African Infrastructure Investment Managers (AIIM), an infrastructure-focused private equity fund manager through its IDEAS Managed Fund (IDEAS), acquired a majority stake in three solar projects in South Africa.
The 30 MW solar portfolio reached a financial close in May 2022 and is expected to reach commercial operation in March and April 2023. The construction works are likely to be started this month.
The projects will be connected through a combination of wheeling and behind-the-meter solutions, feeding energy into Harmony operations in the Welkom area in South Africa.
Upon completion, the projects will deliver 68 GWh of clean energy in the first twelve months of operations and 1.3 TWh over the 20-year lifespan of the projects. The energy produced by the portfolio is expected to mitigate 65,000 tons of CO2 emissions in the first year of operations.
According to the South African government’s Integrated Resource Plan 2019 (IRP 2019), there is a requirement to add a capacity of 30,000 MW of renewable energy to the country’s grid by 2030, of which 4,000 MW is expected to be other distributed generation, co-generation, biomass, and landfill technologies.
However, given the current proposed amendments to the Electricity Regulatory Act (ERA) to permit self-generation <100 MW and the concept of “wheeling” electricity through the transmission network, growth will likely exceed the 2019 IRP allowance.
The portfolio has been financed through a mix of debt and equity. Equity was funded by IDEAS and the Mahlako Financial Services-managed Mahlako Energy Fund 1. Debt was provided by Rand Merchant Bank, a division of FirstRand Bank Limited (RMB).
African Clean Energy Developments (ACED), an AIIM affiliate, served as the technical lead and transaction manager on the projects and will manage the construction process.
Energy Infrastructure Management Services (EIMS), another AIIM affiliate, will manage the operations once the projects reach their commercial operation date. The projects were jointly developed by BBEnergy, Energy Group, and Harmony.
According to Mercom’s Q1 2022 solar funding and M&A report, 82 large-scale solar project acquisitions were in Q1 2022, compared to 80 transactions in Q4 2021. Year-over-year, there were 82 large-scale solar project acquisitions in Q1 2021.