Scatec ASA, a company based in Norway, has secured financing for three solar photovoltaic projects in South Africa. These projects have a total capacity of 273 MW and are scheduled to commence construction in the first quarter of 2024.
Approval for the projects was obtained during the fifth bid window of South Africa’s Renewable Energy Independent Power Producer Procurement Program in 2021. The combined value of the projects amounts to $270 million. This program aims to increase electricity generation in the country by encouraging private sector investments in various renewable energy technologies, including solar PV, concentrated solar, onshore wind power, small hydropower, landfill gas, biomass, and biogas.
Scatec ASA signed power purchase and implementation agreements for Grootfontein PV 1, Grootfontein PV 2, and Grootfontein PV 3 in December 2022. It is anticipated that the three solar plants will help South Africa eliminate an estimated 630,000 metric tons of carbon dioxide annually.
The company has a 51% stake in the projects, while H1 Holdings, its South African Black Economic Empowerment partner, owns 46.5%, with Community Trust taking up the remaining 2.5%.
Scatec, which in 2020 acquired Norway-based SN Power AS from Norfund for $1.17 billion, will sell the generated electricity from the three solar PV plants to South Africa’s grid at $25.8526 per MWh under a 20-year power purchase agreement it signed with Eskom, South Africa’s electricity public utility.
When the projects come online, Scatec will perform engineering, procurement, and construction that account for 75% of the projects’ total cost and will also provide operation and maintenance as well as asset management services for the power plants.
“We are now looking forward to starting construction next year and achieving commercial operation in 2025, while powering approximately 100,000 households in the region,” Scatec CEO Terje Pilskog said in a June 30 announcement.
Financing for the three solar PV projects has come from equity provided by the owners and $241 million of “non-recourse project finance debt provided by Standard Bank of South Africa as mandated lead arranger.”
“This is a landmark transaction as the first solar PV projects in the fifth bidding round reach financial close,” Scatec said in a statement.
The firm has four renewable energy plants operating in South Africa with a combined capacity of 448 MW, including Upington (258 MW), Kalkbult (75 MW), Dreunberg (75 MW), and Linde (40 MW).
It was one of the 102 bidders that submitted bids during the BW5, with South Africa’s Department of Mineral Resources and Energy saying the fifth bid window was oversubscribed after receiving bids totaling 9,644 MW against the needed capacity of 2,583 MW. That total comprised 1,608 MW from 12 wind projects and 975 MW from 13 solar PV projects.
According to the Department of Mineral Resources and Energy, independent power producers have received approval for at least 123 renewable energy projects, totaling an estimated investment of $17.32 billion.
As of 2023, four out of the six bid windows have been successfully implemented, resulting in a combined capacity of 6,200 MW. This capacity is equivalent to 5% of South Africa’s total electricity supply.
South Africa urgently requires additional renewable energy capacity to resolve the severe issue of load shedding. In 2022, the country endured a staggering total of 3,776 hours (approximately 157 days) of power outages.
