African power development company Ncondezi Energy Ltd this week announced that its renewables subsidiary signed a term sheet with Johannesburg-based investor Nesa to negotiate setting up a solar and storage-focused joint venture (JV) in southern Africa’s commercial and industrial (C&I) sector.
Through 100%-owned Ncondezi Green Power (NGP), the company signed a pact with Nesa Capital (Pty) Ltd and Nesa Engineering (Pty) Ltd, which gives the parties exclusivity to form the JV and raise capital for its business.
For starters, the new entity would have NGP’s 400-kWp solar PV and 0.9-MWh battery storage project currently under construction and its project pipeline in Mozambique. Nesa would contribute its C&I renewable energy management team, its EPC business and its C&I pipeline in South Africa, which totals 91.6 MWp of solar PV and 7.3 MWh of battery storage.
At present, Nesa has 15.5 MWp of solar PV plus 0.2 MWh battery storage C&I assets in operation and under construction across 66 sites, which are held by Nesa Investment Holdings (NIH).
Nesa Capital and Nesa Engineering provide management services for NIH, a venture capital firm, and its portfolio of C&I investments.
If successfully realised, the JV’s current combined portfolio could lead to 94.5 MWp of solar PV and 13.5 MWh of battery storage across a further 47 potential sites, Ncondezi said.
As for the ownership structure, NGP would acquire a minimum 40% equity stake in the new JV before fresh capital enters, with options to boost its interest. Ncondezi said that discussions to raise funds directly into the JV are already underway, with multiple parties bringing non-binding offers to the table.
Nesa and NGP further agreed they would acquire a minimum 51% interest in the NIH portfolio through the proposed JV, and raise their stake up to 100% within five years. The parties granted each exclusive rights to negotiate the terms of the acquisition by November 30, 2021.
Currently, NIH finances and owns projects that meet Nesa’s criteria for investment and construction. The partners want their future projects to be funded and owned by the JV.
The capital structure of the new JV is expected to be finalised by the third quarter of 2021.