Harith launches new R4.8bn fund to back renewable energy projects in Africa

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Harith and Anergi Group have launched a new fund to support the rollout of renewables in Africa.
Harith and Anergi Group have launched a new fund to support the rollout of renewables in Africa.
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  • A $300 million (~R4.8 billion) fund has been established to support the accelerated rollout of renewable energy adoption in Africa.
  • Infrastructure investment firm Harith is managing the fund, while power company Anergi Group will provide project development expertise.
  • Harith will be engaging with potential investors over the next six weeks to back the fund.

A new $300 million (~R4.8 billion) fund has been established to help accelerate the adoption of renewable energy in Africa.

Infrastructure investment firm Harith General Partners, and power company Anergi Group, are backing the fund, known as the Pan-African Renewable Energy Fund (PAREF). Harith and Anergi have been working together over the past 13 years to develop and invest in African power projects, explained Emile du Toit, managing director of fundraising and liabilities at Harith.

Anergi is owned by the Pan-African Infrastructure Development Funds, which is managed by Harith. The power company develops, operates and owns power plants in sub-Saharan Africa. Harith is also known for being the majority partner in the Takatso Consortium, which is the government's strategic equity partner for SAA.

In establishing the partnership, Harith and Anergi sought to tackle the energy accessibility problem in Africa. According to the International Energy Agency's latest Africa Energy Outlook report, 600 million people in Africa, or 43% of the population, do not have electricity access. The majority of which, or 590 million, are in sub-Saharan Africa. To plug this gap about $25 billion should be invested in modern and affordable each year until 2030.

Africa's energy generation is also mostly carbon-intensive. Introducing renewables can help countries adopt cleaner sources of energy and mitigate climate change. There is scope to introduce renewable energy to Africa. The trouble is, investment in renewables in Africa has been low - the fund is also meant to address this and aid the shift to low-carbon energy generation technologies, explained Du Toit.

Harith's role in the new partnership is to manage the fund and attract investors. While Anergi brings project development expertise and services to the partnership, Du Toit said. "Anergi has a project development team with a pipeline of investments and skills and experience in the African context to start new energy projects and to develop them from concept to bankability stage," he explained.

READ | SA's costly big gas projects could cause a 40% electricity price hike, say top researchers

Harith will be engaging with potential investors over the next six weeks, said Du Toit. Harith is targeting a wide investment pool, including South African institutional investors such as pension funds and development finance institutions, as well as international investors. "We have a fairly long list of potential investors, mostly European," said Du Toit. He explained that most finance in renewable energy tend to come from US and Europe.

The fund will likely have a 10- to 12-year life, and returns for investors range between 8% to 12%, depending on the investment, he explained.

The fund makes provision for investments in new renewable energy projects, expanding existing renewable projects, or converting thermal projects like coal and gas to renewables such as wind and solar, explained Du Toit. These projects could deliver returns between 10% and 12%.

The fund can also provide finance for secondary investments – such as buying a stake in a renewable energy project. These investments could deliver returns of between 8% and 10%.

PAREF is also open to financing new technologies such as battery storage and green hydrogen, Du Toit added. He expects 10 or 12 major investments emanating from the fund.

The aim is mainly to provide equity for renewable energy developers (between 30% and 60%). The fund will then also assist developers in raising debt from other banks and development finance institutions to cover the balance of the project financing needs.

READ | COP26 president to visit SA to reinforce support for just energy transition

"PAREF is an important and urgent response to climate change – by accelerating Africa's race to net zero, transitioning to a low carbon future and connecting millions of Africans to sustainable, green energy," said Harith CEO Sipho Makhubela.

Anergi Group acting CEO Neil Hopkins noted the significance of the fund in assisting the energy transition across Africa. "We are fully committed to utilising our project development experience, expertise and resources to convert our pipeline of renewable opportunities into operational assets that provide secure, affordable and lower carbon sources of power supply to individuals and industries across the African continent," Hopkins said.

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