Preparations for the implementation of Grootfontein solar projects in South Africa are well underway. Recently, Scatec ASA, a prominent renewable energy company touched financial close for the projects.
The solar power plants will be the first Scatec assets located in the Western Cape Province of the country. Additionally, the plant will have a total capacity of 273 MW of solar power. Construction start is expected during the first quarter of 2024.
Scatec will own 51% of the equity in the project, with H1 Holdings, our local Black Economic Empowerment partner owning 46.5%. Additionally, the Grootfontein Local Community Trust will be accountable for 2.5%.
Scatec will be the Engineering, Procurement and Construction (EPC) provider and provide Operation & Maintenance. Moreover, the company will oversee Asset Management services for the power plants.
Significance of the Grootfontein Solar Projects in South Africa
Upon completion, the projects will deliver much-needed renewable energy under a 20-year Power Purchase Agreement. The three solar plants will lead to a combined abatement of 630,000 tonnes of CO2 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 approximately 100,000 households in the region,” says Scatec CEO Terje Pilskog.
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The power plants will cost a total of ZAR 5.1 billion (USD 270 million). Importantly, Scatec’s EPC contracts account for approximately 75%. The project will be financed by equity from the owners.
Additionally, ZAR 4.5 billion (USD 241 million) of non-recourse project finance debt was provided by Standard Bank of South Africa as a mandated lead arranger. This is a landmark transaction as the first REIPPPP Solar PV project in the fifth bidding round to reach a financial close.
