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RTIFF to boost southern African power grid

RTIFF will provide power companies and project developers working to tackle transmission issues with access to patient capital and development expertise. (Image source: Adobe Stock)

Climate Fund Managers (CFM), a for-profit investment manager, has been appointed by the Southern African Power Pool (SAPP) to manage the Regional Transmission Infrastructure Financing Facility (RTIFF)

The decision by SAPP, taken in partnership with the Southern African Development Community (SADC), will see CFM lead the US$1.3bn target facility that is focused on improving strategic interconnection and cross-border energy transmission in the Southern Africa region.

RTIFF aims to mitigate the high-risk and capital-intensive nature of energy transmission infrastructure projects through its blended finance model. This model makes use of public capital to balance risk and thereby enable private capital to enter. Its aim is to improve energy transmission within and between the 16 SADC member states and with other power pools. This will ultimately generate long-term energy supply security, supporting economic growth and climate resilience.

“The provision of sustainable power can be distilled into three activities: generation, transmission and distribution,” remarked Victor Mapani, chairperson of the SAPP executive committee. “While generation receives the lion’s share of attention, the importance of delivering that power to where it is needed is equally critical. Access to capital is the number one barrier facing developers of energy transmission infrastructure. RTIFF dismantles this by enabling the private sector to work alongside public sector utilities to roll out new transmission lines at scale. We are delighted to have appointed CFM with their strong track record in the African energy sector to establish and manage this innovative facility and to help our member states finally secure a sustainable, resilient energy supply.”

Supporting additional grid infrastructure

RTIFF is launched with US$20mn in commitments from SAPP. A first close of US$500mn is targeted in 2025 (being raised from public and private sector investors) with a final close of US$1.3bn within 24 months.

Amit Mohan, head of private credit at CFM, remarked, “The lack of investment in grid infrastructure is one of the reasons for ongoing blackouts in many parts of southern Africa. With roughly 180 million people living in the region exposed to ongoing power disruptions, universal access to reliable electricity will improve people’s health, safety, financial inclusion, and economic activities. If we don’t invest in grids today, we will face gridlock tomorrow.

“This is even more pressing from an energy transition perspective as the world needs to embrace green electrons on the grid. CFM is proud to be associated with SAPP and appointed as the manager of RTIFF as there is a deep need to mobilise blended finance at scale and speed to enable the rollout of additional grid infrastructure in the region.”

Projects focused on connecting unconnected SAPP member will be the immediate priority of RTIFF in a bid to relieve congestion bottlenecks to regional electricity trading. In doing so, it will promote inter-continental power trading through transmission corridors and supporting the adoption of new renewable energy projects coming online.