Investec partners with leading independent power producer in refinancing of Touwsrivier solar plant

Investec, as mandated lead arranger, has partnered with leading, black-owned independent power producer Pele Green Energy (Pele) in the refinancing of CPV Power Plant No.1 (Pty) Ltd (CPV1), the 44MWp concentrated photovoltaic (CPV) solar plant in Touwsrivier in the Western Cape, in the form of a senior term loan facility.

CPV1, in which Pele is the majority shareholder, is one of the largest solar CPV plants in the world and the only one on the African continent.

In addition to providing power to the area and contributing to the reduction of South Africa's carbon footprint, the Touwsrivier plant has also helped create jobs and developed local business and community infrastructure.

The plant was built as part of Round 1 of the South African Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) and has been in operation for seven and a half years.

According to Gqi Raoleka, managing director, Pele Green Energy, the refinancing was necessitated by the Department of Mineral Resources and Energy (DMRE), in a bid to reduce electricity tariffs and make electricity more affordable for South African consumers.

Martin Meyer, head of Power and Infrastructure Finance at Investec, noted that the transaction was unique in that it involved the refinancing of a JSE-listed project bond, the only REIPPP project to have been funded in this way.

"The refinancing provides more favourable debt terms, in line with current market conditions, and reduces the tariff of the electricity sold to Eskom under the Power Purchase Agreement, which ultimately benefits the South African consumer," said Meyer.

Said Raoleka: "Investec was instrumental to our success in migrating the project from the listed bond into a project finance structure, according to the DMRE's refinance protocol guidelines, alongside the JSE's requirements. Our ability to achieve this milestone with Investec is a continued reflection of its commitment to a genuine partnership with Pele, following from the preference share facility that we concluded in 2020."

Investec also provided grant funding to partly fund the development of a commercial hydroponic farm jointly owned by Pele and the Touwsrivier Community Trust (also a shareholder in the CPV Project) located at the project site.

The plant consists of 1,500 dual-axis solar tracking systems with a total of 18,000 modules over its site of 190 hectares. It powers roughly 26,000 homes each year and has achieved a reduction of 69 tonnes of CO2 on average per year when compared to coal-fired power plants in South Africa.

The plant's continued operation is an important asset to the impoverished community of Touwsrivier. 733 jobs were created during its construction and the plant now employs 44 permanent staff. Following its development, and thanks to Pele's involvement, the Touwsrivier community has seen 55 bursaries and 59 internships being granted, the development of 63 start-up enterprises, 38 SMEs being mentored and three solar PV systems installed at schools. There have also been investments into two agricultural initiatives as well as the development of a community resource centre called the 4-Rooms of Freedom.

"Collectively, all parties to the transaction have demonstrated a shared commitment to the delivery of clean, affordable electricity to South African households and businesses," said Raoleka.

"Importantly, we concluded this transaction while protecting the social investments that the project is obliged to make towards its host community of Touwsrivier. This project serves as evidence that business can create economic value whilst making the needed contributions to the broader national development objectives," added Raoleka.

"It's great to be able to continue our unique partnership with Pele as it grows its renewable energy business and facilitates the upliftment of communities. As lead arranger we were able to mobilise various divisions within Investec to enable a smooth and efficient refinance process and ensure all financing requirements were met," said Meyer. "The CPV refinance is another example of how Investec partners with our clients to ensure we 'power possibility'."

Disclaimer: https://www.investec.com/en_za/legal/SA/icib-disclaimer.html

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