Absa Bank, a major player in the financing of the energy sector in South Africa, has joined forces with African Rainbow Energy and Power (Arep) to launch a new platform dedicated to financing renewable energy.
The African Rainbow Energy platform is the result of a joint venture between Absa Bank, a subsidiary of the Absa Group and African Rainbow Energy and Power (Arep). The aim of this joint venture is to invest massively in the very dynamic renewable energy sector in South Africa. According to the agreement signed between the two partners, Arep will make an initial investment of assets covering wind, solar photovoltaic and biomass projects with an installed capacity of over 700 MW.
For its part, Absa will make an initial investment of 500 million South African rand ($33.55 million) in cash and transfer 5 billion rand ($335.56 million) of its existing renewable energy assets to the African Rainbow Energy platform. This will give the platform approximately R6.5 billion ($436.22 million) in gross assets, covering 31 renewable assets, making it one of South Africa’s largest and most diversified independent energy companies.
Increasing investment in renewable energy
According to African Rainbow Energy, this collaboration supports Arep’s goals of using modern, renewable energy technologies to provide affordable electricity in South Africa and across the African continent. Absa Bank has an important position in the South African energy sector and as such plays a key role in the green economy through its commitment to renewable energy development.
The bank, led by Wendy Lucas-Bull, has been involved in the financing of 33 projects to date, representing approximately 3 GW, or 46% of the total number of closed projects in South Africa. Absa’s renewable energy lending amounted to R20bn ($1.34bn) as of 31 December 2020. “Our participation in African Rainbow Energy underlines Absa’s commitment to supporting the development of renewable energy and strengthening the green economy, as part of our sustainability agenda,” says Jason Quinn, Absa’s acting group managing director.
Participation in REIPPP
According to Jason Quinn, renewable energy is an important part of Absa’s sustainability strategy. And the bank aims to finance or arrange more than R100 billion ($6.7 billion) for environmental, social and governance projects by 2025.
The platform that Absa is setting up with Arep will support the development of several clean energy technologies, including solar, wind and battery storage solutions. African Rainbow Energy has also teamed up with other partners to bid for the 5th round of the Renewable Energy Independent Power Producer Procurement Programme (REIPPP). The new platform, led by Brian Dames, also plans to invest in the private electricity sector and is working with several companies to provide “tailored energy solutions”.
Jean Marie Takouleu