UK Climate Investments fulfil cornerstone £25m investment dedicated to African Renewables YieldCo

UK Climate Investments has today fulfilled its cornerstone commitment of ZAR 500m (~£25m) to help establish Africa’s first dedicated renewable energy yieldco, managed by majority black-owned fund manager Revego Fund Managers.

Clean, reliable and affordable energy can be a critical enabler of poverty alleviation, sustainable economic development and the creation of communities more resilient to the challenges posed by climate change. Despite having some of the world’s best renewable energy sources, almost 600 million people in sub-Saharan Africa live without access to electricity.¹ Whilst this number has been in steady decline over recent years, the COVID-19 pandemic has halted progress. 13 million more people lacked access to electricity in 2020 compared to the previous year.²

Revego aims to tackle this challenge and accelerate the deployment of new clean electricity generation capacity by acquiring equity in operational renewable energy projects across South Africa, helping developers unlock and recycle capital. UK Climate Investments has established this innovative green finance vehicle alongside Investec Bank Limited and Eskom Pension and Provident Fund.

The initial portfolio will contain stakes in six projects located across South Africa, with a combined installed capacity of 605 MW. Revego intends to continue to grow its portfolio through the acquisition of new assets across the region.

UK Climate Investments is a joint venture between Macquarie’s Green Investment Group (GIG) and the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS), which invests UK International Climate Finance to help the world’s developing economies tackle climate change and promote clean, resilient and inclusive growth.

“UK Climate Investments has now been investing in sub-Saharan Africa for over three years. During that time, we’ve seen a significant growth in the appetite of investors looking to be part of this fast-developing region’s green transition. The establishment of Revego Africa Energy is another sign of the growing maturity of the market, and an indication that the future of green finance in sub-Saharan Africa will be bright.”

Richard Abel
Managing Director, UK Climate Investments

During its COP26 Presidency, the UK is dedicated to raising global climate ambition and supporting clean energy transition in the run up to the summit. It is committed to creating a greener, fairer and more resilient economy as we recover from the COVID-19 pandemic. This innovative UK programme demonstrates the transformative impact that international climate action can have through its support of economic growth and job creation in sub-Saharan Africa, helping to build resilience to future shocks.

“I am delighted that this yieldco vehicle is being launched, backed by £25 million by UK Climate Investments, an innovative programme blending UK public funds with private finance to support not just renewable energy development, but local ownership and involvement in the sector. The UK will continue to explore how government action can drive private investment in green innovation, creating new jobs, providing clean energy, securing energy provision and protecting participation in the rapidly accelerating global low carbon economy.”

Adam Bye
Acting British High Commissioner

“The renewables sector is at an important point in its growth in South Africa and the rest of sub-Saharan Africa. The portfolio already consists of a number operational, income-earning renewable projects, with further opportunities identified in a growing pipeline.”

Reyburn Hendricks
Chief Executive Officer, Revego Africa Energy Limited

UK Climate Investments also recently marked the delivery of its latest project in South Africa – Kruisvallei Hydro – a run-of-river hydropower facility which it part-financed alongside majority black-owned renewable energy investor H1 Holdings. The project takes the total capacity of renewable electricity financed through the partnership in South Africa to 254 MW.

Managed by Macquarie Asset Management and supported by the wider GIG team, UK Climate Investment’s dedicated team of investment professionals have committed approximately £70 million of UK International Climate Finance over three years to support the development of clean energy and green finance markets in sub-Saharan Africa.