Macquarie-managed UK Climate Investments (UKCI) and Norfund announced they are financing a joint venture between H1 Holdings and Pele Green Energy to fund their 40% equity participation in a 700 MW portfolio of onshore wind farms. Both partners will invest alongside Enel Green Power in one of South Africa’s largest renewable energy equity deals valued at around $US100 million.
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.1 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 Black Economic Empowerment (BEE). To this end, the portfolio will make annual social investments in their host communities which have historically been disadvantaged. These BEE investments will strengthen 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. It 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).
Macquarie and Enel are founding private sector members of CFLI, and Norfund has been a leading participant among the European Development Finance Institutions who have partnered with CFLI members in emerging and developing markets.
“UK Climate Investments has operated in the region for over three years now and has committed more than £67 million across several exciting renewable energy projects. This partnership and investment is another sign of the growing maturity of the market, and an indication that the future of green finance in sub-Saharan Africa will be bright. We’re proud to be a part of the solution to transition towards a lower-carbon energy system.”