Scatec has reached financial close for its three Grootfontein solar projects in South Africa, totalling 273MW.
The projects were awarded following the Department of Mineral Resources’ fifth bidding round of its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2021.
The solar plants will be the first Scatec assets located in the country’s Western Cape province.
Once operational the projects will deliver renewable energy under a 20-year PPA.
These are the first REIPPPP solar developments in the fifth bidding round to reach financial close.
Scatec will own 51% of the equity in the projects, with H1 Holdings, Scatec’s local Black Economic Empowerment partner owning 46.5% and the Grootfontein Local Community Trust 2.5%.
Scatec will be the EPC provider and provide O&M as well as asset management services to the power plants.
Construction start is expected during the first quarter of 2024.
“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,” said Scatec chief executive Terje Pilskog.
“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,” he added.
The power plants have an estimated total project cost of $270m of which Scatec’s EPC contracts account for approximately 75%.
The project will be financed by equity from the owners and $241m of non-recourse project finance debt provided by Standard Bank of South Africa as mandated lead arranger.