€50 Million Guarantee Unlocks Renewable Energy Investment in Zimbabwe

HARARE — Zimbabwe is set to benefit from a €50 million guarantee facility aimed at unlocking private investment in renewable energy by improving the bankability of independent power producers (IPPs) across Southern Africa. The facility, announced by renewable energy trader GreenCo in partnership with Impact Fund Denmark (IFDK) and the European Commission, is designed to provide long-term, creditworthy offtake without relying on sovereign guarantees.

For Zimbabwe, where weak utility balance sheets and elevated sovereign risk have historically deterred private capital, the initiative offers a new pathway to financing renewable power projects. By removing the requirement for government guarantees, the structure is expected to accelerate new capacity additions at a time when the country continues to face persistent electricity shortages.

The guarantee is extended to GreenCo on a back-to-back basis through IFDK, which has also committed an additional US$6 million as first-loss capital. This financial structure underpins GreenCo’s ability to meet long-term payment obligations to IPPs operating in Zimbabwe, Zambia, South Africa, Namibia and the Democratic Republic of Congo. The facility is structured as a revolving guarantee over 23 years, with IFDK responsible for administration and oversight to ensure compliance with development and impact targets.

GreenCo Chief Commercial Officer Cathy Oxby said the facility demonstrates that African power markets can function without sovereign guarantees. She noted that the approach uses guarantees to unlock private investment rather than replace it, helping to accelerate the energy transition while spreading risk and delivering innovative solutions to market participants.

The full facility is expected to catalyse more than 500 megawatts of new renewable generation capacity across Southern Africa. It will also support GreenCo’s regional trading activities, including bilateral power sales and participation in the Southern African Power Pool. GreenCo already operates as an active trader within the pool and holds licences across the region, positioning it as a key intermediary between renewable generators and utilities, as well as commercial and industrial power users.

GreenCo Chief Finance Officer Pug Bennet described the guarantees from the European Fund for Sustainable Development Plus (EFSD+) and IFDK as highly bespoke, crediting the European Commission and IFDK for adopting a practical and scalable approach to addressing perceived investment risks in African power markets.

The transaction aligns with the European Union’s Global Gateway strategy, which seeks to mobilise private capital into strategic infrastructure while maintaining fiscal discipline. IFDK Managing Director Thomas Hougaard said the initiative illustrates how catalytic finance can unlock investment that delivers clean, affordable and reliable electricity to support economic growth.

For Zimbabwe, the guarantee facility could mark a significant shift in the power sector, improving investor confidence and opening the door to increased private participation in renewable energy development, with potential long-term benefits for electricity supply and economic stability.