Tuesday 22 October 2019

Mainstream bids to grow its presence in South Africa

Eddie O'Connor, Chief Executive of Mainstream Renewable Power. Photo: Tom Burke
Eddie O'Connor, Chief Executive of Mainstream Renewable Power. Photo: Tom Burke
John Mulligan

John Mulligan

Mainstream Renewable Power – the global energy firm headed by Eddie O'Connor – is vying to boost its presence in South Africa as the government there winds up a new licensing round for close to 900 megawatts of renewable electricity capacity.

A tender process closes next Monday, with Mainstream competing against a number of other global energy firms to secure additional licences.

The Irish company – established by Mr O'Connor after Airtricity was sold to Scottish & Southern Electricity in 2008 for about €1.8bn – already has a presence in South Africa.

It started construction on a 138-megawatt windfarm there in January this year that's expected to be complete in 2014. Construction on a 50-megawatt solar plant started last December and is also slated to be finished next year. It also has permission for another 50MW solar plant in the country.

A number of major international energy firms are eyeing up opportunities in South Africa under the latest licensing round.

Speaking to the Irish Independent, Mr O'Connor wouldn't be drawn on the scale of additional potential capacity Mainstream would hope to secure, acknowledging that the process was much more competitive this time around.

This is the third of five licensing rounds being undertaken by the South African government as it aims to ensure it has 3,725 megawatts of renewable energy capacity by 2016.

Mr O'Connor also confirmed that Mainstream was engaged in a sales process for its assets in the United States.

"We've a good process going on over there, but it's probably not the time to sell," he said.

ENTERPRISE

A circular sent to Mainstream shareholders last week following an agreement by Japanese firm Marubeni to invest €100m in the Irish energy company indicates the Asian group's stake in Mainstream will rise above 25pc if the US assets aren't sold by next March for at least an enterprise value of $44m (€33m).

It would mean that Marubeni would pay €4 per Mainstream share it's acquiring, rather than €4.50.

"Marubeni aren't interested in investing over there. It's a question of priorities," he said.

"I'm not anticipating that the price will come down from €4.50," he added. "My feeling is we'll get there some way or another – I don't know how."

Irish Independent

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