Norwegian renewable energy developer, Scatec ASA, has announced that its three Grootfontein solar projects in South Africa have reached financial close. The company was awarded the projects in the South African government fifth bidding round of its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2021.
The projects have a total capacity of 273 MW, and are the first Solar PV projects in the fifth bid wind of REIPPPP to reach financial close. The projects will be Scatec’s first assets located in the Western Cape province of South Africa.
“South Africa is a focus market and this value accretive investment with project returns above our return hurdle, is in line with our strategy to grow profitably and build scale in Sub-Saharan Africa,” said Scatec CEO Terje Pilskog.
“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,” Pilskog added.
Solar projects to help improve electricity supply in SA
Once operational, the solar projects will deliver much needed electricity under a 20-year Power Purchase Agreement with state-utility Eskom. The three solar plants will lead to a combined abatement of 630,000 tonnes of CO2 emissions annually.
The power plants have an estimated total project cost of ZAR 5.1 billion (USD 270 million) of which Scatec’s EPC contracts account for approximately 75%.
The projects will be financed by equity from the owners and ZAR 4.5 billion (USD 241 million) of non-recourse project finance debt provided by Standard Bank of South Africa as mandated lead arranger.
Scatec will own 51% of the equity in the project, with H1 Holdings owning 46.5% as a local Black Economic Empowerment partner, 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.