Scatec to break ground on huge renewables project in SA

Hopes to start adding power to the national grid within 15 months.
Norwegian company Scatec is to officially break ground on a solar and battery power project in the Northern Cape. Image: Supplied

Norwegian renewable energy solutions provider Scatec is set to start construction on three Kenhardt projects in the Northern Cape, a project that is expected to be one of the largest of its kind in the world.

According to the company, once completed, the project will have the capability of providing 540 megawatts (MW) in total solar capacity and 225MW/1.1GWh of battery storage capacity as well as 150MW of dispatchable power, some of which will be directed to the national grid.

Scatec, which is developing the project under the government’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), will be running the project under a 20-year power purchase agreement to the Kenhardt region.

“Achieving commercial and financial close for the Kenhardt projects shows true commitment by our Scatec team and partners. This project is a first of its kind and will be one of the world’s largest solar and battery facilities,” Scatec CEO Terje Pilskog says in a statement.

“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.”

The company says it expects construction of the project to take at least 15 months, whereafter it will start providing power to the currently severely-strained national grid.

Scatec general manager of Sub-Saharan Africa Jan Fourie adds: “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.”

Financing the project

To fund the 10 kilometre-wide, side-by-side project, Scatec says a combination of equity and debt will be used. The project, with a total capex of about R16.4 billion, will be partially funded by equity from owners, while the bulk of the investment of R12.4 billion will come from lenders Standard Bank and British International Investments.

“Scatec will own 51% of the equity in the project, with H1 Holdings, our local Black Economic Empowerment partner owning 49%,” the company says.

“Scatec will be the engineering, procurement and construction (EPC) provider and provide operation & maintenance as well as asset management services to the power plants. The value of Scatec’s development and EPC contract for the project is approximately R13.7 billion.”

According to Standard Bank, its participation in this project not only aligns with its Environmental, Sustainable and Governance (ESG) framework, but it also helps it achieve one of the main goals of its Climate Policy which is aimed at mobilising up to R300 billion for sustainable finance by the end of 2026.  Part of which includes providing up to R50 billion worth of financing for renewable energy as well as underwriting of a further R15 billion towards the sector by the end of 2024.

“Standard Bank is honoured to be playing a leading role in delivering power to the grid by facilitating the first dispatchable and base load renewable energy project in South Africa, and supporting South Africa’s drive to energy security,” Standard Bank’s head of power Rentia van Tonder says.

“This is not only about ensuring a reliable supply of power to citizens and a growing economy, but also in ensuring that we meet our obligations as a nation to reduce carbon emissions by bringing more clean energy onto the grid,” van Tonder adds.

Read:
Africa’s largest renewable energy IPP to be sold to Egyptian company
Scatec’s Kenhardt solar venture “will be one of the largest in the world”

Supply chain disruptions

The last two years of the Covid-19 pandemic as well as the ongoing invasion of Ukraine by Russia has presented the world with a series of supply chain disruptions, causing delays to operations in many industries.

However, Fourie says that although its teams from around the world remain alive to possibilities of future disruptions, the group has various measures in place to minimise delays to the project.

“It is definitely a factor and it’s something that we are monitoring and keeping our eyes on very closely. But we believe we’ve got all the necessary contingency plans in place to be able to still meet our timelines,” he adds.

To further help mitigate supply chain risks, the company says it will be sourcing some of the components to be used for the project locally, in line with South Africa’s local content policies.

“For a very long time, we’ve been buying locally-manufactured solar trackers, for example; all the steel comes from South Africa, cables come from South Africa. All the construction works are from South Africa. So, there is a significant amount of local content already in the projects.”

“We are working with local suppliers on a variety of fronts, including modules, to be able to meet the requirements that have been set,” Fourie adds.

Read:
Eskom identifies additional land for renewable energy projects
Eskom: De Ruyter has a plan up his sleeve
Nersa fast-tracks solar power licenses to ease strain on Eskom’s tottering power grid

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To put things in perspective:
This plant has a PV output of 540MW with 1.1GWh of storage (Increasing the capacity factor by same margin)
With a total capex of R16.4B
Madupi has a estimated +-R220B cost to full completion.
With its nameplate capacity of 4764MW
for that money we could have built 13 of these plants, with a generation nameplate capacity of 7020MW with 14.3GWh of storage.

PJJ:

Their deal is a bit different but your logic holds on cost of energy when required.

They will put up 3.5GW solar capacity mated to 7GWh storage in order to deliver uninterrupted 1GW for 19h a day (the grid doesnt need them in offpeak – yet)

A dozen of these would be cheaper than Medupi and the country would never run a diesel peaker again :/

End of comments.

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