Merger creates SA’s largest renewables provide

From the newsletter

Norfund is investing $86 million to launch a new company, Anthem, which plans to develop up to 11 GW of solar and wind power in South Africa, four times the size of its current portfolio. The investment is partly funded by capital released from Norfund’s exit from the Kenhardt project, the country’s first large-scale hybrid solar and battery facility.

• The launch of Anthem is timely because South Africa needs to solve its current energy problems and develop new sources of power beyond coal, which makes up 80% of the energy composition.

• The company will focus on hybrid battery storage at selected power stations and assess standalone BESS investments. This aligns with national efforts to mitigate solar and wind intermittency in large-scale renewable projects.

More details

• Anthem is established by merging African Clean Energy Developments and EIMS Africa. It will be backed by $ 69 million from The Climate Investment Fund and $ 17.1 million from KLP Norfund Invest, including participation by Mahlako Energy Fund, a female-owned South African investor.

• It launches with seven wind farms in its portfolio, including Umsinde Emoyeni, Khangela Emoyeni, and Ishwati Emoyeni Wind farms. It also has 11 solar plants, including Greefspan, Waterloo, and Vredendal Solar PV plants, with a singular hydro project, the Lower Magaduza Hydro plant.

• The new platform signals a mature, liberalised energy market in South Africa. Deregulation, which included lifting licensing thresholds for private power, drove this change. The market has shifted from a rush for approvals to one focused on consolidation, scale, and mature operations.

• Anthem’s success will be judged on two fronts: its ability to cut emissions by scaling up renewable energy and its capacity to deliver reliable power that supports South Africa’s economic growth. This marks a shift in climate finance that values both environmental impact and socioeconomic returns.

• As the private generation market grows, competition is intensifying. Anthem finds established payers like Scatec, known for projects like the Kroonstad PV Cluster (846 MW), and Red Rocket, with the Overberg Wind Farm, set to be South Africa's largest privately developed wind farm. Additionally, EDF Renewables is developing large clusters like Koruson 1 and 2, focusing on a mix of wind and solar technologies.

• However, the grid is the new bottleneck. South Africa's grid, originally built for a centralised energy model, is now the primary constraint on renewable energy expansion. The best solar and wind resources are often located in remote areas with limited grid capacity, creating a major barrier to connecting new projects.

Our take

• Norfund’s exit from Kenhardt to reinvest in Anthem shows how DFIs can recycle capital to de-risk the next wave of projects. This recycling of funds allows it to continually take on the higher risks that private investors might avoid, helping to kick-start more projects.

• Additionally, expanding hybrid and standalone battery storage investments will be key to managing the intermittency of renewables, ensuring grid stability and providing reliable power for South Africa’s growing industrial and commercial demand.

• The rise of large-scale IPPs like Anthem increases competition in the market, which should drive innovation, lower power costs, and improve service quality for consumers, especially corporate customers seeking “wheeling” agreements.