Norway’s development finance institution Norfund has pledged R1.3 billion to Mulilo Renewable Energy, a prominent South African clean energy developer, in a move that underscores efforts to accelerate the continent’s most industrialised economy away from coal dependency. This investment secures Norfund a minority stake in the independent power producer, complementing its growing portfolio of companies driving the nation’s transition to low-carbon electricity sources and challenging the long-standing dominance of state utility Eskom.
Mulilo, which secured a substantial injection from its majority owner Copenhagen Infrastructure Partners in 2023, has since emerged as the leading winner of large-scale battery storage projects in South Africa. The company is poised to play a central role in addressing the country’s evolving energy needs as private sector participation surges. Mark Davis, Norfund’s executive vice president for renewable energy, explained that the focus in South Africa centres on substituting the waning output from coal-fired plants with viable, long-term alternatives. He further noted that recent reforms are liberalising the sector, granting private developers and traders greater access to the transmission grid, as reported by Bloomberg.
South Africa’s latest Integrated Resource Plan outlines the requirement for 34 gigawatts of wind capacity, 25 gigawatts of solar power, and 8.5 gigawatts of energy storage by 2039 to meet future demand sustainably. Projections within the plan indicate that private entities will surpass state-led initiatives in adding new generation capacity over the coming years. Norfund has steadily expanded its presence in the local market through investments in firms such as Pele Energy Group, H1 Capital, Anthem, and the electricity trading company Etana.
Eskom continues to derive more than 80 per cent of the nation’s electricity from coal, but this reliance is scheduled to diminish markedly from 2029, when approximately 8 gigawatts of ageing coal capacity will be decommissioned by the end of the subsequent year. The utility is undergoing a restructuring process that will separate its operations into distinct generation, transmission, and distribution entities, thereby fostering a more competitive trading environment. Davis highlighted the enthusiastic response from private players to government policies aimed at opening the market.
This development aligns with broader international trends supporting energy transitions in emerging markets. For context, similar Nordic investments have catalysed renewable projects across sub-Saharan Africa, with the International Energy Agency estimating that the region will need over $40 billion annually in clean energy funding to achieve net-zero goals by mid-century. In South Africa, rooftop solar installations have already reached 7.3 gigawatts, exceeding the combined output from all of Eskom’s independent power producer agreements, according to Integrated Resource Plan 2023 and industry analyses.