Growthpoint powers its way to a green energy future

Growthpoint Properties has welcomed the privatisation of parts of South Africa’s national energy grid after acquiring a significant stake in a new hydroelectric plant, and is prioritising renewable power supply to its properties.

The leading real estate investment trust (Reit) has acquired a 30% stake in the Boston Hydroelectric Plant near Clarens, a R390m development that forms part of the Lesotho Highlands Water Scheme, which was certified for commercial operation by Eskom on October 17.

Owned by independent power producer (IPP) Serengeti Energy, the plant generates around 30GWh of renewable electricity annually. Growthpoint has secured exclusive access to this output through its power purchase agreement (PPA) with licensed energy trader Etana Energy, as part of its e-CO2 green energy benefit scheme.

Once the PPA is fully operational, generating 195GWh through a mix of solar, hydro and wind producers, Growthpoint expects approximately 40% of its total electricity demand to be supplied from renewable sources.

Renewable electricity from the plant will supply 23 Growthpoint-owned buildings, including 10 in Sandton Central and three in Cape Town, via the national grid.

Electricity wheeling allows users to buy electricity generated by private power projects located elsewhere in the country using existing transmission and distribution networks. Growthpoint explained that in areas where rooftop space is limited, on-site solar is impractical, making wheeled hydropower an ideal addition.

This independent energy transmission has been made possible by the adoption of the Electricity Regulations Amendment Act this year, which enabled the competitive trading of electricity.

Commenting on the regulatory changes, Estienne de Klerk, South African CEO of Growthpoint Properties, said: “Every crisis has its opportunity.” The amendments had “opened up the electricity industry for the private sector to step in and solve our own problems. And the last link was wheeling”.

Evan Rice, CEO of Etana Energy, said their clean energy partnership with Growthpoint was “accelerating renewable energy in a way that works for business, the country and the planet”.

“Together, we’re making clean electricity accessible through the grid, securing long-term take-off for IPPs and enabling businesses to cut costs and carbon without complexity. It’s a scalable, transparent model for South Africa’s energy future.

Accelerating renewable energy in a way that works for business, the country and the planet.

Werner van Antwerpen, head of corporate advisory at Growthpoint, explained how tenants directly benefit from their e-CO2 initiative, as the Reit caps electricity bill increases while Eskom’s rates rise. The difference is passed through as a green benefit on tenants’ invoices, keeping costs stable and providing a long-term incentive to remain after lease end.

Van Antwerpen said tenants are also provided with renewable energy certificates (RECs), each representing 1MWh of electricity produced, which can be redeemed to reduce their Scope 2 emissions.

The CEO of Serengeti Energy, Anton-Louis Olivier, said “we previously just said thank you, Eskom, thank you municipality, through gritted teeth”, but now “we know we’re not dependent on a regulated price, where tomorrow somebody changes it and then the commercial case falls away”.

Olivier said that through the liberalisation of the market, IPPs can add flexibility and value to how electricity prices are set, which “will result in better value for money for all of us”.

De Klerk added that their agreement “not only benefits the immediate occupants of Growthpoint’s properties but helps to create a brighter and more sustainable future for South Africa.”

The Boston Hydroelectric Plant is the largest of six hydropower facilities along the Ash River and Serengeti Energy’s fourth operational hydro plant in South Africa. The plant is largely insulated from climate change and weather fluctuations, as the river is fed from upstream reservoirs, which hold three years’ worth of water storage.