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Africa|Energy|Financial|Mining|Power|Projects
Africa|Energy|Financial|Mining|Power|Projects
africa|energy|financial|mining|power|projects

Power aggregators seen as key accelerators of South African mining’s energy transition

Nedbank CIB Energy Finance Co-Head Amith Singh interviewed by Mining Weekly's Martin Creamer. Video: Darlene Creamer.

13th February 2024

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Many energy projects selling to one buyer, who in turn sells to many mines – this procurement model is seen as a key financial tool to accelerate the energy transition of South Africa’s mining industry.

“We think the aggregator model can really accelerate the requirements of the mines to get their energy from green electrons,” Nedbank Corporate and Investment Banking (CIB) energy finance co-head Amith Singh emphasised to Mining Weekly in a Teams interview. (Also watch attached Creamer Media video.)

The aggregators trade energy off a single platform for the short term or the long term, which provides important flexibility.

This pliable enabler of easier and quicker procurement was given a lot of attention last week at Nedbank CIB's full-house ‘Energy in Mining’ event in Cape Town, where far-reaching insights were communicated to an audience described as being “very responsive”.

“It appears that everyone wants to make a positive difference,” Singh noted.

While the energy transition has a strong commercial bent, he senses an equally strong across-the-board attitude of “wanting to do the right thing” for the benefit of future generations.

“Everyone really wants to do more. The appetite is there, the equity is there, the debt is there, demand from mines is there, and now it’s just about making it all happen,” said Singh.

A critical component for mines is to attain net zero, and to assist mines to do so optimally, the aggregator energy structure of many independent power producers (IPPs) selling to one aggregator or one platform is being viewed as a potential panacea.

“Energy aggregators are not traders in the strict sense because they don't sell over the counter or by the hour, but collectively aggregators are called traders in South Africa and they’re licensed as traders.

“They take the power from multiple sources and sell it to multiple offtakers, so it’s many power projects selling to one buyer, who in turn sells to many mines,” Singh outlined.

During Nedbank CIB’s ‘Energy in Mining’ event, ten panellists went into detail on, for example, the mechanisms required for the aggregator model, how this model can be accelerated still further, how its returns impact on IPPs, and whether mines prefer to buy from an aggregator or directly from an IPP.

On the financial front, what is clear is that there is sufficient rand liquidity for long-term lending and the hard currency need of the African continent is also being ably met by huge support from international development financial institutions, together with South African financial institutions.

Edited by Creamer Media Reporter

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