UK Climate Investments, Norfund Invest in South African Wind Portfolio

Macquarie-managed UK Climate Investments (UKCI) and Norfund 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.

Despite having some of the world’s best renewable energy sources, almost 600 million people in sub-Saharan Africa live without access to electricity. 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).

“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,” said Richard Abel, Managing Director, UKCI.

Macquarie and Enel are founding private sector members of CFLI, and Norfund has been a leading participant among the European Development Finance Institutions which have partnered with CFLI members in emerging and developing markets.

“Norfund believes that providing increased access to affordable renewable energy is an effective way to contribute to create jobs and improve lives. Increasing the share of renewables in the South African energy mix is also an important contribution to limit the climate crisis,” said Bjørnar Baugerud, Vice President, Clean Energy, Norfund.

“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 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. This is a key part of delivering a Just Transition,” stated Antony Phillipson, British High Commissioner to South Africa.

H1 Holdings is known for its fundraising abilities, a key requirement to increase global funding for renewable energy and climate action. Pele Green Energy, which will assume a more operational role across the portfolio, will bring technical expertise given their unique position as one of the few South African IPPs that controls and operates a utility-scale power plant.

Enel Green Power, which will retain a 60% ownership interest in the portfolio, has delivered renewable energy projects in South Africa in the past as well.