March 29 2023
Tax-leveraged investment specialist, Anuva Investments has successfully deployed funds raised via the Anuva Green Energy partnership to conclude the purchase of twenty-three solar projects, equivalent to 11 megawatts of power from independent power producer, Decentral Energy.
The funds have been raised via a tax–leveraged structure and have allowed shareholders to benefit from the investment into Decentral’s solar projects by making use of SARS’s Section 12B tax incentive. Section 12B of the Income Tax Act provides taxpayers with a tax deduction of up to 100% for investment into solar power plants.
This will be the first round of projects sold by Decentral, a solar and clean energy asset management company that owns, manages and leases solar power assets across South Africa. The sale includes projects that have been built, owned and operated by the company or are in its approved pipeline.
These grid-tied solar solutions are primarily structured on long-term Power Purchase Agreements (PPAs) with the end-user. The portfolio consists of retail shopping centres, residential estates, and light industrial and commercial users who are contracted to purchase electricity supplied by the solar plant on a monthly basis for terms of up to 20 years.
“These systems reduce our customers’ reliance on the electricity grid substantially, allowing users not only to save on electricity costs but also to decrease their carbon footprint by 25 to 40%,” said Christian Bode, executive director at Decentral.
The energy security crisis South Africa faces has placed major pressure on the supply chain and skills availability of the independent energy sector.
According to Bode, suppliers’ order books are booked up until August 2023 and the capital injection provided by Anuva Green Energy through the portfolio sale will allow the company to re-invest and proceed with its growth strategy through the undertaking of new projects.
Bode said his and other companies are focusing on energy security and energy storage solutions for the commercial and industrial sector.
“There is a considerable amount of investment required to overcome and replace Eskom generation feeds,” said Zane De Decker, chief investment officer of Anuva Green Energy, a subsidiary of Anuva Investments, which raised significant funds via Section12 J structures, when the Section 12 J dispensation was still available to South African businesses.
“Fortunately we picked up on the solar tax incentive via Section 12B when SARS introduced it in 2016, and we have a few successful projects under our belt,” he said.
The tax-leveraged investment offering has been well received by Anuva’s clients and with the addition of Decentral’s 23 projects, the portfolio holds a total of 55 projects, valued at R325m.
“Having made considerable in-roads into the solar sector, we applied stringent due diligence factors in our selection process.” De Decker said.