Pele Green Energy (PGE), a pioneering black-owned independent power producer (IPP) in South Africa, is making significant strides toward achieving its vision of becoming a leading South African IPP. With a history of securing groundbreaking public and private power purchase agreements, PGE finds itself at a crucial juncture, already contemplating the need for additional funding beyond the notable R2.5-billion Sithala facility it secured in November with Nedbank, Norfund, and the Industrial Development Corporation.
This facility marked a significant milestone for PGE, providing it with a consolidated funding platform for the first time. Designed to facilitate a competitive expansion, the funding aims to grow PGE’s operating portfolio from about 1 GW to an ambitious 5 GW by 2027. Moreover, it offers the essential capital required to develop a robust project pipeline and allows PGE to refinance its existing group funding at the holding company level.
Gqi Raoleka, the Managing Director of PGE, shared with Engineering News the transformative impact of the Sithala structure on the company’s funding approach. Moving away from the cumbersome and costly project-by-project capital-raising model, the new structure is a leap forward, enabling PGE to competitively position itself as a lead developer of projects that it both owns and operates.
PGE, established 15 years ago by a group of young black professionals, is transitioning from a junior partner role to seeking majority ownership or co-sponsorship in projects. CFO Matthew Wainwright highlights that the Sithala structure aligns perfectly with PGE’s ambitions, already facilitating a more assertive role in recent projects. Notably, PGE secured significant equity positions in two solar projects awarded under the government’s renewables procurement program and a 20% equity stake in the Koruson 2 cluster of wind and solar projects.
The success of these ventures has led to early drawdowns against the Sithala facility, indicating that PGE is surpassing its initial goals faster than anticipated. This rapid progress suggests that the facility may need to be expanded to accommodate the growing scale of opportunities.
However, Raoleka acknowledges that even an expanded Sithala might not suffice as PGE accelerates toward its goal of becoming a fully-fledged South African IPP. He emphasizes the importance of building a “truly South African company,” which would require broader participation in the capital markets beyond its current black shareholder base. This approach is essential for sustaining PGE’s growth and meeting the country’s energy transition needs.
As PGE navigates this exciting phase of expansion and transformation, it stands as a testament to the potential of homegrown South African enterprises in leading the country’s energy transition. With its ambitious goals and innovative funding strategies, PGE is on a promising path toward reshaping South Africa’s energy sector.
