SCATEC

 

Client challenge

Scatec established Release in 2019 with the aim of offering a creative solar alternative to challenge the traditional approach to providing power in emerging markets. Release offers flexible leasing agreements of pre-assembled modular solar PV and battery equipment. Release has experienced good traction in the market, particularly concerning African utilities, and has projects in operation and under construction in Cameroon, South Africa, Mexico, and South-Sudan with a total capacity of 47 MW solar PV and 20 MWh of battery storage and has additional contracts for 35 MW solar PV and 20 MWh of storage in Chad, in addition to maturing its advanced pipeline. 

Release was looking for additional capital to scale its operations with the aim of strengthening energy security in Africa, reducing energy costs and decarbonisation efforts through the transition away from traditional diesel and heavy fuel oil-fired (HFO) generation solutions.

The RMB solution

RMB’s Corporate Finance Advisory team developed an innovative solution for SCATEC by arranging a US$102 million capital investment from Climate Fund Managers. CFM contributed US$55 million in equity and US$47 million in shareholder loans, part of which will be on concessional terms, for a 32% stake in Release. Scatec will retain the majority shareholding of 68%.

CFM is a leading climate-centric blended finance fund manager. It designs and deploys cutting-edge climate finance funds at scale and at pace, working in partnership to co-develop, construct and own sustainable infrastructure solutions that deliver low-emission, climate-resilient growth. Established in 2015, CFM is a joint venture between the Dutch development bank, FMO, and Sanlam InfraWorks, part of the Sanlam Group of South Africa. The firm invests across Africa, Asia, and Latin America and is headquartered in The Netherlands. The company invested in Release via its Climate Investor One (CIO) fund; a blended finance vehicle focused on renewable energy infrastructure in emerging markets.

Release also has mandated debt and project support from the IFC (World Bank). The IFC has stated it aims to facilitate development of a portfolio of ~210 MW in the next 3 years within sub-Sharan Africa – This transaction means that Release can now play a key role in helping the IFC achieve this target.

Client Enablement and Community Impact

The funding from this transaction will be used by Scatec to scale Release's operations with the aim of strengthening energy security in Africa, reducing energy costs and decarbonisation efforts through the transition away from traditional diesel and heavy fuel oil-fired (HFO) generation solutions. Release, guided by its strong commitment to fostering positive change, intends to replicate its rapid deployment model to address shortfalls in local grid power supplies throughout the region, thus aligning to create a more sustainable future for all while embracing the principles of ESG.

Release enables much-needed flexibility for emerging economies in that the infrastructure is not fixed, it can be leased for the duration of need, and it can be scaled when and if demand grows. A Release power plant can be installed on site, meaning transport costs can be eliminated, and locals can be trained to operate it increasing employment in the area. 

It is increasingly clear that closing Africa’s energy gap will require innovative solutions that disrupt the standard approach to the provision of power. Release’s unique offering will contribute positively to Africa’s future energy mix by rapidly deploying power to remote areas where the only other viable energy alternative is diesel and heavy fuel oil. At RMB, we remain committed to playing our part in Africa’s energy transition, by supporting companies unlocking positive social and environmental outcomes. In this light we are incredibly proud to have advised Scatec on this landmark transaction.

Client	SCATEC
Sector	Renewable Energy
Capabilities	Corporate Finance Advisory
RMB's role	Sole financial advisor
Country	South Africa

Deal Summary

RMB acted as the sole financial adviser to Scatec ASA (Scatec), a leading global renewable energy solutions provider, on a US$102 million capital investment from Climate Fund Managers (“CFM”) in Release by Scatec (“Release”). Release provides an innovative containerised solar and battery solution to address the rapidly growing energy demand and local power challenges across Africa, making a lasting positive impact on the environment and local communities. 

The transaction was highly competitive, receiving significant interest from the development finance, infrastructure, and climate fund communities. This is one of the largest capital raises to have ever been concluded in the African non-utility scale, solar power sector and will leave an indelible mark on sustainability and low-carbon power across Africa – mitigating the adverse effects of carbon emissions and reducing reliance on fossil fuels. 

This transaction is transformative on many levels:

• It brings together Scatec and CFM – two companies dedicated to ESG, sustainable development and reducing GHG emissions, creating a synergy for energy security in Africa.
• It will enable Release to expand its sustainable operations across Africa, helping to strengthen energy security and access in the region.
• It will enable Release to continue to actively target customer segments with high alternative cost of power, temporary investments horizons and a significant need for emission reductions from diesel generators. These include national utilities, NGO’s and mining companies looking to offset diesel use and significantly reduce emissions.
• It will help to reduce energy costs and enable a transition away from higher-carbon power solutions across Africa.
• It will provide local employment opportunities across the continent.

 This transaction is also key to showcasing to the market and world the benefits of modular and flexible solar and battery technology.

• Quick: Efficient roll out resulting in installation 6-9 months from initial discussion. That’s roughly 1-2 MW per week vs traditional PPA timings of 3-5 years.
• Flexible: Simplified and adaptable leasing contracts with no upfront capex requirement from customers vs traditional IPP models. 
• Affordable: Rental of solar PV and batteries are extremely competitive compared to diesel generators.
• Offers standardised, prefabricated and re-deployable PV solution ideal for projects in the 1-30 MWp size, filling the gap between traditional C&I and traditional utility project which was previously being under served thus enabling a new section of the market which is now reducing emissions.