Wind in the sails of SA’s renewable energy sector, as Trialpha invests
Trialpha Investment Management has received official permission to control Kouga Wind Farm, RustMo 1 Solar Farm and SlimSun
There is no shortage of investment in SA’s fledgling renewable energy sector, despite Eskom having put a freeze on new energy agreements.
The recent acquisition of three wind farms by Trialpha Investment is in line with international trends towards consolidation in the sector.
Trialpha received the Competition Tribunal’s go-ahead to exercise control over Kouga Wind Farm in the Eastern Cape, RustMo 1 Solar Farm in the North West and SlimSun in Malmesbury in the Western Cape.
Trialpha, which runs a renewable energy plant, Intikon K, is a special-purpose vehicle that also controls renewable power companies Jasper, Letsatsi and Lesedi — all of which are projects under the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) The three power companies have a 20-year power purchasing agreement to generate and supply Eskom with electricity.
Old Mutual has also made an investment in the government’s REIPPPP, and participates in the construction and operation of projects that hold power purchase agreements with Eskom.
CEO of Old Mutual Alternative Investments Paul Boynton said in a report that despite SA’s continuing to post sluggish growth, renewable energy was one of the sectors that was ripe for private equity capital.
An analyst who asked not be named said it was common for mutual funds to invest in renewable energy projects, with most of them having expressed interest when the sector was classified as a priority by the government.
He said investments in the alternative energy sector were not necessarily dependent on Eskom. However, once there was clarity around the integrated resource plan, there would be a better understanding of what the county’s energy requirements were, and companies that were interested could see what to offer.
As to whether investors have an appetite for renewable energy investments, the analyst said: "Seeing the number of local players that are involved and also looking at the amount of money being invested by international players, there is definitely an appetite for such projects." According to PWC’s power and renewable deals 2017 report, growth, transformation and the search for yields are key themes shaping power and renewable energy deals activity, although these factors are playing out in different ways around the world.
In the US, growth through the acquisition of regulated assets has been a strong trend as corporates move to extend footprints in a market that is already in consolidation stage.