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Norfund, the Norwegian development finance institution, and CDC Group, the UK’s Impact Investor and development finance institution, have announced an investment of ZAR 600 million ($39 million) in H1 Capital – a South-African renewable investment and development company, to support South Africa’s clean energy goals.
Norfund will invest ZAR 360 million, while CDC Group will chip in with the rest amount. This investment is in line with the South African clean energy goals, as it will enable H1 Capital to fund a pipeline of over 2.4 GW of renewable energy projects, including wind and solar projects. These projects will generate approximately 6,400 GWh per year and will contribute to avoiding annual CO2 emissions of 6.2 million tons.
Tellef Thorleifsson, CEO of Norfund, said “We are delighted to be able to put the money to work quickly and effectively through what will be the first investment under the new mandate, with our existing partners in H1 and CDC, in projects in line with the energy plans of the South African government.”
The investment in H1 Capital demonstrates the UK and Norway’s commitment to act on pledges made at COP26 on scaling climate finance to Africa and expanding collaboration green solutions to meet the continent’s energy needs and address the climate emergency.
Nico O’Donohoe, CDC Group Chief Executive, commented, “ This investment marks another key step toward fulfilling our pledge to devote greater capital to fund clean infrastructure and to support markets like South Africa on their path toward a just transition.”
The transaction also qualifies for the 2X challenge, which seeks to inspire development finance institutions and the broader private sector to support women in emerging economies with access to leadership opportunities and quality employment that enhance their economic participation and inclusion.
The South African government has set an ambitious goal to generate 20 GW of new renewable capacity over the next decade to address power outages and decarbonize its power generation fleet, where thermal power plants comprise 86% of the country’s energy mix. This investment from Norfund and CDC will improve access to clean and affordable energy in South Africa, increasing productivity and encouraging economic growth.
The fund will be used to further South Africa’s energy transition and the plan for disbursement of the money will be discussed at Enlit Africa, an annual energy exhibition and conference that puts together Africa’s power, energy, and water community to meet and inspire each other through state-of-art content and valuable connections.