European Commission

UK Climate Investments (UKCI) has announced a £14 million (R253 million) agreement with H1 Holdings to support the development of 254MW of clean energy projects across South Africa.

In a company statement, UKCI explained that it will provide critical financing for the development of the Kruisvallei Hydro project in the Free State province (4MW), the Kangnas Wind Farm in the Northern Cape province (140MW) and the Perdekraal East Wind Farm in the Western Cape province (110MW).

The financing will be provided through an innovative funding mechanism developed by UKCI in close consultation with H1 Holdings and designed to support Black Economic Empowerment (BEE) entities. 

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The projects are expected to be completed by the end of 2020 and provide enough clean electricity to power nearly 200,000 homes each year. During their lifetime, they will help avoid approximately 844,000 tonnes of greenhouse gas emissions per annum.

Richard Abel, the managing director of UKCI, said: "Over 90% of electricity generation capacity in South Africa currently relies on fossil fuels. Our partnership with H1 Holdings supports the country’s transition to a new energy mix – promoting cleaner growth in southern Africa’s largest economy whilst stimulating economic development in rural areas and supporting increased BEE participation in the renewables sector."

Nigel Casey, British High Commissioner to South Africa, said: "The South African Government recently underlined that secure energy supply is essential for the country’s development and that they are committed to expanding the availability of renewable power. 

"I’m delighted that the British Government is supporting this, through UK Climate Investments and their partners, through this significant investment in three renewable energy projects, in partnership with H1 Holdings, a majority black-owned and managed company. In this way, the British Government is simultaneously supporting the low carbon transition, and economic transformation, in South Africa."

In addition to promoting cleaner growth, the projects will stimulate rural development by employing and training at least 40% of construction, operations and maintenance staff from local communities.

Reyburn Hendricks, Chief Executive Officer of H1 Holdings, said: "H1 Holdings is proud to be working with UK Climate Investments on promoting access to cleaner electricity in southern Africa.

"Energy is a highly capital-intensive industry and access to finance is a challenge across the industry for all players. Our partnership will help to address the need for new generation capacity in South Africa."

The investment represents UKCI’s second commitment in sub-Saharan Africa and their fifth investment in total.

In January, UKCI and Investec announced that they would act as cornerstone investors in Revego Africa Energy Limited. The dedicated African renewable energy yieldco intends to seek a listing on the Johannesburg Stock Exchange later in 2019, targeting an initial listing size of R2 billion.  

UKCI is a joint venture between the Green Investment Group and the UK Government’s Department for Business, Energy and Industrial Strategy. UKCI forms part of the UK aid-funded International Climate Finance. UKCI is managed by Macquarie Infrastructure and Real Assets, the world’s largest infrastructure manager.