Norwegian renewable energy company Scatec has signed an agreement to raise $102-million in funding from Netherlands-based investment manager Climate Fund Managers (CFM) to accelerate its growth ambitions.

Notably, the deal will be done through Release by Scatec, which is a flexible leasing agreement of preassembled solar photovoltaic (PV) and battery equipment that Scatec established in 2019 for the mining and utilities market.

CFM, as a climate-centric blended finance fund manager backed by various financial institutions, has invested in Release through the Climate Investor One fund. The fund is a vehicle focused on renewable energy infrastructure in emerging markets.

CFM will contribute $55-million in equity for a 32% stake in Release, and also provide shareholder loans totalling $47-million, part of which will be on concessional terms. Scatec will retain the majority shareholding of 68%.

The companies expect the transaction to close in the third quarter of the year.

The investment will be used to roll out Release’s innovative solar PV and battery solutions to power utilities and mining companies across Africa, reducing energy costs, strengthening energy security and helping to decarbonise generation by replacing traditional diesel and heavy fuel oil or coal-fired generation solutions.

“We are very excited to have CFM join us as a partner to accelerate the significant growth potential of the Release platform. Scatec is establishing a strong partnership and has raised external financing through a value accretive transaction to fund Release’s growth ambitions,” comments Scatec CEO and Release chairperson Terje Pilskog.

He adds that Release is offering a unique renewable energy solution in a rapidly growing market segment that requires a different business model to Scatec’s larger-scale project business.

Pilskog adds that the transaction with CFM establishes Release as a strong and independent company, while Scatec remains the main shareholder and offers services to support Release and drive synergies in the next phase of the company’s development.

“One of the greatest barriers to adopting solar technology is its capital-intensive nature. Release now helps our customers overcome this by providing a flexible and affordable model. Our solar PV and battery solution is extremely competitively priced compared with diesel generators or other traditional grid stabilisation measures.

“The new shareholder funding will be supplemented by Release through additional debt and guarantee facilities that are currently in advanced negotiations. This gives us the financial foundation we need to meet the strong demand for our flexible leasing model, for easily deployable renewable power plants,” says Release CEO Hans Olav Kvalvaag.

Meanwhile, Scatec says Release is experiencing good traction in the market, particularly among African utilities.

It has projects in operation and under construction in Cameroon, South Africa, Mexico and South Sudan with a total capacity of 47 MW of solar PV and 20 MWh of battery storage, as well as additional contracts for 35 MW of solar PV and 20 MWh of storage in Chad.

Release intends to replicate its rapid deployment model to address shortfalls in local grid power supplies throughout the region.

CFM CEO Andrew Johnstone comments that CFM’s purpose is to help end the climate crisis by raising and deploying cutting-edge blended finance funds at scale and at pace.

“Our blended finance model facilitated the integration of impact finance into the deal structure, which Release will be able to leverage to improve its cost structure for its battery and grid connection solutions, allowing Release to offer even more competitive pricing and better value to its clients,” he adds.

After closure of the transaction, Release will be accounted for as a joint venture investment in the group accounts of Scatec, with no impact on the proportionate financials from the transaction.

Meanwhile, Rand Merchant Bank (RMB) comments that it is proud to be the sole financial adviser to Scatec on the $102-million investment from CFM.

“It is increasingly clear that closing Africa’s energy gap will require innovative solutions that disrupt the standard approach to the provision of power. Release’s unique offering will contribute positively to Africa’s future energy mix by rapidly deploying power to remote areas where the only other viable energy alternative is diesel and heavy fuel oil,” RMB energy corporate finance head Liz Williamson notes.

She adds that RMB remains committed to playing its part in Africa’s energy transition by supporting companies that can unlock positive social and environmental outcomes

“As one of the leading renewable energy providers in Africa, Scatec is a key client for RMB. We are, therefore, extremely proud to have advised Scatec on the capital raise for its Release business,” Williamson states, adding that the offering from Release is unique in Africa, providing modularised off-grid solutions for corporate and utility customers.

This successful capital raise from CFM as a key investor in the green economy globally will catapult both Release and its critical offering across the continent, as Africa looks to accelerate its transition to renewable energy, says RMB infrastructure sector solutions power division head Daniel Zinman.