Investment in renewable energy sector continues to power forward

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Africa’s grid-connected electricity deficit coupled with its wealth of renewable resources, like sunshine, make it an attractive destination for energy investors. Africa Private Equity News, an industry information service, reports ongoing investment and strong deal activity in the continent’s power sector in August 2018.

“As both GDP growth and urbanisation in African continue to rise, the demand for power on the continent will increase exponentially. Renewable power will continue to make up the bulk of the new supply, in particular as: costs continue to drop; battery storage technology becomes more efficient allowing renewable sources to provide baseload supply; and renewable projects allow for the flexibility of multiple smaller projects in isolated regions or on mini-grids,” Andre Wepener, head of the power and infrastructure finance team at Investec, told Africa Oil & Power in an interview.

African Infrastructure Investment Managers (AIIM), an infrastructure-focused private equity fund and part of Old Mutual Alternative Investments, through its IDEAS Managed Fund, has acquired stakes in nine new solar and wind power plants in South Africa. When all these facilities are fully operational, expected at the end of 2020, they will provide an additional 800 MW of renewable energy capacity into the national power grid. “We are looking at almost R9 billion (US$611 million) in total capital expenditure across these power projects,” said Sean Friend, investment director at AIIM.

In another notable South African power deal, Vantage GreenX Fund Managers announced that through its second renewable energy fund, Vantage GreenX Note II, it has provided R2.05 billion ($139 million) of funding to a combination of six solar and wind energy projects with a combined capacity of 433 MW. Furthermore, Globeleq, an independent power producer, acquired Brookfield Asset Management’s South African renewable energy interests. The agreement will give Globeleq a majority shareholding in six projects totalling 178 MW.

In Senegal, a recent financing deal has cleared the way for progress on the Taiba Ndiaye wind power development. The project reached financial close on 30 July, with construction scheduled to begin in the near future. Operated by London-headquartered Lekela – a joint venture between Irish renewable energy company Mainstream and private equity investor Actis – and sponsored by French developer Sarréole, the site, when completed, will generate 158 MW.

And in East Africa, OPIC – the US government’s development finance institution – and Kipeto Wind Energy Company closed a $232 million financing deal for the construction and operation of a 100 MW grid-connected wind power plant south of Kenya’s capital Nairobi.

The Off-Grid Energy Access Fund achieved its first close of $58 million in August, with equity and debt commitments from the African Development Bank, Nordic Development Fund, Global Environment Facility, Calvert Impact Capital, and the Nigerian off-grid energy investment company, All On.

And recently, some early-stage innovative energy businesses in Africa found support from FINCA International which officially announced the launch of FINCA Ventures, an impact investing platform that aims to support solutions to poverty in, among other sectors, energy. Schneider Electric Energy Access SAS, which manages impact investments for Schneider Electric, is co-investing in opportunities alongside FINCA Ventures. It has already backed six social enterprises, including: Sanivation, which provides waste-to-energy sanitation services to local governments and refugee camps in East Africa, and BioLite, a manufacturer of clean-burning, electricity-generating cookstoves and solar home systems for households in Kenya.