After attaining financial close, Scatec ASA, a top producer of renewable energy solutions, begin building the three Kenhardt projects in South Africa’s Northern Cape Province as part of the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).
The project will have a total solar capacity of 540 MW once it is operational and a battery storage capacity of 225 MW/1,140 MWh. It will also provide 150 MW of dispatchable power to the Kenhardt region under a 20-year Power Purchase Agreement in a nation that is currently experiencing power shortages.
This project will be among one of the most significant renewable energy and storage projects in the world, this distinctive solar and storage project represents a shift in Africa’s renewable energy environment.
“Achieving commercial and financial close for the Kenhardt projects shows true commitment by our Scatec team and partners. This project is a first of its kind and will be one of the world’s largest solar and battery facilities. We are now looking forward to starting construction of this unique and exciting project, which will be a major contribution to South Africa’s economy and green energy sector,” says Scatec CEO Terje Pilskog.
“This is an important milestone in the procurement of renewable energy and proves that the sector can be relied upon to deliver much-needed electricity capacity to the grid,” adds Jan Fourie, General Manager of Sub-Saharan Africa.
The project will be the biggest investment in Scatec’s history, requiring a total Capex of roughly ZAR 16.4 billion (USD 962 million), which will be covered by owner stock and ZAR 12.4 billion (USD 727 million) in non-recourse project debt. A group of lenders will supply the debt, including British International Investment and The Standard Bank Group as arrangers. The local currency is used to support the Kenhardt initiatives.
Scatec will have 51% of the project’s equity, while H1 Holdings, our local BEE partner, will hold the remaining 49%. Scatec will be the Engineering, Procurement, and Construction (EPC) provider and will offer the power plant’s asset management and operation & maintenance services. The project’s development and EPC contract with Scatec is estimated to be worth ZAR 13.7 billion (USD 800 million).
It is hoped that the increased capacity will reduce some of the pressure on Eskom, the nation’s struggling electricity grid. With the government guaranteeing up to R350 billion of Eskom’s debt, it seriously threatens the country’s economy and public finances.
Since last month, the utility has intermittently cut 6,000 megawatts off the grid, keeping the nation in the dark for hours on end and limiting industrial productivity and growth.
This initiative recognizes the government’s and the private sector’s historic accomplishment in reaching this point in the RMIPPPP process. financial close has been reached in accordance with the authorities’ deadlines and conditions after reaching these agreements.
The Department of Mineral Resources and Energy in South Africa granted preferred bidder status to Scatec in October 2021 for three solar projects totaling 273 MW under the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). The power generated will be sold by PPAs with 20-year terms.