RMB sees the money in fi­nanc­ing so­lar power

CityPress - - Business - YOLANDI GROENEWALD busi­ness@city­press.co.za

Savvy in­vestors are eye­ing off-grid so­lar power as a ve­hi­cle to earn money and im­prove prop­erty yields.

A R100 mil­lion 50-50 joint ven­ture, called First En­ergy Al­ter­na­tives, be­tween Rand Mer­chant Bank (RMB) and so­lar firm BrightBlack En­ergy will test this mar­ket. The ven­ture in­stalls so­lar pan­els and fi­nances them.

Wessel Wes­sels, CEO of BrightBlack En­ergy, said land­lords who in­vested in so­lar power could im­prove their yields – so­lar power cuts prop­er­ties’ util­ity bills, so the prop­erty owner rakes in more prof­its.

“Nor­mally, prop­erty own­ers are happy with a yield of about 8%. So­lar pushes that up to 12%. Some of our clients are get­ting a 20% yield,” said Wes­sels.

So­lar power re­search web­site Power Qual­ity & Re­new­able Ser­vices es­ti­mates that R2 bil­lion was in­vested in the pri­vate pho­to­voltaic sec­tor last year.

Power Qual­ity & Re­new­able Ser­vices’ en­ergy and so­lar con­sul­tant Carel Bal­lack said he had doc­u­mented at least 138 000 in­stal­la­tions by the end of last year with a to­tal ca­pac­ity of 189 megawatts.

Greg Mckenzie, in­vest­ment banker at RMB and joint CEO of the ven­ture with Wes­sels, said that the av­er­age size of rooftop pho­to­voltaic in­stal­la­tions was be­tween R2 mil­lion and R25 mil­lion, which was too small to ex­cite RMB.

“This op­por­tu­nity wouldn’t be in­ter­est­ing on an in­di­vid­ual ba­sis,” he said. “How­ever, when you bulk this into a port­fo­lio, the op­por­tu­ni­ties be­come com­pelling.”

He said that First En­ergy Al­ter­na­tives would col­lect mul­ti­ple rooftop so­lar projects in the com­mer­cial and in­dus­trial space to build a port­fo­lio of up to R1 bil­lion. It will then be able to se­cure debt fi­nanc­ing against this.

There are three fi­nan­cial mod­els to choose from. Firstly, the prop­erty owner could buy the in­fra­struc­ture out­right. If a prop­erty owner was look­ing for cheaper power, a power pur­chase agree­ment was the way to go. Lastly, if the de­vel­oper was look­ing for a bet­ter prop­erty yield, leas­ing the so­lar in­fra­struc­ture was an op­tion.

Clients in­clude Emira Prop­erty Fund, which has in­stalled a R6 mil­lion so­lar farm at its Ep­som Downs Shop­ping Cen­tre in Bryanston, Sand­ton, as well as KPMG in Park­town.

Wes­sels was op­ti­mistic that the port­fo­lio could ex­ceed R500 mil­lion within the next 12 to 16 months.

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