Nedbank CIB structures bespoke solution for 100% black-owned power producer. A R2.5 billion funding platform solution will allow one of South Africa’s largest 100% black-owned independent power producers (IPPs) to deliver 1.1 GW of clean energy.
With the support of a facility originated and structured by Nedbank Corporate and Investment Banking (CIB), Pele Green Energy (PGE) also aims to increase its pipeline of renewable energy projects from 1 GW to 5 GW by 2027.
Delivering the Just Energy Transition
Nedbank CIB contributed R1 billion to PGE’s consolidated funding platform. This replaces the company’s previous capital-raising frameworks, which operated on a project-by-project basis.
The Industrial Development Corporation (R829 million) and Norfund (R658 million) provided the remaining commitments. These are development finance institutions from the governments of South Africa and Norway, respectively. Nedbank CIB served as the mandated lead arranger, underwriter, and bookrunner for the transaction.
The R2.5 billion funding platform facility gives PGE a capital base. This will allow PGE to contribute to the Just Energy Transition (JET) and benefit from cross-collateralisation of various technologies, including wind, solar, and battery storage.
About 80% of PGE’s planned projects are for the private sector. The remaining projects will be developed through bids into government auctions to supply the national grid.
PGE’s increased investment program led to a 49% staff expansion. It also invested 20% in two wind farms and a solar farm on the Northern Cape and Eastern Cape border. These will generate 520 MW of clean energy for Anglo American’s South African mining operations. The R2.5 billion funding platform facility will also help PGE provide an additional 850 MW of clean energy to Anglo American Platinum.
To streamline its project delivery, PGE needed an innovative mezzanine funding solution. It turned to Nedbank CIB to structure this bespoke transaction.
Leveraging strategic partnerships
Nedbank CIB’s Principal Finance and Energy Finance teams leveraged strategic partnerships with capital allocators. These partners share the bank’s commitment to sectors driving South Africa’s energy recovery and economic growth.
By doing so, the bank backed a locally owned, empowered business. This business operates in a sector traditionally dominated by foreign, government-backed IPPs.
Nedbank’s support for PGE highlights its credentials as a leading bank in financing renewable energy projects. As more organisations pursue opportunities in the liberalised energy market, Nedbank taps into its extensive ecosystem of relationships and expertise.
In the case of PGE, Nedbank aligned itself with a company. This company shares its determination to make a positive impact on society.
About 80% of the projects PGE plans to develop are for the private sector
About PGE
PGE was formed 15 years ago by a group of young black professionals. In 2011, it became one of the inaugural IPPs granted power generation licences.
The recent government decision to remove the cap on IPP energy production allows PGE to move faster. This helps alleviate pressure on the national grid.
PGE is committed to uplifting local enterprises. Through its enterprise development programme, it has supported several small businesses, including a solar installer in Mpumalanga.
Its bursary scheme benefits previously disadvantaged individuals. Additionally, its internship programme provides training and workplace experience in renewable energy, empowering graduates for future success.
The company has trained 100 students, all black female artisans aged 20 to 28, in Mpumalanga. Seventeen of them are now employed by reputable companies.
Furthermore, 15 Nkangala TVET College lecturers trained by PGE now offer courses in renewable energy technology. PGE’s facilitator has been recognised as a national RET expert.
These examples highlight the grassroots benefits of clean energy. Nedbank’s role in driving sustainable growth in the sector goes beyond these efforts, extending into a fast-growing ecosystem.
Liberalisation of South Africa’s energy sector
Nedbank is funding an increasing number of aggregators. These aggregators bridge the gap between electricity generators and consumers. They buy electricity from multiple IPPs and sell it to various offtakers, including mining companies, industrial users, municipalities, and Eskom.
Aggregators use the transmission and distribution grid to transport power from generation points to consumption sites. By combining the demand of multiple customers, they can negotiate better tariffs and terms with IPPs.
The bank is also tracking the progress of the Electricity Regulation Amendment Bill. The bill is now on the president’s desk after being approved by the National Council of Provinces in mid-May. This legislation provides for additional electricity generation capacity and infrastructure. It also paves the way for an open-market platform enabling competitive electricity trading.
Nedbank is ready to play its part in funding the further liberalisation of South Africa’s energy sector. The bank also recognises the socioeconomic benefits it will bring.
Meanwhile, Anglo American Platinum is preparing to operate its mines using power from sunshine and fresh air. With its deep ecosystem knowledge, Nedbank expects a cascade of environmental benefits to follow.
Consider this: Platinum group metals (PGMs) are essential in electrolysers, which split water molecules. This is a promising technology for producing hydrogen. PGMs are also needed in hydrogen-powered fuel cells, which generate electricity through chemical reactions.
Anglo American hopes to use solar energy from PGE to produce green hydrogen. This hydrogen will power mine haul trucks converted to run on zero-emission fuel cells.
This virtuous circle could reduce and eventually eliminate the use of fossil fuels. Nedbank’s ability to identify and capitalise on these unexpected connections creates sustainable growth.