Averi Finance forms a joint venture for renewables in SA

From the newsletter

Dubai-based investment and advisory firm Averi Finance has acquired a 50% stake in Estonian renewable energy developer Salika SG. This acquisition enables Averi Finance to control Salika SG's project portfolio, which includes planned developments of 3,000 MW of solar power and 850 MW of wind energy in South Africa.

• South Africa's electricity market has attracted numerous private-sector investments, including banks, energy companies, and other financing and investment platforms. 

• A significant electricity market deficit exists due to ageing coal power plants not operating at full capacity and increasing demand as the economy rebounds post-COVID-19 slowdown.

More details

• The acquisition also includes PTX South Africa, a joint venture with Green Nest Partner ApS, which is dedicated to advancing South Africa's green hydrogen sector. PTX South Africa is already working on a hydrogen project that is currently in the design phase. The project will convert hydrogen to ammonia using the power from the 3,800 MW hybrid power plant. It is estimated to cost $3 billion, with PTX South Africa overseeing the development, financing, and operation of the facility.

• Averi Finance has offices in 13 African countries, including Zambia, Ghana, Nigeria, Cameroon, and Kenya. It has financed over 100 projects and transacted over $16 billion across 15 emerging markets. Salika SG has successfully delivered 42 renewable energy projects worldwide, specialising in solar, wind, wave energy, and energy storage solutions. 

• Averi's subsidiary, PTX South Africa, is the only company to have secured land for green hydrogen at Saldanha Port in South Africa. This is strategic, as it targets becoming a global hub for hydrogen. It comes at a time when South Africa is developing its hydrogen policy to attract more private-sector investments.

• The South African grid is still prone to load shedding due to the lack of adequate supply. A lot of private sector investment has added about 11,000 MW to the grid. Regulations allowing power wheeling are also making it easier for energy companies to generate electricity. Electricity traders are coming in to aggregate electricity and wheel it to consumers.

• South Africa has mapped out its energy strategy in the Integrated Resource Plan (IRP) 2019, which is under review to emphasise the need for a diversified energy mix to ensure energy security and reduce carbon emissions. This includes a combination of renewable energy sources, including hydrogen as a dispatchable source of baseload power.

Our take

• The joint venture of these two giants is set to shake up the energy investment space in South Africa. They bring substantial capital, which South Africa desperately needs to accelerate the development of its generation capacity. The state-owned utility Eskom suffers from debt and lacks the capital to refinance energy infrastructure projects.

• South Africa's electricity market is more mature and developed. Banks are participating in financing big projects. Foreign energy companies are also investing in energy generation. This competition is what the market needs to lower energy costs.

• However, the success of these ambitious projects hinges on effective implementation and grid integration. Load shedding remains a persistent challenge, and simply adding more generation capacity may not be enough. South Africa needs to modernise its grid infrastructure and streamline regulatory processes to ensure that these renewable energy projects can deliver their full potential and move the country out of its energy crisis.