In a bid to enhance energy infrastructure across Africa, Standard Bank Group, the largest bank on the continent by assets, has announced a strategic partnership with Meridiam, a global investment Benefit Corporation and asset manager. This collaboration, which has been in place for over four years, focuses on driving investments in alternative energy infrastructure projects. The two companies hosted a joint event recently, aimed at exploring further investment opportunities in Africa’s energy sector, highlighting their commitment to sustainable development and long-term growth.

Overview of the Partnership

Since 2015, Meridiam has steadily built its investment presence across Africa, working to expand renewable energy projects and improve infrastructure. Last year, the company made significant strides by acquiring BTE Renewables’ assets in Kenya, a company that develops and operates 250 MW of onshore wind and solar projects, reflecting its growing role in Africa’s energy transformation.

Zen Dlamini, Head of Public Sector and Infrastructure at Standard Bank, underscored the importance of partnerships like the one with Meridiam in fostering sustainable development across the continent. “Given our unrivaled footprint across the continent, we are regularly looking to work with partners that share our vision for building this continent that we call home, and this kind of event is important to mark the excellent work that has gone before and the joint work we intend to continue,” said Dlamini.

The African Energy Landscape and Investment Needs

Africa’s energy infrastructure has long faced challenges, including inadequate investment, insufficient grid coverage, and the need to transition to cleaner energy sources. According to the International Energy Agency (IEA), nearly 600 million people in sub-Saharan Africa still lack access to electricity, making it one of the most energy-deficient regions globally. The situation is even more pressing in rural areas, where grid expansion is slow and costly.

Africa also has a vast renewable energy potential, particularly in solar and wind power, which has yet to be fully exploited. Governments across the continent have recognized the importance of renewable energy, and the private sector has increasingly stepped in to fund and develop alternative energy projects. However, there remains a significant financing gap. The African Development Bank (AfDB) estimates that Africa requires approximately $100 billion annually in energy investments to meet its growing needs, a gap that partnerships like the one between Standard Bank and Meridiam aim to help fill.

Meridiam, with its expertise in financing and developing large-scale infrastructure projects globally, brings critical experience to the table. Thierry Déau, founder and CEO of Meridiam, emphasized the company’s focus on advancing projects that drive growth and development across Africa. “We are singularly focused on funding projects that advance the growth and development of African countries, and with Standard Bank, we have a partner that is in sync with our vision,” he said.

South Africa’s Energy Sector Reforms and Opportunities

The joint event between Standard Bank and Meridiam came at a crucial time for South Africa, the continent’s most industrialized nation, which has been grappling with severe energy shortages. Eskom, the country’s national power utility, has struggled to meet demand due to aging infrastructure, mismanagement, and a reliance on coal-fired power plants. This has led to frequent rolling blackouts (load shedding), which have negatively impacted the economy.

In response, South Africa’s government has embarked on an ambitious reform agenda to liberalize the energy market and encourage private sector investment. Last month, President Cyril Ramaphosa signed the Electricity Regulation Amendment Act, which introduces key reforms to the electricity sector. The Act aims to establish a competitive electricity market, allowing for greater private sector participation and investment in the country’s energy industry.

The Act is seen as a crucial step toward improving energy security and reducing the country’s reliance on coal, which currently accounts for around 80% of South Africa’s electricity generation. The government has set a target of achieving 42% of electricity generation from renewable sources by 2030, highlighting the urgent need for investment in alternative energy infrastructure.

Rudi Dicks, Head of the Project Management Office in the Presidency, who attended the Standard Bank-Meridiam event, welcomed the collaboration between the two companies. “The South African government is on a reform journey that requires cross-societal support, and partnerships such as these are encouraging offshoots that contribute to the growth needed to get to our destination,” said Dicks.

Standard Bank’s Role in Africa’s Energy Sector

As Africa’s largest bank by assets, Standard Bank plays a pivotal role in financing infrastructure projects across the continent. With a footprint in 20 African countries, the bank is uniquely positioned to facilitate investment in key sectors, including energy, which is critical to the region’s economic development.

Standard Bank has a long history of supporting energy projects, particularly in the renewable energy space. In 2022, the bank committed to funding $6 billion worth of renewable energy projects across Africa by 2030, a move that aligns with global efforts to transition to cleaner energy sources and combat climate change. The bank has also worked on various power projects, such as the Lake Turkana Wind Power Project in Kenya, the largest wind farm in Africa.

Moreover, Standard Bank’s strong relationships with governments, regulators, and the private sector across Africa enable it to navigate complex regulatory environments and identify investment opportunities that align with national development goals.

Meridiam’s Growing Presence in Africa

Meridiam, founded in 2005, is a global investment firm that focuses on infrastructure projects in sectors such as energy, transport, and social infrastructure. It is structured as a Benefit Corporation, meaning that it not only seeks financial returns but also aims to deliver positive social and environmental impact through its investments.

In Africa, Meridiam has built a solid track record, particularly in the renewable energy sector. In addition to its recent acquisition of BTE Renewables’ assets in Kenya, the firm has been involved in several other high-profile energy projects. For example, Meridiam is a key investor in the Tulu Moye Geothermal Project in Ethiopia, which is expected to generate 150 MW of renewable energy once completed. The project is part of Ethiopia’s broader strategy to increase its renewable energy capacity and reduce its reliance on fossil fuels.

Meridiam’s investment philosophy is centered on long-term sustainability, and the firm has made a commitment to invest at least 50% of its assets in projects that contribute to the United Nations Sustainable Development Goals (SDGs). This focus on sustainable infrastructure development aligns well with Africa’s growing need for clean energy solutions and resilient infrastructure.

The Path Ahead: Expanding Energy Access and Sustainability

The partnership between Standard Bank and Meridiam is expected to play a significant role in accelerating the development of Africa’s energy infrastructure. By focusing on renewable energy projects, the two companies aim to address the continent’s energy deficit while also contributing to global efforts to combat climate change.

Africa’s renewable energy potential is immense, particularly in solar and wind power. According to a report by the International Renewable Energy Agency (IRENA), the continent could potentially generate up to 310 GW of renewable energy by 2030 if the necessary investments are made. However, achieving this will require not only significant capital investment but also supportive regulatory frameworks and effective public-private partnerships.

Both Standard Bank and Meridiam have expressed their commitment to continuing their collaboration to unlock these opportunities. By leveraging their respective strengths—Standard Bank’s extensive network and financial expertise in Africa and Meridiam’s experience in infrastructure development and sustainability—the partnership is well-positioned to contribute to the continent’s energy transformation.

As Africa continues to urbanize and industrialize, the demand for energy will only increase. Meeting this demand while ensuring sustainability and resilience will be a challenge, but partnerships like the one between Standard Bank and Meridiam offer a promising path forward.

In conclusion, the collaboration between Standard Bank and Meridiam marks a significant step in addressing Africa’s energy challenges. With a focus on renewable energy and sustainable infrastructure, the partnership is poised to make a lasting impact on the continent’s energy landscape, contributing to economic growth, job creation, and improved quality of life for millions of people across Africa.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

30th September, 2024