The Southern African Power Pool’s (SAPP’s) Regional Transmission Infrastructure Financing Facility (RTIFF) will be managed by climate-focused blended finance fund manager Climate Fund Managers (CFM), it was jointly announced on Tuesday, on the fringes of the 2024 Africa Energy Indaba, in Cape Town. The RTIFF, developed by the SAPP in partnership with the Southern African Development Community (SADC), aims to raise $1.3-billion to finance improved electricity interconnection and cross-border transmission across Southern Africa.

“The RTIFF aims to mobilise 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,” explained SAPP Coordination Centre executive director engineer Stephen Dihwa. “Interconnection across SAPP via strategic transmission corridors can save the SADC region an estimated $37- [to] $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 $4.3-billion in NPV.”

The RTIFF will provide a means whereby the private sector will be able to work with the public sector utilities in the region to create new transmission lines “at scale”. This is necessary because the biggest obstacle regarding the development of energy transmission infrastructure is access to capital.

“The lack of investment in grid infrastructure is one of the reasons for the ongoing blackouts in many parts of Southern Africa,” affirmed CFM head of private credit Amit Mohan. “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 mobilise blended finance at scale and speed to enable the rollout of additional grid infrastructure in the region.”

The architecture of the RTIFF fund will emulate those of CFM’s emerging market blended finance facilities Climate Investor One and Climate Investor Two. Climate Investor One is focused on renewable energy generation and transmission. Climate Investor Two is focused on water, sanitation and ocean infrastructure.

The RTIFF will be divided into a Development Fund and a Construction Fund. The Development Fund has a target of $100-million, which will be used to support viability studies, financial and legal structuring, planning, and environmental, social and governance compliance, through the provision of development expertise and concessional capital. The Construction Fund has a target of $1.2-billion and will directly invest in projects by providing construction finance, as well as providing value-add expertise.

The SAPP is composed of the electricity utilities of Angola, Botswana, Democratic Republic of Congo, Eswatini, Lesotho, Mozambique, Malawi, Namibia, South Africa, Tanzania, Zambia and Zimbabwe.