13 November 2008
US-based Denham Capital, a leading energy-focused global private equity firm, has announced an equity investment of US$150-million (about R1.56-billion) in BioTherm Energy, a South African developer, owner and operator of renewable and clean energy generation projects.
“Having opened BioTherm’s first plant just over a year ago, we are delighted with this substantial investment by Denham Capital, a major foreign investor, in a business that will generate more electricity in South Africa, contribute to the reduction of greenhouse gasses and create more jobs in the South African economy,” Minerals and Energy Minister Buyelwa Sonjica said in a statement issued by Denham Capital this week.
Sonjica was referring to a 4.2 megawatt biogas power plant, based at the PetroSA facility in Mossel Bay, which she opened in September 2007.
At the time, it was the first private sector renewable power generation project in southern Africa funded under Clean Development Mechanism of the Kyoto Protocol, under which the project earns carbon credits because of its contribution to the reduction of greenhouse gases.
Under the European carbon-trading scheme, these credits are in turn sold, primarily to European industries, which need to reduce the cost of their compliance liabilities.
Denham Capital’s London office head Louis van Pletsen said that Denham would provide the necessary equity capital for BioTherm to develop, invest or acquire projects totalling approximately 300 megawatts, equivalent to the electricity needed to supply about 500 000 households.
“Private sector investment from companies such as BioTherm Energy will be essential in addressing South Africa’s energy deficit,” he said. “Our investment in BioTherm reflects the range and geographic reach of Denham Capital’s energy investment strategy.”
According to the statement, the opportunity for small-scale, on-site generation in South Africa has grown significantly, and BioTherm Energy has secured, and is continuing to develop, a substantial pipeline in waste gas co-generation, biomass and combined heat and power projects, many of which qualify for carbon credits under the Kyoto Protocol.
These projects can generate electricity much more rapidly than conventional large-scale power projects, thereby providing much-needed relief to the South African power system.
BioTherm Energy co-founder and CEO Charles Liebenberg said that a partnership with Denham Capital would allow BioTherm Energy to continue its aggressive expansion programme.
“For years South Africa has had cheap energy, and an unfortunate result of this is inefficient usage,” he said. “BioTherm Energy’s projects ensure that all forms of energy can be best harnessed to avoid waste, reduce carbon emissions and provide reliable power.
Power conservation programme
Liebenberg added, however, that the government’s power conservation programme, which rations electricity supply to all consumers, reflected the severity of the power crisis in South Africa – something that BioTherm could help address.
The company is targeting energy-intensive industries where industrial processes release significant amounts of waste energy both as heat and gasses, which can be used to produce electricity, which is then sold on to the host site or to Eskom.
BioTherm Energy is also instituting multi-level sustainability in all of its projects through the participation of black economic empowerment (BEE) partners, and community-based development programmes.
Denham Capital partner Scott Mackin said the company’s investment in BioTherm reflected their strong belief in the potential for innovative solutions to South Africa’s power crisis.
“We are delighted to be working to develop this exciting and valuable business, with a highly skilled and committed management team with a proven track record,” he said. “We believe BioTherm Energy is well positioned to delivery much needed additional clean and reliable power to the South African economy.”
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