Norway’s investment fund for developing countries, Norfund and the UK’s development finance institution (DFI), CDC Group, have commitment to invest R600 million in H1 Holdings – a South-African, black-owned and managed renewables investment and development company.
This memorandum of understanding embodies a joint vision by the DFIs to mobilise climate finance to Africa and back clean infrastructure projects across the continent.
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The investment from Norfund(R360 million) and CDC (R240 million), which will soon be renamed British International Investment (BII), aims to improve access to clean and affordable energy in South Africa. This increase in clean energy supply will provide consistent power to cities, villages, townships, businesses and farms, and increase productivity that will encourage economic growth.
“I believe that the new Norwegian climate investment fund managed by Norfund will be our most efficient tool to help accelerate the global clean energy transition, making it possible to base necessary development on renewable energy and limit the climate crises devastating impacts on the world’s poor,” explains Norwegian Minister of International Development Anne Beathe Tvinnereim.
“I am confident that this first investment under the new climate mandate will be the first of many mutually beneficial partnerships that contribute to a just transition in South Africa and in the other markets that Norfund aims to prioritise.”
H1 Capital will use the investment to fund a pipeline of over 2.4GW of new wind and solar projects, generating approximately 6 400GWh per year. This will contribute to avoiding annual emissions of 6.2Mt of carbon and help to accelerate South Africa’s transition to clean energy.
“H1 is excited to be able to partner with Norfund and CDC to achieve our purpose of improving the quality of lives,” said H1 Capital CEO Reyburn Hendricks.
“South Africa needs access to long-term, patient capital to develop the large-scale energy projects required for reliable, clean power supply and economic development. H1 hopes that the partnership fostered with Norfund and CDC can be replicated with other players and projects in Sub-Saharan Africa”.
H1 plans to roll out a tenth of South Africa’s renewable capacity target
South Africa has set an ambitious target to generate 20GW of new renewable capacity over the next decade to address power shortages and decarbonise the power generation fleet, where 86 per cent of the country’s energy mix is thermal.
The investment in H1 Capital demonstrates commitment by the UK and Norway to act on pledges made at COP26 – scaling climate finance to Africa and deepening collaboration on solutions that will meet the continent’s needs and address the climate emergency.
At the summit, Norway announced the creation of a new climate investment fund to be managed by Norfund, and this capital to H1 Capital will be the first investment under the new fund.
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Featured image by Lindsey Schutters/VentureBurn