African Rainbow Energy and Power (AREP), backed by billionaire Patrice Motsepe, aims to increase renewable power generation sevenfold to become one of the largest clean electricity providers on the continent.
The one in Johannesburg resident company The company’s ultimate goal is to add up to 5,000 megawatts (MW) of assets. It has already invested in more than 700 MW and is working with partners to target another 2,000 MW by the end of the second quarter of next year.
A rule change that allows generators to build projects of up to 100 MW without applying for a license have given AREP a tremendous boost.
“We always thought we should scale up” and create a major energy company, said Brian Dames, CEO of AREP.
That meant the investment in projects realized through government auctions to buy power and generation for commercial use. The company also plans to become an operator.
Dames, a former CEO of state-owned energy company Eskom Holdings, joined Motsepe in 2014 to become the energy company’s first head with a focus on renewable energy. Renewable energy auctions were delayed for years as a plan to build nuclear capacity was favored during Jacob Zuma’s presidency.
Mostly solar power
“It gave a lot of time to explore,” said Dames.
AREP is mostly solar powered with a third from wind power and a small portion from biomass. The company has an interest in the secondary market that is opening up and could potentially include energy trading, he said.
Last year it formed a joint venture with Absa Group Ltd which together accounted for R6.5 billion in renewable assets who are launching a fund called African Rainbow Energy.
There is a lot of interest in large renewable energy portfolios in Africa. Lekela Power, with 1,300 MW of green power capacity, was valued at about US$1.8 billion (about R28.9 billion), a person familiar with the sale of a 60 percent stake in the company said earlier this month /p>
SA registered the largest projects last month, two solar stations of 100MW each, to cut red tape and help speed up the pace of residential power generation , by not requiring a license. The projects are being developed in the northwest by Sola Group, which is 40% owned by AREP.
The lifting of the license exemption cap has dramatically changed the landscape for private power generation, Dames said. Grid access remains one of the biggest challenges to add more renewable energy.
AREP’s holding company, Motsepe’s Ubuntu-Botho Energy Holdings Proprietary Ltd, is a partner in Breakthrough Energy Ventures, an initiative started by Bill Gates to on which it is focused to achieve net-zero emissions worldwide.
After reaching a capacity target of 5,000 MW, AREP would develop a strategy to expand business around energy trading, grid, storage solutions and other opportunities to the Bringing the continent away, Dames said.
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