Engie, the French utility that led a US$1-billion buyout of a rival’s renewable power property in Africa final 12 months, expects extra offers to be seen within the business throughout the continent.
Whereas specializing in integrating the property it purchased from Actis fairly than in search of extra acquisitions, Engie is trying to develop a pipeline of 7GW of tasks, mentioned Mohamed Hoosen, the corporate’s MD for Asia, Center East and Africa. It could additionally put money into transmission tasks in South Africa, as soon as these are opened up for personal participation, he mentioned.
The corporate’s acquisition of BTE Renewables from Actis, which it purchased with Meridiam, comes as massive renewables corporations look to bolster their place on the continent. The business can be attracting new entrants.
A unit of Outdated Mutual is in talks with corporations together with BlackRock to promote a stake in one of many continent’s greatest renewable power companies, Bloomberg reported in June. Africa Finance Corp and Egypt’s Infinity Group acquired Lekela Energy in 2022 and Copenhagen Infrastructure Companions secured management of South Africa’s Mulilo Vitality Holdings final 12 months. Mainstream Renewable Energy is on the lookout for an investor in its African tasks and Pink Rocket might promote its enterprise.
“It’s inevitable that there’s going to be consolidation within the renewable area,” Hoosen mentioned in an interview. “Renewables is a scale enterprise — the larger you might be, the extra you might be growing, the extra buying energy you will have in buying panels or wind generators, you might be higher positioned to be aggressive.”
The consolidation comes because the tariffs energy producers are paid fall in South Africa, which has the continent’s greatest renewable power business, lowering returns for smaller corporations, he mentioned. Nonetheless, with a historical past of energy cuts, there’s substantial urge for food for additional tasks to be developed, he mentioned.
Three key markets
Engie plans to get rid of some property because it focuses its African enterprise on three key markets: South Africa, Egypt and Morocco. It’s trying to promote its stakes in two photo voltaic tasks in Senegal, which have a mixed capability of about 60MW.
“We are literally in a sophisticated stage with a celebration that’s trying to purchase our stake in these tasks,” Hoosen mentioned. “We now have no intentions of pursuing choices in different international locations in Africa” except for the three we’ve got chosen, he added, citing the maturity of these markets, nationwide insurance policies geared towards lowering emissions and the safety of authorized rights pertaining to contracts.
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Of the corporate’s pipeline of potential tasks, 3GW are in North Africa whereas 4GW are in South Africa. The portfolio, which is about evenly break up between wind and photo voltaic, would value billions of {dollars} to assemble if pursued, mentioned Hoosen. It will value about $1-million per megawatt of wind energy developed and $750 000 for a similar unit of solar energy, he mentioned.
The corporate already has about 3.7GW of producing capability operational throughout the continent and greater than 1GW within the means of being developed, a graphic on its web site exhibits.
Nonetheless, improvement plans in South Africa are constrained by the shortcoming of the grid to tackle massive quantities of extra energy, particularly within the western half of the nation the place the most effective photo voltaic and wind energy potential lies. Whereas the federal government is but to say how that will likely be resolved, Engie sees alternatives as soon as a grid-expansion undertaking goes forward.
“There’s a gridlock within the nation and I feel the authorities have already indicated that to unlock the transmission challenges that they face, they’re trying to the personal sector,” Hoosen mentioned. “Engie would take a look at that chance as a result of we do have a really profitable enterprise that makes investments in transmission infrastructure.”
Within the quick time period, Hoosen urged South Africa to permit a coverage of curtailment on its energy grid, which might permit extra renewable power producers to connect with the grid given that at instances of peak provide, they don’t ship all the facility they produce to it. — (c) 2024 Bloomberg LP
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