Climate-centric blended finance fund manager, Climate Fund Managers (CFM), has been appointed by the Southern African Power Pool (SAPP), in partnership with the Southern African Development Community (SADC) to manage its Regional Transmission Infrastructure Financing Facility (RTIFF), a USD 1.3 billion target facility focused on improving strategic interconnection and cross-border energy transmission in the Southern Africa region.
Energy transmission infrastructure projects are notoriously high-risk and capital-intensive, making them challenging to fund independently through sovereign capital alone. RTIFF’s blended finance model seeks to overcome this by utilising public capital to balance risk and enable private capital to enter.
The facility is expected to improve energy transmission within and between the 16 SADC member states and with other power pools. Through the facility, SADC expects to achieve long-term energy supply security, economic growth, and climate resilience through the inclusion of sustainable energy sources.
“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,” said Victor Mapani, Chairperson of the SAPP Executive Committee.
“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,” Mapani adds.
Private investment in transmission infrastructure in SADC
The facility, which launches with USD 20 million in commitments from SAPP, targets a first close of USD 500 million in 2025 to be raised from public and private sector investors locally and internationally and a final close of USD 1.3 billion within 24 months. The facility will have a fund life of up to 20-25 years.
“RTIFF aims to mobilize the substantial investment capital required to invest in new cross-border transmission infrastructure as well as relevant in-country transmission infrastructure required for regional electricity trading to enable SAPP members to increase and improve trading volumes, alleviate congestion on the existing network, incorporate new and green regional power generation resources, improve reliability and create adequate redundancy in the system,” said Engineer Stephen Dihwa, Coordination Centre Executive Director of SAPP.
“ Interconnection across SAPP via strategic transmission corridors can save the SADC region an estimated US$37-42 billion in Net Present Value (NPV) by 2040. We have identified eight high-priority transmission projects for RTIFF that will bring economic benefits of US$4.3 billion in NPV,” added Dihwa.
RTIFF will prioritise 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.
Amit Mohan, Head of Private Credit at CFM commented on the developments saying; “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 mobilize blended finance at scale and speed to enable the rollout of additional grid infrastructure in the region.”