Norfund is investing ZAR 365m (ca. NOK 220m) in wind farms in South Africa under the new Norwegian Climate Investment Fund. Three wind farms with a total capacity of 420 MW will be built by EDF Renewables, and Norfund is investing in the project through its partnership with H1 Capital.
When the project is up and running, it will deliver more than 1400 GWh per year. Given South Africa’s current energy sources, with a majority coming from coal, the project will avoid more than 1.3 million tonnes of CO2 emissions per year – equivalent to the yearly emissions from 700,000 petrol cars in Norway.
“I am delighted to see how Norfund is able to quickly contribute to fill some of the enormous need for more capital to speed up the transition to renewable energy in South Africa through the new climate investment fund and thus give vital contributions to global efforts to limit the climate crisis”
Minister of International Development Anne Beathe Tvinnereim
The Coleskop, San Kraal and Phezukomoya wind farms, each with a capacity of 140 MW, will be located in the Northern and Eastern Cape provinces, giving a combined capacity of 420 MW. EDF Renewables is developing these projects with its local B-BBEE (Broad-based Black Economic Empowerment) partners H1 Capital and GIBB-Crede. Norfund’s investment will contribute to the financing of H1 Capital’s investments in the projects.
EDF Renewables plans to commission its wind farms between mid-2024 and early 2025. Each farm will consist of 26 wind turbines with a height of 124 m and a blade length of 83 m. The installations are expected to be capable of meeting the electricity needs of at least 193,000 South African households.
Enormous need for investments in South Africa
The 3 projects will sell power to Eskom, the South African utility. Wednesday this week, Eskom chief executive officer Andre de Ruyters said that to overcome the current energy crisis, the country will need to spend close to R1.2 trillion (725 billion NOK) by 2030 to ensure it has enough generation, transmission and distribution capacity to meet the demand, and that renewable energy is the quickest and most cost-effective way to resolve the country’s crisis.
2 billion invested from the Climate Investment Fund
With this new investment, Norfund will already have put more than 2 billion NOK to work under the new climate mandate that became operational in May.
“The need for capital to cover the growing demand for power with renewable sources is enormous in all the priority countries for the climate investment fund, so we will very quickly be able to put to work the 10 billion that have been set aside over the next five years”
Tellef Thorleifsson, CEO of Norfund
The climate investment fund will allocate 10 billion NOK over the next five years, with 1 billion coming from Norfund’s capital and 1 billion from the state budget each year. Since Norfund can advance parts of the fund that originate from Norfund’s own capital, the total amount in the fund could already reach 2.8 billion NOK by the end of 2022.