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Standard Bank refinances two of Globeleq’s solar projects to the tune of R682-million

The $37-million (R682-million) refinancing of 11MW Aries Solar and 11MW Konkoonsies Solar plants in the Northern Cape will increase the financial viability of the projects, as it will lower the debt cost.

Standard Bank’s refinancing of two of Globeleq’s solar projects in the Northern Cape is expected to have a notable impact on their viability.

Globeleq’s says the new loan deal will allow for a significant reduction in wholesale electricity prices from the plants. It will also create a more efficient capital structure, enabling the release of funds for shareholders to reinvest in the power sector and accelerate equity distributions to the Aries and Konkoonsies communities and BEE shareholders.

Aries and Konkoonsies commenced operations in 2014 as part of South Africa’s Renewable Energy Independent Power Producer Procurement Programme, and Globeleq acquired a majority interest in the plants in 2019. 

Since May 2021, Globeleq has managed the full scope of operations and maintenance at both plants, achieving an average availability of above 99%.

“Restructuring the financing terms of these projects continues to be of significant benefit to Eskom and to South African consumers. We have reduced the cost of power at these two plants by around R129-million over the remaining ten years of the power purchase agreement,” says Globeleq CEO Mike Scholey.

Globeleq has now restructured six of its eight plants in South Africa using the Department of Mineral Resources and Energy’s IPP Office Refinancing Protocol.

Globeleq previously completed debt restructuring of the Jeffreys Bay Wind Farm and the De Aar and Droogfontein solar plants in August 2021, and the Soutpan solar plant in January 2022.

“These efforts demonstrate our desire to be a long-term producer of cost-effective renewable power in South Africa to benefit energy users and encourage investment in the renewable energy sector,” says Scholey.

Sherrill Byrne, the executive for energy and infrastructure finance at Standard Bank, said the institution was “committed to being a leading player in the energy sector in South Africa.”

The deal with Globeleq follows STANLIB, together with group companies Standard Bank and Liberty, launching an Energy Transition Fund in October 2023.

Standard Bank and Liberty will provide initial seed assets of R3-billion to the Fund, which will be managed by STANLIB. 

The long-term goal of the fund is to create easier access to the asset class to mobilise capital from institutional investors such as pension funds, development finance institutions, banks, South African Fixed Income funds and the like to build this up to a $1-billion (R20-billion) pan-African investment vehicle. 

The group said achieving this goal will depend on investor appetite and investment opportunity.

“The initial seeding from Standard Bank and Liberty ensures that this fund will be able to offer scale and diversity from the first day it is launched to the institutional market, which is unique in the alternative assets space,” said Kenny Fihla, Standard BankCorporate and Investment Banking CEO, at the time.

The Fund will invest in a pool of energy transition and project loans with different maturities and in different technologies, such as renewable energy and related clean technologies, to enable Africa to fulfil its energy transition goals at scale. 

In doing so, this initiative will address various United Nations Sustainable Development Goals, including climate action, affordable and clean energy, sustainable cities and communities, and industry innovation and infrastructure.

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