The UK government’s development finance institution (DFI) is to make the largest investment into hydropower in its 74-year history by taking a minority stake in a joint venture with Norway’s DFI Norfund.

The British International Investment (BII) said on June 23 that it would commit up to $200m to construct at least three hydroelectric power projects in Africa as part of the partnership. The two entities will hold a 49% stake in a joint venture with Scatec, a Norwegian renewable energy company, with Norfund committing up to $100m over the next several years.

“Hydropower is critical for providing clean baseload and peaking power, especially in landlocked countries in Africa, as the continent’s countries transition away from fossil fuels towards a net-zero future,” said Chris Chijiutomi, the BII’s head of infrastructure equity for Africa and Pakistan.

The partnership will focus on various existing and new projects including the planned 205 megawatt (MW) Ruzizi hydropower plant. This is Africa’s first tri-national public–private partnership and will supply electricity to Rwanda, Burundi and the Democratic Republic of the Congo.

Other hydro projects in Scatec’s African portfolio include Malawi’s largest power plant, the 350MW Mpatamanga project, and the 120MW Volobe hydropower plant on the Ivondrio river in Madagascar. BII’s commitment to hydropower comes as it enters a new five-year strategy in which at least 30% of its planned annual investment of between £1.5bn and £2bn will be devoted to climate finance.

Terje Pilskog, the CEO of Norfund, said that BII joining their venture with Norfund is “testimony to the importance of hydropower across Africa” and will support their effort to boost the continent’s renewable energy drive.

Currently around 600 million people in Africa, equivalent to 43% of the population, lack access to electricity. An International Energy Agency (IEA) study published on June 20 said that Africa will need $25bn of investment per year to achieve universal energy access by 2030.

Renewables, including solar, wind, hydropower and geothermal power, will account for 80% of new power generation capacity by 2030, according to the IEA’s proposed Sustainable Africa Scenario, in which all of Africa’s energy-related development goals. 

Despite this focus on renewables, the IEA said that Africa would need an additional 90 billion cubic metres of natural gas per year by 2030 in order to industrialise. 

The IEA said that fossil fuel power plants in 2020 accounted for 80% of Africa’s “flexible sources for power systems”, which maintains the required balance between electricity supply and demand in the face of uncertainty. By 2030, hydropower is set to be the second-largest source of flexibility under the proposed Sustainable Africa Scenario.

Fatih Birol, the IEA executive director, said that the current energy crisis has underlined that Africa “has had the raw end of the deal” from the fossil fuel-based economy, but stated the potential opportunities for the continent. 

“The new global energy economy that is emerging offers a more hopeful future for Africa, with huge potential for solar and other renewables to power its development — and new industrial opportunities in critical minerals and green hydrogen,” said Mr Birol.