Pele Energy secures $31m for South African renewables

From the newsletter

South African lender Nedbank and Norway’s Norfund have acquired a minority stake in Pele Energy Group, injecting $31m to accelerate solar and battery projects. The deal follows a $135m structured loan, positioning Pele to target $108 - 162 million in additional funding by 2027 amid South Africa’s coal-to-renewables transition.

• Demand for reliable and clean electricity is high in South Africa as companies rush to ditch the fossil-fuel-powered national grid. Investors are seeing great potential in the market and are moving fast to get a share of it.

• This is not just a trend in South Africa but a global one. Just this week, TotalEnergies acquired a 51% stake in Scatec's hydropower assets in Uganda, Malawi, DRC, and Rwanda.

More details

• Pele operates through subsidiaries Pele Green Energy (PGE), an independent power producer (IPP) with a 3,500 MW portfolio, and Knowledge Pele (KP), which performs research-led developments. PGE specialises in wind and solar utility-scale projects and battery storage.

• Pele won six of eight state-tendered renewable projects in December 2024, targeting financial close on 420 MW of solar/storage early next year. The company is capitalising on the increasing demand for self-reliant power solutions among energy-dependent companies in South Africa.

• South Africa aims to deploy 30,000 MW of renewables by 2030, requiring over $30 billion in investment to phase out coal and curb load-shedding. Pele’s projects will add 420 MW of solar and storage capacity by 2026, powering ~300,000 households annually and reducing reliance on Eskom’s failing coal plants. This could cut load-shedding by 15% in key regions.

• Pele's focus on wind, solar, and battery storage aligns with South Africa's energy needs. The company is well-positioned to contribute significantly to South Africa’s energy transition. Transitioning from coal, Pele’s projects will offset 740,000 tons of CO2 annually, equivalent to removing 160,000 cars from roads.

• The partnership with Nedbank and Norfund provides Pele Energy with the financial resources to accelerate project development and ensure sustainable growth.

• The investment demonstrates confidence from both local and international financial institutions in South Africa's renewable energy potential. Pele's success highlights the increasing viability and attractiveness of renewable energy projects in the region.

Our take

• Nedbank and Norfund’s bet on Pele highlights the viability of public-private partnerships in Africa’s energy transition. However, overreliance on foreign debt risks saddling utilities with unsustainable liabilities if tariffs or project timelines slip.

• Africa’s renewable energy boom is set to attract more investment, and small companies that can't raise money will be absorbed through mergers and acquisitions, leading to larger, more competitive entities. Those that are clear on their business model will attract equity and debt funding to scale up operations.

• The liberalisation of South Africa's electricity market presents a significant opportunity for companies like Pele Energy. With the sector poised for growth, Pele can strategically expand its operations beyond power generation and diversify into other key areas within the electricity vertical.