Scatec commences construction of solar and battery project in South Africa

Construction of the three Kenhardt solar and battery storage hybrid projects in South Africa’s Northern Cape Province under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) is set to commence, this is after renewables developer Scatec ASA announced the conclusion of financial close on the projects this week.

The renewable energy facilities, when completed, will have a total solar capacity of 540 MW and battery storage capacity of 225MW/1,140MWh, and provide 150 MW of dispatchable power.

The value of Scatec’s development and Engineering, Procurement and Construction (EPC) contract for the project is approximately ZAR 13.7 billion (USD 800 million).

“Achieving commercial and financial close for the Kenhardt projects shows true commitment by our Scatec team and partners. This project is a first of its kind and will be one of the world’s largest solar and battery facilities. We are now looking forward to starting construction of this unique and exciting project, which will be a major contribution to South Africa’s economy and green energy sector,” Scatec CEO Terje Pilskog said.

The project, being executed under a 20-year Power Purchase Agreement to the Kenhardt region, is expected to bring relief to a country that is currently suffering from debilitating power shortages.

“This is an important milestone in the procurement of renewable energy and proves that the sector can be relied upon to deliver much-needed electricity capacity to the grid,” adds Jan Fourie, General Manager of Sub-Saharan Africa.

The project will be the largest investment in Scatec’s history with a total capex of approximately ZAR 16.4 billion (USD 962 million) to be financed by equity from the owners and ZAR 12.4 billion (USD 727 million) in non-recourse project debt.

The debt will be provided by a group of Lenders which includes the Standard Bank Group as arranger and British International Investment. The Kenhardt projects are funded in local currency.

Scatec will own 51% of the equity in the project, with H1 Holdings, a local Black Economic Empowerment partner owning 49%.

The renewable energy solutions provider will oversee the EPC as well as provide Operation & Maintenance and Asset Management services to the power plants.