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Strengthening regional power integration through platforms such as the East Africa Power Pool (EAPP) and the Southern African Power Pool (SAPP) has been identified as a critical step in tackling Africa’s energy challenges while unlocking large-scale investment into the sector.
Standard Bank South Africa’s Head of Power, Corporate and Investment Banking, Rentia Van Tonder, highlighted the importance of innovative financing models and cross-border partnerships in accelerating power generation and transmission projects.
Speaking during a session on innovative models for energy project financing and the role of commercial banks in renewable energy development at the Energy Conference for Africa in Lusaka, Van Tonder underscored that project finance, though complex was the foundation for structuring sustainable deals.
“Project finance remains complex, but it is also the foundation for bringing in multiple players—banks, development finance institutions (DFIs), and advisors—to structure sustainable deals,” she said.
She urged stakeholders to think beyond traditional power purchase agreements (PPAs), which were often not bankable, and to consider alternative mechanisms such as receivables financing, escrow accounts, and tapping debt capital markets to close viable transactions.
The discussion noted that while government-led programmes remained vital in providing a backbone for market development, independent power producers (IPPs) and bilateral agreements with industries such as mining were increasingly driving growth.
However, Ms Van Tonder stressed that true transformation lies in strengthening regional interconnections.
“The East Africa Power Pool and the Southern Africa Power Pool are strategic unlocks, not just for partner countries but for the continent as a whole.
“They allow power to move where it’s most needed, reduce reliance on single markets, and create the scale that attracts meaningful investment,” she observed.
Beyond grid integration, she pointed to opportunities in electric mobility, value-chain development, and local content.
For instance, e-mobility is expected to spur investment in charging infrastructure and last-mile logistics, while transmission and generation projects will continue to drive industrial supply chains.
She also projected increased market consolidation, with multiple players in the sector merging to form stronger, more resilient entities capable of executing large-scale projects.
“The lesson is that markets can turn emergencies into opportunities if liberalisation is pursued with innovation. Our pipeline has grown significantly because we are thinking beyond traditional models and matching IPPs with reliable off-takers across borders,” Ms Van Tonder stated.
Sharing his thoughts, Stanbic Bank Chief Executive, Mwindwa Siakalima, said unlocking Zambia’s renewable energy potential would require pragmatic financing models, deep expertise, and greater collaboration between lenders, developers, and development finance institutions (DFIs).
Mr Siakalima highlighted that the institution had already deployed close to US$500 million into various projects, underscoring its growing role in financing the country’s energy transition. However, he stressed that the path to scaling renewable energy was complex, often underestimated, and required multi-disciplinary input.
“It takes a lot of expertise, both internal and external — from legal advisors to ESG specialists and credit experts — to structure projects that are truly bankable,” he said.
One of the main hurdles, according to Mr Siakalima, was ensuring projects were commercially viable and “bankable” from end to end. This means lenders must be able to clearly trace cash flows — from power production to the final off-taker — and ensure that Power Purchase Agreements (PPAs) are legally and commercially sound.
Another critical challenge identified was the lack of seed capital and equity participation from local developers. Many projects begin with strong concepts but without the upfront financing required to move beyond feasibility.
“We are often approached by companies eager to build solar plants, but they don’t even have financing for basic facilities. This is where blended finance, risk-sharing mechanisms, and equity contributions of at least 30 percent become essential,’ Mr Siakalima noted.
He further pointed to the scale of investment required for renewable energy projects. Large-scale solar developments, for instance, often cost around US$1 million per megawatt, although technological advances are gradually reducing this ratio.
He also cited the limited size of local balance sheets as a constraint.
With strict single-obligor limits in Zambia’s banking sector, commercial banks cannot finance large projects alone, making partnerships with DFIs and international financiers vital.
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