Scalar International and Mergence Investment Managers have officially announced the launch of a substantial $150 million private equity fund aimed at financing clean energy and digital infrastructure projects in Southern Africa. This initiative, named the Africa Decarbonization Fund I, is designed to support energy-efficient and decarbonization efforts within the commercial and industrial sectors.
The fund’s investment pipeline is strategically focused on the data center and manufacturing industries, which have recently experienced a significant 40% decline in grid reliability due to their heavy reliance on the regional energy pool. Most countries within the Southern African Development Community (SADC) obtain their electricity from the Southern African Power Pool, which sources approximately 40% of its power from hydroelectric facilities and around 50% from coal-fired plants. This dependency highlights the urgent need for innovative solutions to enhance energy reliability and sustainability in the region.
Key areas targeted for investment by the Africa Decarbonisation Fund I include:
- On-site Power Generation: Developing localized energy solutions to reduce dependence on the grid.
- Critical Infrastructure Utilities: Investing in essential services that support economic growth and sustainability.
- Smart Grid Technology: Implementing advanced technologies to improve energy distribution and management.
- Manufacturing Energy Efficiency: Enhancing energy use in manufacturing processes to reduce costs and emissions.
- Digital Infrastructure Energy: Supporting energy solutions for digital infrastructure to ensure reliability and efficiency.
- Industrial Energy Storage, Electric Vehicles (EV), and Battery Storage: Investing in technologies that enable energy storage and support the transition to electric mobility.
- Enterprise On-site Electric Vehicle Infrastructure: Developing charging solutions for businesses transitioning to electric fleets.
- Commercial Energy Efficiency (Equipment Retrofit): Upgrading existing equipment to improve energy efficiency in commercial settings.
- Blockchain/AI Infrastructure Supporting Digital Transformation: Investing in technologies that facilitate digital advancements and operational efficiencies.
- Aggregated Virtual Solar Power Purchase Agreements: Creating innovative agreements to enhance access to renewable energy sources.
Semoli Mokhanoi, Chief Commercial Officer at Mergence Investment Managers, expressed enthusiasm about the partnership with Scalar, stating, “We make a powerful partnership with Scalar. The teams have more than five years of collaboration and 20 years of experience in advising, modeling, and structuring infrastructure transactions. At Mergence, we have deep experience in private markets investing in challenging geographies, including renewable energy, water, housing, transport, digital connectivity, property, and health.”
The launch of the Africa Decarbonization Fund I marks a significant step towards fostering sustainable development and addressing the pressing energy challenges faced by Southern Africa, while also promoting digital infrastructure growth in the region.
