MIGA Supports Solar Power Production in South Africa
WASHINGTON, August 1, 2023 – The Multilateral Investment Guarantee Agency (MIGA) has issued guarantees to BTE Renewables for up to $18.9 million to cover its equity investments into MBP PV (RF) Pty Ltd. MBP is a 75 MW solar power plant in the Northern Cape province of South Africa.
BTE Renewables has acquired Sonnedix Solar South Africa Holdings Pty Ltd of South Africa, which has a 60 percent ownership interest in MBP. The 15-year guarantees protect BTE Renewables against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
South Africa has made substantial progress toward achieving universal access to electricity, with an estimated 85 percent of the population having access, compared to 70 percent in 2001. The country, however, still faces chronic power shortages with frequent load shedding during which the power company shuts off supply to customers because there is an imbalance between electricity supply and demand. This usually happens during peak hours, affecting commercial and household activities. Ongoing issues with load shedding are resulting in negative impacts on the overall industrialization and macroeconomic development of the country.
To address the country’s energy needs, the government of South Africa has initiated several programs to increase generation capacity and narrow the electricity supply and demand gap. One such initiative, the Renewable Energy Independent Power Producer Program (REIPPP), was introduced in 2011 and has enabled significant additional renewable energy capacity. The MBP solar plant is part of Round 3 of the REIPPP and has been operating since 2016. Continuing significant private sector investments will be required to achieve the government’s goals.
“With this guarantee, MIGA is facilitating a private investment that will contribute to the financial sustainability of the power sector and demonstrate the value in the secondary market of solar power plants in South Africa,” said Hiroshi Matano, Executive Vice President of MIGA. “Just as important, we are also supporting a low-carbon and climate resilient development pathway for South Africa.”
Actis, an experienced global operator of renewable energy assets and a long-standing MIGA client with guarantees across all its investments across Africa, supported BTE Renewable’s acquisition through its Actis Energy 4 (AE4) investment fund. AE4 is a $2.75 billion global energy fund that invests in controlling stakes in electricity generation businesses across Latin America, Africa, and Asia. AE4 owns BTE Renewables, which acquired the interest in MBP.
The power sector is a significant contributor to GHG emissions in South Africa, and the carbon footprint of the sector is considered high. The electricity sector has significant CO2 emissions due to the dominance of coal generation, with limited renewable energy generation (less than 10 percent). As a solar power plant, MBP delivers net positive impacts on the environment and has strong climate change mitigation aspects. The acquisition will ensure that it maintains an acceptable level of performance via its environmental benefits.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $70 billion in guarantees across 123 developing countries in support of more than 1,000 projects.
Elizabeth Howton, (202) 458-5922, email@example.com
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