UK’s development finance institution, British International Investment (BII), is joining Norfund, the Norwegian Investment Fund for developing countries, in its joint venture with Scatec ASA to provide capital for Africa’s hydropower sector.
The parties announced that they will invest up to $200 million of capital over the next several years in hydropower projects in Africa. This will be the largest investment in hydropower in BII’s 74-year history. Norfund is seeding the partnership with their existing share in their joint venture with Scatec, and further capital commitments of up to $100m over the next several years.
“British International Investment is helping to deliver on the UK’s vision for the Clean Green Initiative, by providing capital to power inclusive economic sustainability across Africa,” said UK Minister for Africa, Vicky Ford.
“Investing to bolster Africa’s hydropower sector is a strong step toward helping to meet the energy demands of three million people in countries most at risk to the impacts of the climate emergency. Through these projects, UK finance will enable job creation and drive clean productive growth across the continent,” Ford added.
The JV’s investments are expected to support the creation of 180,000 jobs, avoid at least 270,000 tCO2e of GHG emissions annually, and could provide enough clean electricity to meet the equivalent demand of over 3 million people.
The investment extends and compliments BII’s and Norfund’s existing commitments and partnerships to powering Africa, through Globeleq, a 2.3GW IPP company in which BII and Norfund are shareholders, and the joint investment the two development finance institutions have in H1 Capital – a South-African black-owned and managed renewables investment and development company.
“We are excited to have British International Investment join our venture with Norfund and this is testimony to the importance of hydropower across Africa. This strong partnership and investment by BII will support our concerted effort to boost the continent’s renewable energy drive and deliver affordable and clean energy to the world,” said Terje Pilskog, CEO at Scatec.
Hydropower critical for Africa’s energy transition
Norfund and BII now together hold a 49% stake in Scatec’s African hydropower portfolio, which includes a mixture of operating assets as well as a number of assets under development, including the proposed 205MW Ruzizi III hydropower plant, which will provide power to Rwanda, Burundi and DRC, the 120 MW Volobe hydropower plant in Madagascar and the 350MW Mpatamanga project in Malawi among others.
BII is entering a new five-year strategy period. The new strategy will see it invest between £1.5 and £2 billion per annum, with at least 30 per cent devoted to climate finance.
“Hydropower is critical for providing clean baseload and peaking power, especially in landlocked countries in Africa, as the continent countries transition away from fossil fuels towards a net zero future. BII along with its partners will play a key role in providing inclusive and sustainable finance to support hydropower in sub-Saharan Africa. It is great that we are partnering with Norfund and Scatec in this partnership,” said Chris Chijiutomi, Managing Director, Head of Infrastructure Equity, Africa & Pakistan at BII.
Commenting on the partnership, Mark Davis, Executive Vice President Clean Energy in Norfund, said: “The expansion of dispatchable renewables is critical to support the integration of more wind and solar energy in Africa. We are delighted to be able to join forces with BII in our partnership with Scatec, to further scale up our ability to provide clean and affordable energy through hydropower, enabling economic development and job creation, while avoiding emissions.”