Solar micro-leasing marketplace Sun Exchange has signed an agreement with Decentral Energy, a boutique clean energy fund manager based in Johannesburg.
The agreement gives Decentral Energy’s Grovest Energy, a Section 12J fund, first right of refusal to fund 51% to 100% of selected Sun Exchange off-taker projects, and to fund any balances after Sun Exchange solar cell crowd sales are completed.
Decentral Energy has already provided equity and debt financing for the largest Sun Exchange project to date, the 473kW Cape Town-based Nioro Plastics, which came online early January this year.
“We invest in small scale energy assets that demonstrate predictable, inflation-linked cash flows, because we believe that the energy future will be decentralised and built upon similar financing systems,” says Christian Bode, fund manager at Decentral Energy. “For that reason, we support Sun Exchange in their vision to create a thriving, inclusive and decentralised solar-powered economy. We’re so confident about their business model that we’ve already bought into the Nioro Plastics project, and our goal is to fund 20 MWp of Sun Exchange projects by 2020.”
“We are delighted about the partnership with Decentral Energy,” says Abe Cambridge, CEO and founder of Sun Exchange. “Their confidence in our projects demonstrate that our solar cell leasing marketplace offers a reliable, lucrative and socially responsible source of income for anyone.”
The agreement increases the ability of the Sun Exchange to host larger projects with less risk. For Sun Exchange users, this means that they can be part of large or small projects and there is greater reliability around the completion dates of crowd sales and subsequently quicker time scales to having their solar cells rented out. This is also good news for off-takers, such as Nioro Plastics, as the agreement highlights the increasing availability of equity and debt financing for viable small projects, which large financiers are traditionally not interested in funding.
“We turn recycled PET into everyday household items that last a very long time and which continue to be 100% recyclable,” says Simeon Penev, Nioro Plastics MD. “We are committed to recycling and producing these products in a cleaner and more cost-efficient way, using renewable energy. The solar project was easy to justify, because we will be saving on our energy bill moving forward.”
Decentral purchased nearly 59% of the Nioro Plastics solar cells, which will yield an IRR of 14.5% per year. Over 20 years, Nioro Plastics will produce 14.12GWh of clean electricity, which is equivalent to over 10 million kilograms of coal burned.
Sun Exchange has successfully hosted crowd-sales for seven other solar projects in South Africa through its solar micro-leasing platform. The projects, which focus on commercial, industrial and community installations, provide an income stream for Sun Exchange members, who lease their cells to the projects through the Sun Exchange platform. The platform provides cell owners access to real-time information on how solar cells are performing and tracks rental income generation.
The company’s most recent crowdsale was for a project that will solar power Sacred Heart College in Johannesburg, a historic educational institution renowned for its social justice leadership.
Sun Exchange is already expanding their footprint into the rest of Africa, which lacks traditional grid-tied and centralised infrastructure. Last year, the company announced a partnership with Leonardo DiCaprio-backed Powerhive, aiming to leverage the Sun Exchange platform to deliver electricity for up to 175,000 people in Kenya currently living without power.