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Scatec ASA Secures R5.1 Billion for Solar Projects in South Africa

Published

10 months ago

June 30, 2023

Norwegian renewable energy company Scatec ASA has successfully secured funding for its three Grootfontein solar projects in South Africa. Valued at R5.1 billion, these projects were awarded to Scatec as part of the Department of Mineral Resources’ Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) fifth bidding round in 2021 as reported by Business Tech.

With a total solar capacity of 273 MW, these solar power plants will be Scatec’s first assets in the Western Cape province. Once operational, they will generate renewable energy through a 20-year Power Purchase Agreement, resulting in a combined reduction of 630,000 tonnes of CO2 emissions annually.

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Construction is scheduled to begin in 2024, and commercial operation is targeted for 2025. The plants will have the capacity to power around 100,000 households in the region. The estimated project cost of R5.1 billion is mainly covered by Scatec’s Engineering, Procurement, and Construction (EPC) contracts, accounting for 75% of the total.

Equity from the project owners and a non-recourse project finance debt of R.5 billion will finance the project, with Standard Bank of South Africa serving as the mandated lead arranger. Scatec will hold 51% of the equity, while H1 Holdings, its local Black Economic Empowerment partner, will hold 46.5%, and the Grootfontein Local Community Trust will hold 2.5%.

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Scatec will act as the EPC provider and offer Operation & Maintenance and Asset Management services for the power plants. Construction is expected to commence in the first quarter of 2024.

These Grootfontein solar projects will complement Scatec’s existing solar developments in South Africa, including the three Kenhardt projects in the Northern Cape. They will contribute a solar capacity of 540 MW and a battery storage capacity of 225MW/1,140MWh to the national grid.

In other news, Scatec recently announced its decision to divest its stake in the 258 MW Upington solar plants. Holding a 42% equity share valued at just under R1 billion, the company plans to use the proceeds from this divestment to reinvest in new renewable energy ventures, demonstrating its commitment to furthering sustainable energy initiatives.

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