A R2,5 billion funding solution will allow one of South Africa’s largest 100% black-owned independent power producers (IPP’s) 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.

Nedbank CIB contributed R1 billion to the consolidated funding platform for PGE, which replaces the company’s previous capital-raising frameworks that operated on a project-by-project basis.

The remaining commitments came from the Industrial Development Corporation (R829 million) and Norfund (R658 million), being development finance institutions of the governments of South Africa and Norway respectively. Nedbank CIB was the mandated lead arranger, underwriter and bookrunner for the transaction.

The platform facility provides PGE with a capital base that will allow it to play a meaningful role in delivering the Just Energy Transition (JET) as well as benefits from the cross-collaterisation of different technologies, including those for wind, solar generation, and battery storage.

About 80% of the projects PGE plans to develop are for the private sector, with the rest being developed through bids into government auctions to supply the national grid.

PGE’s increased investment program has resulted in it expanding its staff complement by 49% and to make a 20% investment in 2 wind farms and a solar farm on the border of the Northern Cape and Eastern Cape that will provide 520 MW of clean energy for Anglo American’s mining businesses in South Africa. The platform facility will also help PGE to supply an additional 850 MW of clean energy to Anglo American Platinum amongst others.

To do so, however, it needed an innovative mezzanine funding solution to enable it to streamline the delivery of its project pipeline, and it turned to Nedbank CIB to structure this bespoke transaction.

Nedbank CIB’s Principal Finance and Energy Finance teams were able to leverage strategic partnerships with capital allocators who share the bank’s commitment to key sectors capable of driving South Africa’s energy recovery and economic growth. In doing so, the bank had the opportunity to back a locally owned, empowered business in a sector that has been dominated by foreign, government backed IPP’s.

Nedbank’s support for PGE illustrates its credentials as one of the leading banks in the financing of renewable energy projects. As more organisations seek to take advantage of the liberalisation of the energy market, Nedbank can draw on its extensive ecosystem of relationships and expertise. In the case of PGE, it has also been able to align itself with a company that shares its determination to have a positive impact on society. 

About PGE

PGE was formed 15 years ago by a group of young black professionals and in 2011 it was one of the inaugural IPP’s granted power generation licences. The recent government decision to remove the cap on the amount of energy IPP’s can produce means that the company can now move faster to help alleviate pressure on the national grid.

PGE is dedicated to uplifting local enterprises and has supported several small businesses through its enterprise development programme, including a solar installer in Mpumalanga. Its bursary scheme is tailored to benefit previously disadvantaged individuals and its internship programme offers training and workplace experience to graduates in renewable energy, empowering them for future success.

The company has trained 100 students – all black female artisans between the ages of 20 and 28 – in Mpumalanga, and 17 are now employed by reputable companies. In addition, 15 Nkangala TVET College lecturers trained by PGE have introduced courses in renewable energy technology (RET) and PGE’s facilitator has been recognised as a national RET expert.

These are examples of the surprising grassroots benefits that flow from clean energy, but Nedbank’s role in driving sustainable growth in the sector extends further into a fast-growing ecosystem.

It is funding a growing number of aggregators, which 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 even Eskom.

Aggregators use the transmission and distribution grid to wheel power from generation points to consumption sites, and by combining the demand of multiple customers into a single large volume, they can negotiate better tariffs and terms with IPPs.

The bank is also following the progress of the Electricity Regulation Amendment Bill, which is now on the president’s desk after having been approved by the National Council of Provinces in mid-May. The legislation provides for additional electricity generation capacity and infrastructure and paves the way for an open-market platform that will allow competitive electricity trading.

Nedbank is standing by to play its part in funding the further liberalisation of South Africa’s energy sector and the socioeconomic benefits it will bring. In the meantime, Anglo American Platinum is preparing to operate its mines using power generated from sunshine and fresh air, and 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 – a promising technology for producing hydrogen. PGMs are also needed in hydrogen-powered fuel cells, which use chemical reactions to generate electricity. Anglo American hopes to use solar energy from PGE to produce green hydrogen that will then be used to power mine haul trucks converted to run on zero-emission fuel cells.

This virtuous circle has the potential to reduce and eventually eliminate the use of fossil fuels, and it is Nedbank’s ability to identify and capitalise on these unexpected connections that creates sustainable growth.