South Africa’s Minister of Energy and Mines, Gwede Mantashe, has today officiated the signing of power purchase agreements for three 50 megawatts (MW) hybrid renewable energy projects to be developed by Norwegian developer Scatec ASA. The projects were awarded under the technology agnostic Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) last year.
All the three renewable energy projects will be located in the Northern Cape Province of South Africa.
“Today’s signing acknowledges this landmark achievement by the government, as well as the private sector in achieving this milestone in the RMIPPPP process. With these agreements being signed, we are working towards financial close under the timelines and conditions as stipulated by the authorities,” says Scatec CEO Terje Pilskog.
Dispatchable renewable energy
A first of its kind in Africa, the hybrid renewable energy plants, once completed, will provide 150 MW of dispatchable renewable energy from 5:00 in the morning to 21:30 in the evening, based on a hybrid installation of 540 MW of solar PV capacity, and 1.1 GWh of battery storage.
According to the agreements signed, financial close is to be achieved within 60 days from the signature date. Once financial close has been reached, Scatec will start construction of the projects.
“This unique solar and storage project signifies change within Africa’s renewable energy landscape and will be one of the largest renewable energy and storage projects in the world,” adds Pilskog.
Scatec will own 51% of the equity in the project with H1 Holdings, a local Black Economic Empowerment partner owning 49%. Scatec will be the Engineering, Procurement and Construction provider and provide Operation & Maintenance as well as Asset Management services to the power plants.
The Standard Bank Group will act as the lead arranger and debt provider, alongside a lender group including British International Investment. Together, they will provide non-recourse project financing to the projects.
Powerships snubbed, for now
South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMI4P) sought to procure 2 500 MW of energy to cover the electricity generation shortfall in the country, and help reduce the occurrence of power blackouts. A majority of the projects awarded under the tender were the controversial floating gas-fired power plants retrofitted on ships known as “powerships” belonging to Turkish company, Karpowership.
The projects awarded to Karpowership constituted more than 60% of the projects awarded under the tender, and have a total electricity generation capacity of 1,220 megawatts of capacity. The projects were awarded under a 20-year deal valued at R218 billion ($14 billion).
The “powerships” projects have been standing in limbo due to resistance from environmentalists, and have received severe criticism from energy experts on their higher tariffs when compared to renewables. The company has been embroiled in court cases with environmentalists, and a rival bidder DNG Power who alleges the company was unfairly awarded the tender. The projects have also failed to get environmental approvals and were not signed under today’s signing ceremony.