The Department of Mineral Resources and Energy has announced that the multibillion emergency solar power project has reached a financial close.
This means that the leading renewable power producer, Scatec, now has the green light to break ground to officially begin with the development of three combined solar and battery storage projects in South Africa.
The three Scatec projects, Kenhardt (1 – 3), with a total capacity of 150MW, signed all project agreements on 2 June 2022 and had 60 days within which to conclude financial close.
According to the statement released on Wednesday, the first three projects under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) reached financial close on 19 July 2022.
“Following the fulfilment of all conditions precedent, Scatec has reached financial close on just over R16 billion financing required for the construction and development of the three combined solar and battery storage projects in the Northern Cape, ” the statement read.
“Once completed, the three power stations will be the first dispatchable renewable energy projects in South Africa.”
Meanwhile, the department said Eskom is the designated buyer for the capacity, energy and ancillary to be created by these projects, which will be available for dispatch by the system operator between 5:00 and 21:30.
The department said the construction is expected to take no more than 18 months to reach commercial operation.
“In support of the current economic challenges that South Africa is facing, the three projects, which are 49% South African-owned, have committed to 40% local content during construction and operation phases.”
In addition, the department said the venture will boost job creation and is expected to produce 4 970 employment opportunities for South African citizens during the construction and operation phases.
Meanwhile, local communities and enterprises in and around Kenhardt will also benefit through the R444 million committed by the projects towards the supplier, enterprise and socio-economic development initiatives.
“This is truly a great milestone for Scatec and renewable energy. We are demonstrating that cost-competitive dispatchable solar power can be delivered at a large scale with a short implementation time. This confirms that renewable energy is an ideal choice for driving electricity generation growth in Africa and other developing countries,” Scatec CEO, Raymond Carlsen, said.
According to Scatec, this move will deliver much-needed power to the South African economy.
The department said the RMIPPPP bid window was released to the market on 24 August 2020, following the promulgation of the Ministerial Determination of 2 000MW, with concurrence from the National Energy Regulator of South Africa (NERSA).
The main objective of the bid window is to close the supply gap indicated in the Integrated Resource Plan (IRP2019) and reduce the extensive utilisation of expensive diesel-based open cycle peaking generators in the medium to long term.
On bid submission day, 22 December 2020, 28 bid responses were received with a contracted capacity of 5117 MW, while 11 preferred bidders were announced in two phases on 18 March 2022 and 1 June 2021.
The remaining eight projects under the RMIPPPP are at varying stages of preparation to sign their agreements, and announcements for further project closures will be made in due course.
Source: South African Government News Agency