Sadc power pool announces $1.3bn energy facility

The Southern African Development Community (SADC) has made a significant stride towards boosting energy infrastructure with the launch of a $1.3 billion energy facility. The initiative, known as the Southern Africa Power Pool (SAPP), aims to address the challenge of transmission lines and interconnectors to support the growing number of renewable energy projects in the region. This milestone marks a shift towards incorporating private sector investments in the traditionally public-dominated energy sector, signaling a new era of collaboration and innovation in the energy transition landscape. The partnership between SAPP and Climate Fund Managers has paved the way for the creation of the ARSA fund, which will focus on identifying and funding projects that require transmission lines. These interconnectors will facilitate the movement of electrons across borders, allowing countries with abundant renewable energy resources to supply clean electricity to neighboring regions. With a target of $1.3 billion by 2025, the fund has already garnered interest from various investors, including development finance institutions and multilaterals, as well as institutional investors seeking opportunities in the energy transition. Blended finance, a mechanism that combines public and private funding for infrastructure projects, has played a key role in driving the growth of the energy sector in Southern Africa. By leveraging different funding sources and risk profiles, Climate Fund Managers has been able to attract a diverse range of investors to support energy initiatives in the region. The partnership between public and private sectors has unlocked new possibilities for financing transmission lines and substations, which were previously overlooked in favor of generation projects. Kevin Anderson, Head of Strategic Initiatives at Climate Fund Managers, emphasized the importance of connecting generation assets with off-takers to ensure reliable electricity supply for businesses and communities. The initiative is expected to have a positive impact on businesses by addressing transmission shortfalls and creating new opportunities in the energy market. As South Africa, a major player in the SADC region, engages with the initiative, collaboration with utilities like Eskom will be crucial in accelerating the deployment of transmission infrastructure. In addition to addressing energy challenges, the initiative also holds promise for addressing broader climate issues such as water scarcity. Climate Fund Managers has a dedicated fund focused on water funding needs, recognizing the interconnected nature of climate challenges. By mobilizing resources towards both energy and water projects, climate investors can contribute to sustainable development goals and climate resilience. The urgency of the climate crisis underscores the need for swift and coordinated action to mitigate its impact. As the energy transition gains momentum in Southern Africa, the launch of the $1.3 billion energy facility marks a significant milestone in driving sustainable development in the region. By leveraging blended finance and private sector partnerships, SAPP and Climate Fund Managers are paving the way for a more resilient and interconnected energy infrastructure that will support the transition to a cleaner and more sustainable energy future.