CrossBoundary Energy Secures $40M In Equity From Norfund & KLP To Expand Portfolio Across Africa

Whenever I travel to some of the major capital cities in Africa, the first thing I notice is all the roofs and carports that are still not covered in solar panels. The solar rooftop market in Africa is still essentially largely unapped. For example, in Kenya, according to the Clean Captive Power: Understanding the uptake and growth of commercial and industrial (C&I) solar PV in Kenya report, there are an estimated 3,900 large commercial consumers which would benefit from solar power. However, currently less than 500 of these customers have adopted PV systems to complement their energy requirements.

There is so much potential for rooftop solar across the major cities on the African continent. Sunny Australia gives us a good example of the power of rooftop solar to complement the grid. Australia’s Ministry for Industry, Energy and Emissions Reduction in March this year reported that 2021 was the fifth record-breaking year in a row for rooftop solar in Australia. In 2021, Australians installed approximately 380,000 new systems with a combined capacity of 3.2 GW. More than 3 million rooftops in Australia now have solar, bringing the total installed capacity to an awesome 17 GW! “Last year $7.4 billion or $284 per person was invested in renewable energy in Australia. This puts us ahead of countries including Canada, Germany, Japan, France, China and the United States on a per person basis,” Minister Taylor said earlier this year.

Getting this level of funding into the C&I sector in the major markets on the continent would help unlock the potential this industry has. During the early years, about 8 or so years ago, the adoption of solar PV systems by corporates in Africa’s major centers was mostly via outright purchase deals. This slowed down uptake as large systems of several hundred kW were quite pricey. Later, several solar development companies started offering corporate PPAs and system lease agreements. Under these facilities, corporates could get grid-tied PV systems for no money down, and then pay monthly lease fees for 15 to 20 years. These monthly payments were structured in a way that they would offset their daytime consumption at rates much cheaper per kWh than the utility tariff. The availability of such financing options is now helping to drive adoption of these behind the meter PV systems as more corporates move to cut energy costs.

One of the early players and leaders in the sector is CrossBoundary Energy. CrossBoundary Energy is a developer, owner, and operator of distributed renewable energy solutions for businesses across Africa, providing cheaper and cleaner energy through power purchase and lease agreements. Earlier today, CrossBoundary Energy announced the completion of a $40 million equity investment from Norfund, the Norwegian Investment Fund for developing countries, and KLP, Norway’s largest pension company, through their joint company KLP Norfund Investments AS.

This commitment will allow CrossBoundary Energy to further scale its investments in renewable energy solutions for commercial and industrial businesses across Africa. The $40M commitment is a continuation of Norfund and KLP’s earlier investments in the C&I sector and endorses the scale and maturity of the distributed generation sector in Africa. The secured funding is in addition to $40M in equity invested in CrossBoundary Energy by ARCH Emerging Markets’ Africa Renewable Power Fund in 2020.

CrossBoundary Energy provides tailored, fully financed renewable energy solutions to its corporate customers allowing them to avoid upfront capital expenditure and technical risks, while still benefiting from cheaper, cleaner, and more reliable power. CrossBoundary Energy is currently delivering a portfolio of $188M in projects for 30 corporate customers across 14 countries in Africa, comprising 150 MWp of solar PV assets, 50 MWh of battery energy storage assets, and 12 MW of wind assets. CrossBoundary Energy is the renewable energy provider of choice for a number of market-leading companies present in Africa, including Unilever, Diageo, Rio Tinto, Heineken, and AB InBev.

Pieter Joubert, President and Chief Investment Officer, CrossBoundary Energy says, “We are very excited to welcome Norfund and KLP as investors. Their commitment is aligned with our belief that the business sector across Africa should be able to benefit from cheaper, cleaner and more reliable power. This investment validates CrossBoundary Energy’s position as a trusted provider of customer-centric renewable energy solutions to the African business community. We look forward to drawing on Norfund’s significant experience as we seek to deliver an operational portfolio of over $300M in assets within the next 5 years.”

Kristoffer Valvik, Investment Manager, Norfund, says, “We believe that distributed renewables are playing a critical role in driving towards the clean and sustainable growth of the commercial and industrial sector across Africa. The cost savings offered by renewable energy, coupled with the reliability of battery energy storage systems, allows companies like CrossBoundary Energy to provide the business sector with immediate cost savings whilst significantly reducing their emissions, and creating employment in the renewable energy sector. CrossBoundary Energy has secured a leading portfolio of high-quality assets and we are excited to support them as they continue to scale.”

Aage Schaanning, Group Chief Financial Officer, KLP, says, “We are pleased to support the further development of CrossBoundary Energy’s portfolio of distributed renewable energy systems and are confident that its strong business practices will boost sustainable economic development on the African continent and deliver stable and predictable returns for KLPs owners.”

William Barry, Managing Director, ARCH ARPF, says, “We are extremely pleased with the progress made by CrossBoundary Energy following our investment in 2020, with their portfolio growing ten-fold over the last two years. CrossBoundary Energy has established itself as a pioneer and clear market leader in the commercial and industrial renewable energy sector across Africa, and we look forward to supporting the next phase of growth enabled by Norfund and KLP’s investment.”

Its really good to see this kind of investment in the C&I sector aimed at catalyzing the wide scale adoption of distributed solar and battery storage across Africa.

Images courtesy of CrossBoundary Energy


 

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