Gridworks and New GX have announced a $40 million investment into the portfolio company Sustainable Power Solution Investments (SPS).
The investment also sees Gridworks (established by CDC, the UK’s DFI) become a majority shareholder in the company, while New GX will replace current minority shareholders, Trigen Group and Genfin. Titan Group will remain an investor in the business.
The long-term funding provided by Gridworks and New GX will enable the company to deepen its presence in existing markets and expand across sub-Saharan Africa. The company is targeting building an additional 100MW of projects.
The $40 million of new capital for SPS reflects Gridworks and New GX’s relative shareholdings in the company, with Gridworks committing $22 million and New GX $18 million. In addition, Gridworks is investing $9 million to become a majority shareholder. This brings Gridworks total commitment to SPS in this transaction to $31 million. The introduction of New GX will also bring the local empowerment ownership in the company above 42%.
Lack of reliable grid power has led to more than half of businesses in sub-Saharan Africa using diesel generation to ensure certainty of supply. With more than three-quarters of total energy demand in Africa coming from commercial and industrial customers, the need is clear.
Solar PV and battery storage solutions are increasingly providing a viable and cheaper alternative for many businesses that see the value in being able to benefit from greener, more consistent power. SPS is well-positioned to accelerate the use of solar energy with Gridworks’ and New GX’s support and capital.
Gridworks first invested in SPS (then known as Mettle Solar Investments) in late 2019. Since then, the company has built over 22MW of grid-tied projects in Southern Africa and Kenya and 4.2MW / 8.7MWh of islanded projects in Seychelles, including some of the largest off-grid systems using Tesla’s Powerpack technology in Africa for its customers. Gridworks also appointed the experienced Kenyan businessman and former CEO of Kenya Airways, Mbuvi Ngunze as Chairman of SPS. In the last financial year, SPS’s operating plants reduced carbon emissions by more than 11.7 million kilogrammes.
The impact of the Gridworks and New GX investment
Announcing the new investment, Gridworks CEO Simon Hodson said, “We’re delighted to become the majority shareholder in SPS and support the company in the next stage of its development. Since first investing in 2019, we’ve helped the company become one of only a small set of African developers operating sustainably to finance, build, and operate grid-tied and battery-backed, off-grid systems.
“We’re excited that New GX Capital have decided to invest in the business alongside us. They have a wealth of experience in long-term infrastructure investing and will be a strong partner who share our ambitions for SPS. Their investment and expertise will be invaluable as SPS expands into new markets across Africa.”
“Gridworks exists to increase the quantity and quality of power in Africa and our mandate covers transmission and distribution infrastructure, as well as off-grid solutions like SPS. SPS, and the C&I sector as a whole, can provide green, reliable power to businesses that will go on to create jobs and economic opportunity.”
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Khudusela Pitje, CEO of New GX Capital added: “In South Africa, regulatory certainty is key to attracting capital. We believe President Ramaphosa’s announcement for lifting the license requirements around 100MW embedded energy opportunities will drive job creation (especially amongst the youth); private sector investment in the Telecoms sector; and indirectly assist utilities to generate additional capacity without government-backed guarantees”
SPS works with commercial and industrial (C&I) clients across sub-Saharan Africa to fund, develop, build and operate solar power technologies, including battery storage, that provide consistent, affordable clean energy.