The Concentrator Photovoltaics Power Plant No.1 (CPV1), a 44 MW concentrated solar photovoltaic plant in the Western Cape, has successfully been refinanced by its shareholders Pele Green Energy (PGE), the Public Investment Corporation (PIC) and Touwsrivier Solar Community Trust, which represents the local community of Touwsrivier.

The refinancing involved the delisting of a JSE-listed bond and converting the debt into a limited recourse project finance instrument.

The refinancing initiative was launched by the Department of Mineral Resources and Energy’s Independent Power Producers Office (IPPO) in October 2019, as one of the mechanisms to reduce the wholesale price of electricity.

All IPPs contracted under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Windows (BWs) 1 to 3.5 were invited to participate in this initiative.

CPV1 was built as part of BW 1 of the REIPPPP.

In support of the IPPO initiative, the board of CPV1, led by majority shareholder PGE, initiated the refinance process in March last year.

This was followed by a competitive process to appoint lenders, which resulted in some of the bondholders joining the new project finance structure alongside leading commercial banks.

The project is now collectively financed by Investec as initial mandated lead arranger (MLA), Rand Merchant Bank (RMB) as current MLA, Stanlib, Mergence and Aluwani.

“We would like to congratulate the CPV1 project on reaching financial close on their recent re-financing agreement. To date, 13 IPP projects have successfully applied to refinance their projects. The nominal savings to the consumer from the 13 refinancing applications is significant, at just over R3.5-billion.

“We encourage all IPPs from these earlier bidding rounds to participate in this important initiative” IPPO head Tshifhiwa Bernard Magoro said.

“Acting as initial MLA for the CPV1 refinancing concludes yet another milestone transaction executed in our partnership with PGE. We are honoured to have been able to walk this journey with Pele and look forward to further partnering with them as they build on their . . . renewable energy strategy,” Investec power and infrastructure head Martin Meyer said.

“The refinancing has unlocked value for all the shareholders involved, especially for the beneficiaries of the Touwsrivier Solar Community Trust. It has improved the potential returns and significantly reduced risk over the life of the project. The proceeds will create an opportunity for further investment into the South African economy,” PIC CIO Kabelo Rikhotso said.

“The senior debt refinancing of CPV1 cements RMB’s relationship with Pele as well as the other sponsors and unlocks significant value for the stakeholders while giving a cost saving to South African energy consumers, a beneficial transaction for all,” RMB infrastructure finance co-head Judy Kobus said.

CPV1 was the first REIPPPP project funded through a JSE-listed bond, which brought great value at the time by opening a channel to debt funders whose mandate restricts them to listed investments, according to PGE MD Gqi Raoleka.

"The Moody’s project bond rating and the listed nature of the bond financing was ahead of its time when the bond was initially listed. The successful migration away from a bond into a project finance structure was a novel and complex transaction which allowed our investment and funding team to demonstrate . . . financial innovation and structuring, by navigating the DMRE’s refinance protocol guidelines alongside the JSE’s strict requirements,” Raoleka said.