New African platform to boost investment in renewable power generation

Actis said the launch of Lekela Power, in partnership with global wind and solar developer Mainstream Renewable Power, will provide between 700 and 900 megawatts (MW) of new generating capacity by 2018.

Actis said it will own 60% of the platform, with Mainstream owning the remainder. Lekela will be funded over three years through a combination of equity and debt, Actis said.

Three wind power projects in South Africa’s Northern Cape, with a combined generating capacity of 360 MW, “will form the bedrock for the platform”, Actis said. “Lekela also has a pan-African pipeline of projects, including the 225 MW Ayitepa wind project in Ghana, wind and solar projects in South Africa and 100 MW of wind and solar power in Egypt, where the company has recently been awarded projects in the country’s new feed-in tariff programme.”

Actis said. “This latest platform is another example of Actis replicating a proven strategy in a high-growth sector and meeting the increasing demand for domestic infrastructure in emerging markets.”

Countries and regions in which Actis is already investing in renewable energy production include India, Central America, Chile, Brazil and Mexico.  

Actis’ co-head of energy Torbjorn Caesar said: “Lekela completes our Fund 3 platform strategy. Controlled platforms allow investors to choose optimal projects and financing structures, and reduce development risk. This model also allows shareholders to capture value as the platform achieves scale, resulting in higher exit valuations.”

Head of renewable energy at Actis Lucy Heintz said Africa has a “pressing need” for renewable energy. She said: “In South Africa for example, currently 95% of the country’s electricity is generated by coal-fired power stations. While the region has significant natural and fossil fuel resources, a lack of long-term investment has led to a reliance on emergency and short-term diesel generation. An improvement in the regulatory regime in many African countries has opened up the (energy) sector for further investment. Drawing on our deep understanding of the renewable energy sector, we are looking forward to unlocking the country’s formidable renewable resources and meeting some of the urgent demand.”

Renewable energy from South Africa’s first wind and solar plants generated a “net financial benefit” of around 8 million rand (ZAR) ($702,000) for the country in 2014, according to the results of a survey announced earlier this year by the South African government-owned Council for Scientific and Industrial Research.

Up to 95% of South Africa’s electricity is currently generated by coal-fired power stations and the country is among the world’s top 25 producers of greenhouse gases, according to government figures. The country is now looking to invest in new generation facilities, rationalise consumption and diversify its energy mix.

As of November 2013, South Africa was rated as the 12th most attractive investment destination for renewable energy, according to the government, which recently approved an additional 17 renewable energy projects.