US$500 million wind and solar portfolio in South Africa reaches financial close

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US$500 million wind and solar portfolio in South Africa reaches financial close

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BioTherm Energy, a South African renewable energy development platform and power producer, has reached financial close on a portfolio of wind and solar projects with a combined generation capacity of 284 MW. The total development cost of the portfolio is approximately US$500 million.

The projects are the 120 MW Golden Valley wind farm, 86 MW Konkoonsies II solar PV plant, 45 MW Aggeneys solar PV plant and 32 MW Excelsior wind farm. They are expected to commence operations in Q4 2020, Q1 2020, Q3 2019 and Q4 2019, respectively.

All four projects will begin construction shortly. Xinjiang Goldwind Science & Tech Co has been contracted to engineer, procure and construct the two wind farms, while EPC works on the solar projects will be undertaken by ET Solutions.

The projects were awarded 20-year inflation linked power purchase agreements (PPAs) with Eskom, the South African national utility, in the fourth round of the South African Renewable Energy Independent Power Producers Programme (REIPP). The PPAs are backed by sovereign guarantees provided by the National Treasury.

The PPAs were awarded in April 2015, but not signed until April this year. This delay caused much frustration amongst the renewables industry and its proponents in South Africa, as all of the projects that won PPAs in rounds 3.5 and 4 of the REIPP were affected. This meant the delay of the installation of over 2300 MW generation capacity, which represents ZAR56 billion (US$4.7 billion) investment. Signing deadlines were repeatedly pushed back for reasons including opposition from the mining industry and Eskom itself. 

However, these challenges have failed to deter South Africa's Energy Ministry - a fifth bidding round was announced last month. It will open in November and procure up to 1.8 GW renewable capacity.

BioTherm Energy also participated in Round 1 of the REIPP, winning 49 MW of projects that are now operational. Given its success, perhaps the company will participate in November.

The developer is backed by Denham Capital, a leading energy and resources-focused global private equity firm with more than US$9.8 billion of invested and committed capital across nine fund vehicles, headquartered in Boston, USA.

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