Norwegian Investment Fund for developing countries (Norfund) and UK government’s development finance institution CDC Group will invest ZAR 600 million ($39 million) in South African black-owned and managed renewables company H1 Capital to support its 2.4 GW new solar and wind energy pipeline.
H1 Capital is a partner of Norway’s Scatec for 540 MW solar and 225 MW battery storage project in Kenhardt. Scatec said this investment will enable H1 Capital to fund its equity share in the project.
This investment, hope the 2 investors, will improve clean and affordable energy supply in South Africa contributing a total of around 6,400 GWh annually to be supplied to cities, villages, townships, businesses and farms.
While Norfund has committed ZAR 360 million ($24 million), ZAR 240 million ($15.6 million) will be pooled in by CDC that’s soon to be rebranded as British International Investment (BII). Their financial commitment is a pledge they made at COP26 to scale climate finance to Africa.
They say the investment is aligned with the country’s efforts to decarbonize and diversify its energy supply and achieve 20 GW of new renewables capacity over the next decade.
Currently, South Africa’s energy mix is heavily reliant on thermal power with aging plants providing unreliable electricity supply through the sole electricity utility Eskom.
“South Africa needs access to long-term, patient capital to develop the large-scale energy projects required for reliable, clean power supply and economic development,” said H1 Capital’s CEO Reyburn Hendricks. “H1 hopes that the partnership fostered with Norfund and CDC can be replicated with other players and projects in Sub-Saharan Africa.”