Growthpoint Properties has acquired a 30% stake in a R390m Boston Hydroelectric Plant as part of its ongoing efforts to strengthen its environmental, social and governance (ESG) credentials and reduce its reliance on the national power grid.
The plant, developed by Serengeti Energy and nested within the Lesotho Highlands Water Scheme near Clarens in the Free State, is meant to deliver around-the-clock clean energy to 10 of Growthpoint’s flagship office buildings in Sandton — and drive down tenant occupation costs by injecting green benefits into lease agreements.
ESG considerations weigh heavily on investment and business decisions. Growthpoint’s latest move tilts the odds in its tenants’ favour, which are made up of thousands of businesses, large and small, spanning every sector of SA’s economy.
“We have developed a green benefit that reflects as a credit on a tenant’s monthly rental invoice. This green benefit is calculated as the difference between the tenant electricity tariff escalating at an agreed fixed escalation, say 7%, and that of the prevailing Eskom tariff. Over time, as the gap between Eskom’s increases and the 7% increase widens, tenants experience greater savings,” said Growthpoint head of corporate advisory Werner van Antwerpen.
Meanwhile, for tenants on five- or 10-year leases, Van Antwerpen said the green benefit was anticipated to become a key reason to stay, cutting occupancy costs while aligning with long-term sustainability targets.
Renewable energy drive e-co₂
The renewable power is wheeled through Eskom’s grid by licensed energy trader Etana Energy and verified through blockchain-based renewable energy certificates, enabling tenants to cut Scope 2 emissions and meet tightening environmental regulations.
Growthpoint secured exclusive access in 2023 to approximately 30GWh of renewable electricity generated annually by the Boston Hydro plant under its 195GWh power purchase agreement (PPA) with Etana Energy. Boston Hydro is the first project to come online in a broader portfolio of certified zero-carbon hydro, wind and solar assets set to power the agreement.
The broader renewable energy drive, known as e-co₂, will start being operational this month as power from the newly operational Boston Hydro plant starts feeding into the national grid.
Serengeti views this as a direct result of SA’s recent liberalisation of the power sector — a shift that has unlocked opportunities for private, willing buyer–willing seller transactions.
“We’re starting to see the market shift towards shorter-term PPAs. However, for a hydro asset, a 10-year PPA is considered relatively short — typically, you’d expect a term of 25 years or more. The financing structure for this project follows a standard project finance, non-recourse model. Investec recognises the value of having Growthpoint as an equity partner, which brings significant benefits — both in terms of short-term stability and the foundation for a long-term strategic partnership," said Serengeti CFO Strafford Harris.
Once its power purchase agreement with Etana Energy is fully operational and combined with its rooftop solar portfolio, Growthpoint expects to source about 40% of its total electricity demand from renewable energy, the group said.
On the solar front, the group has taken a high-tech leap to see its energy consumption through the lens of screens inside its Sandton head office, where a digital command centre monitors energy production from all 83 of its rooftop solar PV systems — totalling just more than 61 megawatt peak (MWp).
“The biggest benefit is for our clients to earn renewable energy certificates, which they can use to reduce their carbon footprint. It not only benefits the immediate occupants of Growthpoint’s properties but also helps to create a brighter and more sustainable future for SA,” said Growthpoint SA CEO Estienne de Klerk.
Landlords with green power
After years in the doldrums, Gauteng’s office market is stirring back to life. While vacancies are still high, access to renewable energy is fast becoming a key differentiator — giving landlords with green power an edge in luring tenants chasing both cost savings and sustainability.
Another advantage is that e-CO₂-wheeled green electricity has a zero-carbon footprint and is certified with tradable digital renewable energy certificates (RECS), where smaller tenants who don’t report on carbon emissions can choose to trade their RECs for a monetary return, while larger corporates may redeem them to offset Scope 2 emissions in their sustainability reporting.
