African Rainbow Energy and Power (Arep) and Absa have launched a new entity, called African Rainbow Energy – an “African-led, world-class, renewable-energy investment platform”.

Arep will make an initial investment in assets covering wind, solar photovoltaic and biomass projects with an installed capacity of more than 700 MW of renewable energy.

Absa will make an initial investment of R500-million in cash and transfer R5-billion of its existing renewable energy assets to African Rainbow Energy.

This will result in African Rainbow Energy having about R6.5-billion of gross assets, covering 31 renewable assets, making it one of the largest and most diverse independently-owned energy businesses in South Africa.

The establishment of African Rainbow Energy expands the pool of funding available for renewable-energy developments in South Africa at a time when the country is accelerating its plans to expand and diversify its energy base through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The private sector is simultaneously expanding its energy supply, which the companies say is an “important step for the South African economy, which aims to source reliable and cost-effective renewable energy to drive growth and employment”.

This collaboration supports Arep’s objectives to use modern and renewable-energy technologies to provide affordable electricity in South Africa and on the African continent.

Absa, meanwhile, is uniquely positioned, given its key role in the African continent’s economy and its commitment to the development of renewable energy and the green economy.

African Rainbow Energy will invest in renewable technologies including solar, wind and battery energy storage solutions. It has already secured a deep investment pipeline and has partnered on a number of bids in Round 5 of South Africa’s highly successful REIPPPP.

African Rainbow Energy will also invest in the private power sector and is working with several companies on bespoke energy solutions.

The effective date of the fund is subject to the fulfillment of certain conditions precedent, which are expected to be concluded in the fourth quarter of this year.