Small town Kenhardt in the Northern Cape will become home to one of the largest solar-linked renewable energy and storage projects in the world, Scatec CEO Terje Pilskog said on Thursday following the signing of a new 20-year power purchase agreement with government.
Scatec ASA is the global renewable energy solutions company leading the R16 billion venture, which will be made up of three projects that will run on a hybrid installation of 540MW of solar photovoltaics (PV) capacity and 1.1 GWh of battery storage.
The group will own 51% of the equity in the Kenhardt solar scheme, with the remaining stake held by H1 Holdings – its Black Economic Empowerment partner in the venture.
Pilskog hailed the signing of the power purchase agreement, saying Scatec’s unique solar and storage project “marks a significant turning point within Africa’s renewable energy landscape”.
According to Scatec sub-Saharan Africa general manager Jan Fourie, the plan was to initially develop six 75MW projects but it was adapted after the group secured preferred bidder status from the Department of Mineral Resources and Energy (DMRE) in 2021.
Under the DMRE’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPP), the broader Kenhardt project is expected to provide 150MW of transmittable solar energy onto the national grid, from 5:00 in the morning to 21:30 in the evening.
Fourie says Kenhardt will assist the country’s embattled power utility Eskom by reducing the frequency of load shedding, thus allowing businesses to operate with fewer power disruptions.
Standard Bank, which acted as lead arranger and underwriter for the Kenhardt venture, together with British International Investment, said it welcomes the milestone, given South Africa’s constrained electricity supply characterised by ageing infrastructure and persistent maintenance needs.
“Since the programme’s [RMIPPP] inception in 2020, when it was gazetted by the Minister of Mineral Resources and Energy to alleviate the country’s power constraints, the bank has supported clients, Scatec and H1 Holdings, bringing three projects valued at over R16 billion to fruition,” it noted.
The JSE-listed financial services giant says it will mobilise between R250 billion and R300 billion for sustainable finance by the end of 2026, including R50 billion of financing for renewable energy and underwriting of a further R15 billion for renewable energy by the end of 2024.
“It is very exciting to not only witness, but to be a part of significant competition and diversity in the South African power generation sector,” says Stephen Barnes, Standard Bank’s global head of power and infrastructure.
“We are confident that these additional projects will create the necessary momentum to shift the country’s reliance from carbon-based fuels towards sustainable energy, creating new green jobs and technical expertise in the sector,” he adds.
Once fully operational, Kenhardt will join four other renewable plant locations developed by Scatec in South Africa. The other plants are in Upington, Kalkbult and Linde in the Northern Cape province, and in Dreunberg in the Eastern Cape.
Kalkbult, its first project commissioned under round 1 of government’s Renewable Energy IPP Programme in March 2014, produces 141 GWh per annum for 35 000 households. Scatec says Dreunberg was the second project commissioned under round 2 of the programme and produces 156 GWh of power per annum for 38 000 households.
Linde was commissioned in July 2014 and produces 86 GWh of power per annum for 20 000 households. Scatec’s most recent project in Upington was awarded preferred bidder status in the DMRE’s fourth bidding round in 2015. It was connected to the grid in 2020 and produces 650 GWh of power per annum to 120 000 households.
Fourie says Scatec will continue participating in the government’s renewable energy rollout programme as the energy sector continues to be “opened up” to private sector investment.
Nondumiso Lehutso is a Moneyweb intern.