Scatec is starting construction of the three Kenhardt projects in the Northern Cape Province of South Africa after reaching financial close. The projects are part of South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP). The main objective of the RMIPPPP is to procure new generation capacity based on:
- a range of source technologies to address the electricity capacity supply gap as identified South Africa’s Integrated Resourse Plan (IRP) of 2019
- reducing the extensive utilization of expensive diesel-based peaking open cycle gas turbine (OCGT) generators in the medium-to-long-term.
Once operational, the project will have a total solar capacity of 540 MW and battery storage capacity of 225MW/1,140MWh, and provide 150 MW of dispatchable power under a 20-year Power Purchase Agreement to the Kenhardt region — in a country that is currently suffering from power shortages.
“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,” says Scatec CEO Terje Pilskog.
“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 ($962 million) to be financed by equity from the owners and ZAR 12.4 billion ($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, our local Black Economic Empowerment partner, owning 49%. Scatec will be the Engineering, Procurement and Construction (EPC) provider and provide Operation & Maintenance as well as Asset Management services to the power plants. The value of Scatec’s Development and EPC contract for the project is approximately ZAR 13.7 billion ($800 million).
South Africa has been experiencing increased load-shedding of late. Load-shedding is a controlled process that responds to unplanned events (such as demand exceeding available capacity) in order to protect the electricity power system from a total blackout. We are only halfway through the year, but already, 2022 has been the worst year of load-shedding on record. South Africans have experienced more load-shedding in the past 6 months than in the whole of 2021! Its really great to see these types of solar and battery storage projects reach financial close and move to project implementation. South Africa desperately needs a lot of new electricity generation capacity. We hope to see more of these projects being implemented.
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