Norway’s Climate Investment Fund Powers South Africa’s Energy Transformation Through Historic Anthem Merger

In a landmark move that signals accelerating momentum in South Africa’s renewable energy transition, Norfund, Norway’s development finance institution, has committed US$86.1 million to back the strategic merger of two leading renewable energy companies, creating a powerhouse entity positioned to reshape the country’s energy landscape.

The merger between African Clean Energy Developments (ACED) and Energy Infrastructure Management Services (EIMS) has given birth to Anthem, a renewable energy giant that now commands an impressive portfolio spanning 24 wind and solar photovoltaic projects across five provinces in South Africa, plus a hydroelectric project and a solar PV facility in Eswatini. This consolidation represents over 2.7GW of secured capacity and an ambitious 11GW greenfield pipeline, positioning Anthem with an estimated 15% market share in South Africa’s rapidly expanding renewables Independent Power Producer (IPP) market.

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The Financial Architecture Behind the Transformation

The financial backing for this transformative merger comes through a sophisticated investment structure that highlights the growing international confidence in South Africa’s renewable energy sector. Norway’s Climate Investment Fund is investing US$69 million (NOK 685 million) directly in Anthem, while KLP Norfund Invest (KNI) is contributing US$17.1 million (NOK 170 million). KNI represents a joint investment vehicle owned 51% by Norfund and 49% by KLP, Norway’s largest pension fund.

The deal also includes crucial backing from the African Infrastructure Investment Managers (AIIM) IDEAS Fund, which has established itself as one of South Africa’s largest domestic infrastructure equity funds. Perhaps most significantly, the merger includes founding investor Mahlako Financial Services through its managed Mahlako Energy Fund, marking a historic milestone as the first 100% Black women-owned energy fund in South Africa.

“Access to capital on competitive terms is crucial for us to realise our ambitious plans for renewable energy development in South Africa, and we are therefore very pleased to have Norfund and The Climate Investment Fund on board,” says James Cumming, the CEO of Anthem.

Breaking Barriers: The Mahlako Success Story

The inclusion of the Mahlako Energy Fund in this merger represents far more than just financial backing – it symbolizes the transformation of South Africa’s energy sector through inclusive ownership structures. Founded by sisters Makole Mupita and Meta Mhlarhi, the company was named after their pioneering, entrepreneurial mother, Mahlako Maponya, who built businesses at a time when it was deemed impossible to do so.

With a target size of R1.75 billion, the Mahlako Energy Fund is explicitly designed to facilitate a more liberalized and socially representative energy sector by providing structured equity financing solutions to energy projects and companies. The fund’s investment approach places great importance on selection criteria that encompass returns profile, developmental impact, and environmental, social, and governance (ESG) factors.

“This Fund is the first of its kind – a 100% black women-owned energy fund with a mandate that expands beyond Renewable Energy, to include Gas and Energy Services sectors, as we endeavour to tackle, disrupt and transform SA’s energy sector,” explained Makole Mupita, Fund Principal of the Mahlako Energy Fund.

The fund has already demonstrated its capability through strategic investments, including South Africa’s first large-scale operational wheeling project, a 10 MW solar plant in the Northern Cape that provides clean energy to Amazon Web Services via the Eskom grid. The fund also invested in a landmark 30MW solar photovoltaic portfolio for Harmony Gold, representing one of the first projects under Schedule 2 of the Electricity Regulation Act.

South Africa’s Energy Crisis Context

The Anthem merger comes at a critical juncture for South Africa, as the country grapples with an ongoing energy crisis that has plagued economic development for over a decade. Although South Africa recently celebrated 300 consecutive days without loadshedding as of January 2025 – a milestone last reached in June 2018 – energy security remains fragile.

The country’s heavy reliance on aging coal-fired power plants, which account for approximately 80% of electricity generation, has created persistent supply disruptions. In 2022, loadshedding cost the South African economy around R560 billion, while Eskom’s loss after tax was R55 billion in 2024.

Recent analyses warn that without urgent action, another energy crisis could emerge as soon as coal decommissioning is resumed. The 2025 Energy Market Projections report emphasizes that South Africa must urgently scale up storage, finalize gas infrastructure, accelerate renewables, and fix the grid connection backlog to prevent a return of significant loadshedding.

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The Renewable Energy Market Dynamics

South Africa’s renewable energy sector is experiencing unprecedented growth, with the market size estimated at 18.41 gigawatts in 2025 and projected to reach 31.10 gigawatts by 2030, reflecting a compound annual growth rate of approximately 11.05%. This expansion is driven by the government’s commitment to diversify away from coal-dependent power generation.

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has been instrumental in this transformation, successfully procuring over 6.4 GW across multiple bid windows. Under the latest Bid Window 7, eight solar PV projects totaling 1,760MW were appointed as preferred bidders, with the possibility of additional wind projects adding 932.2MW of capacity.

The government’s Integrated Resource Plan envisages a total addition of 29,500 MW of electricity capacity by 2030, with renewables playing the leading role through 14,400 MW from wind and 6,000 MW from solar photovoltaic installations.

Strategic Significance for Climate Finance

Bjørnar Baugerud, Head of The Climate Investment Fund at Norfund, emphasized the strategic importance of the investment: “Anthem will be a key investment in The Climate Investment Fund’s efforts to support the transition to renewable energy in South Africa, making a significant contribution in terms of avoided emissions, while also ensuring the country has reliable access to the energy needed for growth out of poverty.”

The Climate Investment Fund, which has been managed by Norfund since 2022, had invested NOK 5.6 billion in climate projects by the end of 2024, contributing to reducing greenhouse gas emissions by 17.6 million tons of CO2 annually. The fund represents Norway’s commitment to international climate finance and its recognition that developing countries need substantial support to achieve their energy transition goals.

This investment aligns with broader international climate finance initiatives, including the World Bank-linked Climate Investment Fund’s recent approval of the next phase of South Africa’s coal-exit plan, which unlocked R47 billion ($2.6 billion) in funding.

The ACED and EIMS Track Record

Both companies bring substantial experience and proven track records to the merger. ACED has successfully brought to life 1.4 gigawatts of new renewable projects, with a combined investment exceeding R35 billion ($1.8 billion). The company has been actively involved in South Africa’s renewable energy industry since 2008 and ranks as the most successful renewable energy developer in the South African market to date.

EIMS Africa, meanwhile, operates as one of the largest South African-owned renewable energy companies, with a portfolio of 11 utility-scale projects boasting a combined generation capacity of over 700MW. The company specializes in the development, operation, and management of renewable energy solutions across Southern Africa.

The combined expertise of these entities has recently been demonstrated through successful projects such as the 140MW Ishwati Emoyeni Wind Farm, which reached financial close in early 2025. The R4.9 billion project features 32 Vestas 4.5MW wind turbines and is scheduled to begin generating electricity in 2026.

Addressing Investment Challenges in Developing Countries

The Anthem merger addresses a fundamental challenge in renewable energy financing: the capital-intensive nature of clean energy projects. As noted in the original announcement, “For renewable energy, almost the entire cost comes at the time of investment. This means that high capital costs, due to higher risk in developing countries, can hinder the transition from coal to renewables.”

Standard Chartered Bank served as Norfund’s financial advisor in the deal, bringing international banking expertise to structure the complex transaction. The bank’s involvement reflects the growing sophistication of renewable energy financing in emerging markets and the increasing willingness of international financial institutions to support clean energy transitions in developing countries.

This financing challenge is particularly acute in Africa, where traditional energy infrastructure has been underdeveloped, but where abundant solar and wind resources present enormous opportunities for leapfrogging to clean energy systems. The success of blended finance structures – combining development finance with commercial investment – is becoming increasingly critical to unlock the capital needed for energy transitions across the continent.

Future Implications and Industry Impact

The creation of Anthem represents more than just a corporate merger; it symbolizes the maturation of South Africa’s renewable energy sector and demonstrates how international development finance can catalyze transformative change in emerging markets. With its substantial 15% market share and 11GW pipeline, Anthem is positioned to play a pivotal role in South Africa’s energy future.

The company’s success will be closely watched as a model for how development finance institutions can support large-scale renewable energy deployment while ensuring local ownership and transformation objectives are met. The involvement of the Mahlako Energy Fund particularly highlights how energy transitions can serve broader socio-economic development goals.

As South Africa continues to grapple with the need to balance energy security with climate commitments, entities like Anthem will be crucial in demonstrating that renewable energy can provide reliable, cost-effective power at scale. The company’s diverse geographic footprint across five provinces also positions it to contribute to regional energy security and economic development.

Looking ahead, the renewable energy sector’s projected growth to 47% of peak midday generation by 2030 will require continued investment in both generation and storage infrastructure. Anthem’s combination of operational experience and development pipeline positions it well to capitalize on these opportunities while contributing to South Africa’s broader economic transformation.

The success of this merger may well serve as a blueprint for similar transactions across Africa, where the combination of international development finance, local expertise, and transformative ownership structures could unlock the continent’s vast renewable energy potential.

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By: Montel Kamau

Serrari Financial Analyst

23rd September, 2025