The Southern African Power Pool (SAPP) has announced the appointment of climate-centric blended finance fund manager Climate Fund Managers (CFM) to manage its Regional Transmission Infrastructure Financing Facility (RTIFF) – a US$1,3 billion target facility focused on improving strategic interconnection and cross-border energy transmission in the Southern Africa region.
The new facility will strengthen the Southern African power grid by funding cross-border energy transmission infrastructure.
The blended finance mechanism enables participation of both private and public capital at scale.
“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 overcomes this by utilising public capital to balance risk and enable private capital to enter. The facility will improve energy transmission within and between the 16 SADC member states and with other power pools, generating long-term energy supply security, economic growth, and climate resilience through the inclusion of sustainable energy sources,” CFM said in a statement.
The facility, which launches with US$20 million in commitments from SAPP, targets a first close of US$500 million in 2025 to be raised from public and private sector investors locally and internationally and a final close of US$1,3 billion within 24 months. The facility will have a fund life of up to 20-25 years.
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.
More growth in SAPP projects
Investors are becoming increasingly interested in SAPP, said Vincenza Leitich of Standard Bank. Leitich was speaking at the IPP & PPA Conference, a sideline event to the African Energy Indaba, which took place this week in Cape Town.
“At the crux of the investment conundrum is the security of revenue flows and hence the viability of the off-taker. SAPP is featuring more and more. Quite a few projects want to sell into SAPP and once it has a track record, it will open the market up. It is a point of growth,” she said.
