Exxaro is looking for opportunities for its subsidiary, Cennergi, to buy completed renewable energy projects in SA whose parent companies are financially distressed, CEO Mxolisi Mgojo said last week.

At least two multinational renewable energy developers have experienced a cash squeeze in the past year: Abengoa, whose Khi Solar One plant came online in February; and SunEdison, which has nine solar photovoltaic projects in SA.

Cennergi, a 50:50 joint venture with Tata Power, has connected two wind farm projects, Tsitsikamma Community and Amakhala Emoyeni, to the grid, and by year-end they will be delivering 229MW. They were awarded under the second window of the renewable energy independent power producer programme.

In the six months to June Cennergi notched up an equity accounted gain of R37m, a turnaround from last year’s loss of R32m, when projects were in development. Until 2030, these projects will be paying more to financiers than to Exxaro and Tata, but from 2031 the dividends will dwarf debt repayments.

Mgojo says Cennergi will look at a range of renewables acquisitions opportunities. It might want a project of 30MW for a particular reason, or one awarded in an early bid window, when prices were higher.

Cennergi is a small cog in Exxaro’s machine, but it fits into the company’s strategy of moving away from reliance on Eskom coal supply and the new management team’s focus on innovations. Coal contributed 119% of the group’s core headline earnings per share in the six months to June, offsetting a negative contribution from titanium company Tronox and a reduced contribution from the ferrous interests (mainly the stake in Sishen Iron Ore).

Exxaro’s shares lifted from R80 to R84 after it released interim results and announced a 38% higher dividend at 90c/share, but slipped back to R80 within a day.

Author : Charlotte Mathews
Media : Financial Mail