Norwegian renewable energy company Scatec has achieved financial close on three solar projects with a total capacity of 273MW, in Grootfontein in South Africa’s Western Cape province.
In 2021, Scatec secured the projects under the Department of Mineral Resources’ fifth bidding round of the renewable energy independent power producer procurement programme.
These projects will entail an investment of R5.1bn ($270m). A non-recourse finance debt of R4.5bn ($241m) from the Standard Bank of South Africa and equity from the owners will provide the funding.
Scatec owns 51% of the project, while South Africa-based Black-owned clean energy firm H1 Holdings owns 46.5%.
The Grootfontein Local Community Trust holds the remaining 2.5% interest.
Scatec will serve as the engineering, procurement and construction (EPC) provider and will offer operation and maintenance support along with asset management services to the solar facilities.
The company’s EPC contract makes up 75% of the total project investment.
Construction on the three solar projects is expected to commence in the first quarter of 2024. The projects will supply clean energy under a 20-year power purchase agreement.
The three solar plants will reduce CO₂ emissions by 630,000 tonnes per year.
Scatec CEO Terje Pilskog stated: “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.
“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.”
In June 2023, the company offloaded its 258MW Upington solar plants in the country for R973m. Proceeds from the sale will be reinvested in new renewable energy projects.
