Solar-generation microleasing platform Sun Exchange announced last month that it had signed an agreement with Johannesburg-based boutique clean energy fund manager Decentral Energy.
Sun Exchange founder and CEO Abe Cambridge says the agreement gives Decentral’s Grovest Energy, an Income Tax Act Section 12J fund, first right of refusal to fund 51% to 100% of selected Sun Exchange offtaker projects, as well as to fund any balances after Sun Exchange solar cell crowd sales are completed.
Decentral provided equity and debt financing for the 473 kW rooftop solar plant for plastics recycling company Nioro Plastics, in Cape Town. The project, which came on line in January, is the largest Sun Exchange project to date, Cambridge points out.
The fund manager also bought nearly 59% of the Nioro Plastics solar cells, which will yield an internal rate of return of 14.5% a year. Over 20 years, Nioro Plastics will produce 14.12 GWh of clean electricity, which is equivalent to over 10 000 t of coal burned.
“We invest in small-scale energy assets that demonstrate predictable, inflation-linked cash flows, because we believe that the energy future will be decentralised and built upon similar financing systems,” says Decentral fund manager Christian Bode.
“For that reason, we support Sun Exchange in its vision to create a thriving, inclusive and decentralised solar-powered economy. We are so confident about its business model that we have already bought into the Nioro Plastics project, and our goal is to fund 20 MW of Sun Exchange projects by 2020.”
The agreement allows Sun Exchange to host larger projects with less risk. For Sun Exchange users, this means the company can be part of large or small projects and there is greater reliability around the completion dates for crowd sales and, subsequently, quicker time scales to having their solar cells rented out, says Cambridge.
This is also good news for offtakers, such as Nioro Plastics, as the agreement highlights the increasing availability of equity and debt financing for viable small projects, which large financiers are traditionally not interested in funding, he adds.
Nioro Plastics MD Simeon Penev says Nioro Plastics recycles polyethylene terephthalate into durable household items that continue to be 100% recyclable.
“We are committed to recycling and producing these products in a cleaner and more cost-effective way using renewable energy. The solar project was easy to justify because we will save on our energy bill moving forward,” he says.
With an ever-increasing ability to get larger projects off the ground, Sun Exchange is already expanding its footprint into the rest of Africa, which lacks traditional grid-tied and centralised infrastructure, says Cambridge.
Sun Exchange last year also entered into a partnership with US-based electricity minigrid technology venture company Powerhive to leverage the Sun Exchange platform to deliver electricity for up to 175 000 people in Kenya.
Sun Exchange has successfully hosted crowd sales for seven other solar projects in South Africa through its solar microleasing platform. The most recent crowd sale was for a project that would provide solar power for Sacred Heart College, in Johannesburg.
The projects focus on commercial, industrial and community installations and provide an income stream for Sun Exchange members, who lease their cells to the projects through the Sun Exchange platform.
The platform provides cell owners with access to real-time information on how solar cells are performing and tracks rental income generation.
The confidence Decentral has in Sun Exchange’s projects demonstrates that the solar cell leasing marketplace offers a reliable, lucrative and socially responsible source of income for anyone, says Cambridge.