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SA banks maintain appetite for renewable energy projects

SA banks maintain appetite for renewable energy projects

Photo by Duane Daws

11th February 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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South Africa has enough liquidity to finance the next round of renewable-energy projects, with local banks maintaining their appetite in the emerging industry, a panel said at the Solarplaza conference, held in Sandton on Tuesday.

The panel, which comprised Standard Bank investment banking senior manager for power and infrastructure Bhavtik Vallabhjee, Vantage GreenX Fund MD Alastair Campbell and Fieldstone Private Capital Group MD Jonathan Berman, noted that, in terms of the nation’s energy needs, the four big banks were well positioned to finance long-term, large-scale projects.

South Africa’s portfolio of the Department of Energy-led Renewable Energy Independent Power Producer Procurement Programme- (REIPPPP-) approved projects had increased to 64, representing a combined investment value of between R120-billion and R150-billion, as well as a collective capacity of 3 933 MW.

Forty-seven projects had already moved through the financial-close threshold and were at various stages of development, with some even producing electricity.

Currently, about 60% of the financing for the REIPPPP projects were funded by South African banks, Solarplaza CEO Edwin Koot pointed out.

The foreign portion of the third-window funding (both equity and debt) had earlier been estimated at about R15.6-billion.

Campbell, who commented that “everybody in banking” had become “very comfortable” with the renewable-energy sector “very quickly”, added that projects valued at around R20-billion were expected to emerge from the fourth window of the REIPPPP.

The programme had made South Africa the twelfth most attractive investment destination for renewable-energy investors globally, attracting a collective R150-billion in foreign direct investment since inception, Energy Minister Ben Martins said on Tuesday.

Standard Bank Corporate & Investment Banking previously indicated its eagerness to back projects worth R10-billion as part of South Africa’s third renewable-energy bidding round, with a combined capacity of more than 1 000 MW.

During the first bidding round, Standard Bank underwrote R9.4-billion for wind and solar projects and followed that up with a further R6.4-billion during the second round.

Nedbank group investment banking division Nedbank Capital last year had underwritten debt funding for seven of the 11 debt-funded third-round projects, totalling R6.8-billion of projects valued at R26.2-billion.

The projects funded by Nedbank Capital included two solar photovoltaic (PV), two wind and two concentrated solar power (CSP) projects, as well as one landfill gas project.

To date, Nedbank Capital had funded projects comprising 875 MW, or 36%, of the total allocated capacity awarded in windows one and two of the REIPPPP. Should all window-three projects achieve financial close, Nedbank Capital would have funded projects totalling 1 486 MW, or 38%, of the total allocated capacity in all the bidding windows.

Absa Corporate & Investment Banking said it would provide R10.8-billion in debt funding to six projects, comprising wind, solar PV and CSP, under the third round.

The bank had committed about one-third of the total debt committed overall by South Africa’s commercial banks for the REIPPPP’s third bidding window, with the projects supported by Absa totalling a combined yearly power output of 635 MW.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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