British International Investment Partners With Norfund, Scatec to Invest $200 Million in African Hydropower

In its joint venture with Scatec ASA, British International Investment, the UK’s development finance organization, is collaborating with Norfund, the Norwegian Investment Fund for Developing Countries, to raise money for Africa’s hydropower industry.

With up to $200 million in funding pledged over the next years, this will be the greatest hydropower investment in BII’s 74-year history. With their current stake in their joint venture with Scatec and additional cash commitments of up to $100 million over the coming years, Norfund is establishing the partnership.

“British International Investment is helping to deliver on the UK’s aim for the Clean Green Initiative, by giving finance to support inclusive economic sustainability across Africa,” said Vicky Ford, the UK’s minister for Africa. A significant step toward meeting the energy needs of three million people in the nations most vulnerable to the effects of the climate emergency is investing in Africa’s hydropower sector. UK funding for these initiatives will promote clean, productive growth and the creation of jobs throughout the continent.

With Globeleq, a 2.3 GW IPP company in which BII and Norfund are shareholders, and with their joint investment in H1 Capital, a South African black-owned and managed renewables investment and development company, the two development finance institutions’ existing commitments and partnerships to powering Africa are extended and complemented by the investment.

Together, Norfund and BII now own a 49 percent stake in Scatec’s African hydropower portfolio, which consists of both operational and under-construction assets. Examples of these under-construction assets include the 205 MW Ruzizi III hydropower plant in Rwanda, the 120 MW Volobe hydropower plant in Madagascar, and the 350 MW Mpatamanga project in Malawi.

The collaboration is committed to assisting the respective nations in achieving net-zero, as evidenced by the alignment of all assets now under development with the Paris Agreement.

Over the ensuing years, numerous pipeline projects will be planned and built. According to BII, the clean power supplied by the JV’s new assets may enable the development of at least 180,000 additional jobs, prevent at least 270,000 tCO2e of GHG emissions each year, and satisfy the equivalent demand of more than 3 million people within a ten-year period.

A new five-year strategic era for BII is beginning. With at least 30% going toward climate finance, the new approach will see it invest between £1.5 and £2 billion annually. Norfund played a key role in establishing SN Power as a top hydropower provider in developing nations. In January 2021, SN Power was acquired by the Norwegian developer of renewable energy Scatec. Under the new Scatec ownership, the parties agreed to work together on SN Power’s projects in Africa, with Norfund keeping a 49 percent stake that will now be divided with BII.

“Hydropower is critical for providing clean baseload and peaking power, especially in landlocked countries in Africa, as the continent countries transition away from fossil fuels towards a net zero future,” said Chris Chijiutomi, Managing Director, Head of Infrastructure Equity, Africa & Pakistan at BII. In order to develop hydropower in sub-Saharan Africa, BII and its partners will play a critical role in providing inclusive and sustainable funding. It’s fantastic that Norfund and Scatec are joining forces with us in this relationship.