Climate Fund Managers, a fund manager focused on climate, is launching a $1.3-billion energy fund to finance cross-border energy transmission infrastructure in Southern Africa, aimed at strengthening the power grid.
Climate Fund Managers (CFM), a blended finance fund manager focused on climate, said on Tuesday it was appointed by the Southern African Power Pool (SAPP) and the Southern African Development Community (SADC) to manage the $1.3-billion Regional Transmission Infrastructure Financing Facility (RTIFF).
The facility will be focused on improving strategic interconnection and cross-border energy transmission in the Southern Africa region.
The facility starts with $20 million in commitments from SAPP, a cooperation of 12 Southern African countries represented by their national power utilities and some private utilities.
The facility targets a first close of $500 million in 2025, and a final close of $1.3 billion within 24 months. The facility will have a fund life of up to 20-25 years.
The funds are expected to be raised from public and private sector investors locally and internationally, Climate Fund Managers said.
Despite the abundance of renewable power resources such as solar and wind, African countries have not been able to take full advantage of renewable energy installations because of issues with their underdeveloped and underfunded grids and a lack of sufficient cross-border transmission links.
The new facility, RTIFF, will prioritize projects that focus on connecting currently unconnected SAPP members, help relieve congestion bottlenecks to regional electricity trading, promote inter-continental power trading through transmission corridors, and support the adoption of new generation renewable energy space in the region, according to Climate Fund Managers.
"While generation receives the lion's share of attention, the importance of delivering that power to where it is needed is equally critical," said Victor Mapani, chairperson of the SAPP Executive Committee.
"Access to capital is the number one barrier facing developers of energy transmission infrastructure," Mapani added.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More