Construction begins on South Africa’s first major solar and battery power project

Norwegian renewable energy company Scatec ASA has started construction on solar and battery power projects to supply 150 megawatts (MW) of dispatchable electricity to South Africa’s grid.

Once operational, the project will have a total solar power capacity of 540 MW and a battery storage capacity of 1,140MWh (225MW).

Scatec is building three projects in the Kenhardt region of the Northern Cape under South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).

The projects reached financial close and will provide power to the Kenhardt region under a 20-year power purchase agreement.

“This project is a first of its kind and will be one of the world’s largest solar and battery facilities,” said Scatec CEO Terje Pilskog.

“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.”

“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,” said Scatec sub-Saharan Africa general manager Jan Fourie.

The project will be the largest investment in Scatec’s history, with capital expenditure of approximately R16.4 billion to be financed by equity from the owners and R12.4 billion in non-recourse project debt.

Lenders include Standard Bank Group as the arranger and British International Investment.

Scatec will own 51% of the equity in the project, with H1 Holdings, its local Black Economic Empowerment partner owning 49%.

Scatec will be the Engineering, Procurement and Construction (EPC) provider. It will provide operation, maintenance, and asset management services to the power plants.

The value of Scatec’s development and EPC contract for the project is approximately R13.7 billion.

Scatec’s solar power projects are the only three of 11 preferred emergency power bidder projects for which South Africa’s energy department has signed power purchase agreements.

The RMIPPPP has been plagued by delays, most notably due to a legal battle over controversial gas-using powerships from Turkish supplier Karpowership.

The first RMIPPPP projects were chosen as preferred bids in March 2021 to source 2,000 MW of generation.

However, 1,220 MW of this planned capacity was set to come from Karpowership.

The Department of Mineral Resources and Energy added Scatec’s three additional solar and battery projects in June last year.

Now read: Why South African solar power systems can underperform in winter

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Construction begins on South Africa’s first major solar and battery power project