R5 billion solar projects pushing ahead in South Africa

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Norwegian renewable energy group Scatec ASA has announced that it has reached financial close for its three Grootfontein solar projects in South Africa.

The projects, valued at R5.1 billion, were won as part of the Department of Mineral Resources’ fifth bidding round of its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2021.

“The solar power plants will be the first Scatec assets located in the Western Cape province of the country and have a total capacity of 273 MW solar power.

“Once operational, the projects will deliver much-needed renewable energy under a 20-year Power Purchase Agreement. The three solar plants will lead to a combined abatement of 630,000 tonnes of CO2 emissions annually,” the group said.

Construction on the projects is expected to commence in 2024, with the group targeting commercial operation in 2025.

The solar plants will be able to power approximately 100,000 households in the region, it said.

The power plants’ estimated total project cost of R5.1 billion is made up of 75% Scatec EPC contracts.

The project will be financed by equity from the owners and R.5 billion of non-recourse project finance debt provided by Standard Bank of South Africa as the mandated lead arranger.

“This is a landmark transaction as the first REIPPPP Solar PV projects in the fifth bidding round to reach financial close,” the group said.

Scatec will own 51% of the equity in the project, with H1 Holdings, its local Black Economic Empowerment partner owning 46.5% and the Grootfontein Local Community Trust 2.5%.

Scatec will be the Engineering, Procurement and Construction (EPC) provider and provide Operation & Maintenance as well as Asset Management services to the power plants.

Construction start is expected during the first quarter of 2024.

The Western Cape solar plants will add to Scatec’s other solar developments in the country, including the three Kenhardt projects in the Northern Cape, which will add a total solar capacity of 540 MW and battery storage capacity of 225MW/1,140MWh to the grid.

The group announced earlier in June that it would divest its holding in its 258 MW Upington solar plants, where it holds a 42% equity-share valued at just under R1 billion. (NOK 546 million).

The proceeds of the divestment are being recycled into new investments in renewable energy, the group said.

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