Scatec Reaches Financial Close On Three South African Solar Projects

The solar plants have a combined capacity of 273MW.

By Liz Bains on
3rd July 2023

Norway’s Scatec has reached financial close for its three Grootfontein solar projects in South Africa, won as part of the fifth bidding round of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2021.

The solar power plants have a combined capacity of 273MW and will be the first Scatec assets located in the Western Cape province. Once operational, they will deliver much needed energy to South Africa under a 20-year power purchase agreement. 

Scatec owns 51% of the equity in the project, with the local H1 Holdings having 46.5% and the Grootfontein Local Community Trust 2.5%. Scatec will be the engineering, procurement and construction (EPC) contractor and will provide operation and maintenance 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,” stated Scatec CEO 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.”

The total estimated cost of building the three power plants is ZAR5.1 billion (US$270 million) of which Scatec’s EPC contracts account for approximately 75%. The project will be financed by equity from the owners and ZAR4.5 billion of non-recourse project finance debt provided by Standard Bank of South Africa as mandated lead arranger. 

These are the first photovoltaic solar projects in the REIPPPP fifth bidding round to achieve financial close.

Scatec is already building three solar plants with a combined capacity of 540MW in Kenhardt, in South Africa's Northern Cape province. That project, which includes 225MW/1,140MWh of battery storage, is estimated to cost US$962 million.

Photo: Solar farm (© Andreeacoman | Dreamstime)

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