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United Kingdom-based power developer Globeleq announced on 18 July that the company has reached a definitive agreement with an affiliate of New York Stock Exchange-listed Brookfield Asset Management to acquire majority stakes in six renewable energy projects with combined capacity of 178MW. The deal, which is subject to outstanding conditions, also includes Globeleq taking a majority position in Brookfield’s South African asset management company.
The power plants involved in the transaction are:
BioTherm Energy sold its stake in Aries and Konkoonsies to Terraform Global, then the yield company (yieldco) – a company established to own operating assets – of SunEdison, soon after the three-year after commissioning bar on selling stakes in REIPPP projects expired. SunEdison’s assets were similarly transferred to the yieldco, which was acquired by Brookfield Renewable Partners in December 2017 following a difficult separation from SunEdison. Brookfield acquired a 31% interest in Terraform, with the remainder purchased by institutional partners. At the time, Terraform owned and operated 952MW of solar and wind plants across the world.
Globeleq is owned by the UK’s Department for International Development’s CDC Group and Norway’s Norfund. Since a change of ownership and full return to public hands in 2015, the developer has been encouraged to take on a larger role in early stage development as well as become more oriented towards wider development objectives.
Globeleq chief executive Paul Hanrahan said, “our team is working hard to complete this very exciting transaction. The expertise of our South African team will be able to enhance these assets by driving operational improvements and improve the existing social and economic development programmes.”
The high cost of projects from REIPPP1 and 2 has been a contentious issue in South Africa, taking on increased significance as national utility Eskom has bemoaned the impact of the projects on its revenues as it struggles to stabilise its finances. The developmental impact of the projects has also been challenged, with critics of the programme claiming that not enough jobs have been produced. The programme feeds into regional and institutional tensions, with thousands of heavily unionised coal power plant workers expected to lose their jobs in Mpumalanga over the next decade. Renewable energy workers, where the established unions are less well entrenched, are located elsewhere in the country, particularly in the poorer Northern Cape.
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