S&P backs NamPower's green plan

S&P Global Ratings has given a positive assessment to NamPower's Sustainable Fundraising Framework, allowing the national power utility to raise green and social finance for renewable energy, electrification and climate resilience projects.

The Second Party Opinion found the framework aligns with international standards, including the Green Bond Principles, Social Bond Principles, Green Loan Principles and Sustainability Bond Guidelines.

S&P said the framework supports Namibia's goal of achieving 70% renewable energy by 2030 and improving the country's electricity self-sufficiency.

The ratings agency expects most proceeds raised under the framework to be allocated to green projects, particularly renewable energy developments, helping to decarbonise the electricity grid while expanding access in rural and underserved communities.

NamPower intends to allocate most financing over the three years following issuance to green projects, primarily renewable energy developments. Up to 50% of proceeds may be used to refinance existing eligible projects, with the remainder funding new investments.

Eligible investments include solar, wind, hydropower, biomass and battery storage, as well as transmission infrastructure and future green hydrogen projects. The framework also covers energy efficiency, sustainable water management, climate adaptation and biodiversity conservation.

Supports energy transition

S&P said NamPower is central to Namibia's energy transition. As of December 2024, the utility had an installed generation capacity of 509.5 megawatts, comprising 68% hydropower, 24% thermal, 4% diesel and 4% solar photovoltaic.

NamPower generated 46% of Namibia's electricity supply in 2024, with a further 46% imported through power purchase agreements and the Southern African Power Pool. Independent power producers supplied the remaining 8%.

NamPower aims to increase electricity self-sufficiency to 80% by 2028 by expanding local renewable generation and reducing reliance on imports. It plans to add around 325MW of solar and wind capacity between 2025 and 2028.

Areas to watch

S&P said the framework's strengths include its contribution to decarbonising Namibia's power sector and expanding electricity access. It reported no weaknesses, but highlighted several areas requiring further development.

The agency said NamPower has limited consideration of future physical climate risks because it does not yet use forward-looking climate scenarios to assess infrastructure resilience. The utility is working with the World Bank Group to develop a climate risk mitigation plan that includes physical climate risks.

S&P also noted that some project categories, particularly sustainable water projects, lack clearly defined environmental performance thresholds, making their environmental benefits harder to assess. It added that large hydropower developments, including the proposed Baynes Hydropower Project, could present environmental and social risks that would require appropriate safeguards.

NamPower excludes fossil fuel projects from the framework and has established governance processes for selecting eligible projects. These include environmental and social impact assessments, oversight by the executive committee and board, quarterly monitoring of funded projects, and annual public reporting on the allocation of proceeds and project impacts. The utility has also committed to obtaining external limited assurance over its allocation and impact reporting.