The solar power plants will be the first Scatec assets located in the Western Cape province of the country and have a total capacity of 273 MW solar power. Once operational 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.
The power plants have an estimated total project cost of ZAR 5.1 billion (USD 270 million) of which Scatec’s EPC contracts account for approximately 75%. The project will be financed by equity from the owners and ZAR 4.5 billion (USD 241 million) of non-recourse project finance debt provided by Standard Bank of South Africa as mandated lead arranger. This is a landmark transaction as the first REIPPPP Solar PV projects in the fifth bidding round to reach financial close.
Scatec will own 51% of the equity in the project, with H1 Holdings, our local Black Economic Empowerment partner owning 46.5% and the Grootfontein Local Community Trust 2.5%. Scatec will be the Engineering, Procurement and Construction (EPC) provider and provide Operation & Maintenance as well as Asset Management services to the power plants. Construction start is expected during the first quarter of 2024.
