that controls and operates a utility-scale power plant.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals, and insights from Africa’s business, economy, and more. SUBSCRIBE HERE

Other Recent Posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.