IPPToday #189: Scatec Solar signs US$400 million solar projects in South Africa
- Scatec Solar
- Standard Bank
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Scatec Solar has announced that it has signed all project documents with its partners and shortly expects to achieve financial close for three solar PV plants to be located in Upington, South Africa with a total generation capacity of 258 MW.
Scatec Solar was awarded preferred bidder status for the three projects in April 2015, through the fourth bidding round of the Renewable Energy Independent Power Producer Procurement (REIPPP) Programme. As reported on this platform, the signing of the 27 projects awarded in this round was delayed several times, to the extent that there was doubt as to whether the projects would ever be developed. South Africa's Minister of Energy announced the signing last week.
Scatec Solar will build, own and operate the solar power plants with a 42% shareholding. Norfund will hold 18% stakes in the projects, the local Community of Upington will own 5% and a South African Black investor will hold the remaining 35% of the equity.
The three projects require a total investment of ZAR4.76 billion (US$394.3 million). A consortium of commercial banks and development finance institutions, led by Standard Bank, are providing non-recourse project finance of ZAR3.68 billion (US$304.9 million), accounting for 77% of the total project cost.
Construction is expected to commence in the third quarter of 2018 with grid connection towards the end of 2019. Revenues in the first year of operations are expected to reach ZAR720 million (US$59.6 million).
The plants are expected to produce 650 GWh of electricity a year, offsetting about 550,000 tons of CO2 emissions. All contract terms are based on the original award in April 2015.
Scatec Solar will provide the Engineering, Procurement and Construction (EPC) services for the power plants and as well as Operation & Maintenance and Asset Management services.
These plants add to Scatec Solar's large portfolio of projects that have reached financial close over the last six months, which now amounts to 1,092 MW and covers South Africa, Egypt, Brazil, Malaysia, Honduras and Mozambique.
Once the Upington solar plants become operational, Scatec Solar will hold a diversified asset portfolio with a capacity of 1.4 GW, all of which is supported by long-term power purchase agreements (PPAs) of 20-25 years. This portfolio is expected to generate 2,900 GWh of electricity per year with annual revenues of about NOK2.7 billion (US$345.9 million).