UK private equity group Actis has plans to establish a $1.9 billion (ZAR23 billion) renewable power company in Africa. Named Lekela Power, the objective is to utilise the continent’s abundant resources and deliver reliable power to meet increasing demand.
A joint venture with wind and solar developer Mainstream, Lekela will take 60% equity up to a maximum of $220 million (ZAR3 billion) and Mainstream the other 40%. The balance of the funding will be provided as debt by South African banks and development finance firms, Financials UK reported.
The venture includes the development of several power projects with a combined generation capacity between 700-900MW.
While interest in Africa is increasing, there is still a lack of funds on the continent.
“At the moment, commercial bank interest in the rest of Africa [outside South Africa] is more patchy, so we will work with multilaterals and development finance institutions”, Lucy Heintz, head of renewable energy at Actis said.
Northern Cape wind farms
Lekela is in the process of developing three wind farms in the Northern Cape of South Africa which are to commence construction next month. Once fully operational, the wind farms will have a total generation output of 360MW.
East African power
Heintz said east Africa was generating investor interest as a renewable power hub.
“There is a lot [happening] in solar in Kenya, Uganda. Ethiopia is an interesting market that we are watching — it has been very active on the state-procurement side in energy. We’ll see whether that market evolves towards more private sector participation”, Heintz commented.