CEC Renewables 2023 Annual Report
Chairman’s Report
I am delighted to share with you the second annual report for CEC Renewables, covering the period 1st January 2023 to 31st December 2023.
This year has been truly exceptional for us, with numerous noteworthy achievements that showcase our dedication to providing environmentally friendly and sustainable energy solutions.
Some highlights of the year include:
- The completion of the RSP with a total plant capacity of 34 MW. This project is a remarkable demonstration of our technical expertise and commercial excellence, making it one of the largest solar power plants in the country.
- Establishing a dedicated management team for the Company. The management team oversees the daily operations of the Company and implements our strategic vision.
- Significant advancement made towards completing the construction of the ISP. Upon completion, the project will have a capacity of 60 MW with anticipated commissioning being the first quarter of 2024. It will be a significant addition to the portfolio of our clean and affordable energy sources and contribute to the much needed national energy mix.
Registration of a USD 200 million Green Bond with the SEC. This will allow the Company to raise funds for future projects and expand sources of financing at CEC Renewables. The Green Bond demonstrates our commitment to upholding international standards and principles for green finance, highlighting our commitment to deepen our ESG performance.
I want to express my gratitude to the Directors and Management Team for their invaluable hard work and contributions throughout the initial phases of the business. I am confident that the Company has fully aligned its mandate with the Group strategy and I remain very optimistic about its growth prospects.
Business Strategy
CEC Renewables has shaped its strategy around spearheading the Group’s energy generation from renewables and has set objectives that will ensure it successfully drives the green transition agenda, with a strong emphasis on Solar PV and battery technology.
During the financial year, the Company established a strong base for capitalising on the financial and environmental prospects that align with the Zambia National Energy Plan, which promotes the expansion and penetration of renewables. With our vision to become a leading regional renewable energy infrastructure developer and operator, we aim to make a significant contribution to the national decarbonisation effort.
Performance
Our operational asset generated 46.6 GWh in 2023, its inaugural year of operation. This is notwithstanding some initial power evacuation infrastructure constraints between the months of February and May, and higher than anticipated soiling levels between July and October, which curtailed full annual energy generation in line with the forecast.
During the period under review, the Company recorded revenues of USD 2.53 million. Whilst this was below our expectations for the year, attributed to the above mentioned challenges, we achieved good performance in our key financial KPI’s, recording a profit before tax of USD 0.48 million.
Financing
The development costs of the 34 MW RSP and 60 MW ISP Phase-1, were financed using proceeds from a USD 70 million shareholder loan facility, which was drawn down to the tune of USD 47.13 million by 31st December 2023 in line with our pre-refinancing plan. On 21st December 2023, CEC Renewables secured a USD 53.54 million debt financing through tranche one of Zambia’s first Green Bond, whose total programme value is USD 200 million.
The USD 53.54 million Green Bond has facilitated the refinancing of the shareholder loan used to pre-finance the RSP and the Phase-1 of the ISP. It has also gone towards the financing of the remaining EPC payments for both projects. The Company will leverage the balance of the Green Bond programme to finance the planned 126 MW Phase-2 ISP, scheduled for development in 2024 to 2025, with possible inclusion of storage.
Outlook
In 2023, we successfully completed a significant financial re-organisation that bolstered our financial position. This has opened new avenues for growth, thanks to the support of the Group.
Additionally, we are pleased to see the continued growth of the solar industry in Zambia and the promising improvements in the regulatory environment. The penetration of the Solar PV technology is certainly taking hold in Zambia, advancing the realisation of the energy diversification and mix that the country desires. CEC Renewables will continue to play an important role in contributing to the realisation of this crucial national energy policy direction.
Alongside the compliance-driven carbon markets, voluntary carbon markets have gained momentum as corporations and individuals seek to offset their emissions voluntarily. The growth of voluntary carbon markets could provide opportunities for carbon trading. As a Company, we will continue to monitor this space and look for opportunities to derive further value for our investors.
We anticipate that the successful completion of the ISP Phase-1, in the first quarter of 2024, will significantly increase our energy generation capacity and drive improved future operational and financial performance. The Board is confident about the Company’s future prospects and its ability to leverage opportunities to grow the business and effectively manage its assets. We have teamed up with our parent company as the O&M Contractor, leveraging its experience and dedication to maintain operational excellence to support CEC Renewables achieve its performance targets.
Conclusion
Finally, I would like to express the Board’s satisfaction with the Company’s performance for the year as I extend my appreciation to my fellow Directors, the Management Team and all employees for their valuable commitment to duty and hard work, especially during the process leading to the registration of Zambia’s first-ever Green Bond with SEC. Their attention to detail, professionalism and dedication to duty played a vital role in accomplishing this milestone.
Owen Silavwe
Board Chairperson
