Norwegian renewable energy company Scatec has reached financial close for its three Grootfontein solar projects in South Africa, secured in 2021 after a fifth bidding round for government’s renewable energy programme.

The solar power plants will be located in the Western Cape and will have a total capacity of 273MW of solar power.

Once operational, the projects will deliver much-needed renewable energy under a 20-year power-purchase agreement. The plants will lead to a combined abatement of 630 000t of carbon emissions annually.

“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 about 100 000 households in the region,” said Scatec CEO Terje Pilskog. The company operates renewable energy plants with 4.6GW in operation and under construction on four continents.

The estimated project cost of the plants is R5.1-billion, of which Scatec’s engineering, procurement and construction (EPC) contracts account for about 75%. The project will be financed by equity from the owners and R4.5-billion of non-recourse project finance debt provided by Standard Bank.

Construction

Scatec will own 51% of the equity in the project, with H1 Holdings, its BEE partner, owning 46.5% and the Grootfontein Local Community Trust 2.5%. Scatec will be the EPC contractor and provide operation and maintenance, as well as asset management services to the power plants.

Construction is expected to start in early 2024.

Earlier in June, the company also finalised a transaction to sell solar plants it invested in near Upington. The gross consideration for divestment of Scatec’s 42% equity-share in the 258MW plants is R973-million, the proceeds of which will be used in new renewable energy investments.

“We are very pleased to secure a value accretive transaction in line with our strategy to optimise our portfolio and recycle capital. South Africa remains a focus market for us, and we will continue to build scale through new investments in the country,” said Pilskog. — (c) 2023 NewsCentral Media