British International Investment, the UK’s development finance institution, is partnering with Norfund, the Norwegian Investment Fund for developing countries, in its joint venture with Scatec ASA to provide capital for Africa’s hydropower sector.
This will be the largest investment in hydropower in BII’s 74-year history, with up to $200m of capital committed over the next several years. Norfund is seeding the partnership with their existing share in their joint venture with Scatec and further capital commitments of up to $100m over the next several years.
UK Minister for Africa, Vicky Ford, said: “British International Investment is helping to deliver on the UK’s vision for the Clean Green Initiative, by providing capital to power inclusive economic sustainability across Africa. Investing to bolster Africa’s hydropower sector is a strong step toward helping to meet the energy demands of three million people in countries most at risk to the impacts of the climate emergency. Through these projects, UK finance will enable job creation and drive clean productive growth across the continent.”
The investment extends and compliments BII’s and Norfund’s existing commitments and partnerships to powering Africa, through Globeleq, a 2.3GW IPP company in which BII and Norfund are shareholders, and the joint investment the two development finance institutions have in H1 Capital – a South-African black-owned and managed renewables investment and development company.
Norfund and BII now together hold a 49% stake in Scatec’s African hydropower portfolio, which includes a mixture of operating assets as well as a number of assets under development, including the proposed 205MW Ruzizi III hydropower plant, which will provide power to Rwanda, Burundi and DRC, the 120MW Volobe hydropower plant in Madagascar and the 350MW Mpatamanga project in Malawi among others. All assets under development are aligned with the Paris agreement and demonstrate the partnership’s commitment to supporting the respective countries in their net zero pathways.
The various pipeline projects will be designed and constructed over the next several years. BII estimates that in a decade the clean electricity provided by the JV’s new assets could support the creation of at least 180,000 further jobs, avoid at least 270,000 tCO2e of GHG emissions annually, and meet the equivalent demand of more than 3 million people.
BII is entering a new five-year strategy period. The new strategy will see it invest between £1.5 and £2 billion per annum, with at least 30 per cent devoted to climate finance. Norfund was instrumental in building the company known as SN Power into a leading hydropower company in developing countries, which was then sold to the Norwegian renewable energy developer Scatec in January 2021. The parties agreed to collaborate on SN Power’s projects in Africa, under new Scatec ownership, whereby Norfund retained a 49 percent stake, which will now be shared with BII.
