SOUTH AFRICA – Kibo Energy Plc, a multi-asset energy development company, has announced that it has entered into a 10-year take-or-pay conditional Power Purchase Agreement (PPA) to generate baseload electricity from a 2.7 MW plastic-to-syngas power plant.
The plant will be constructed, commissioned and operated for an undisclosed client which operates an Industrial Business Park in the Gauteng Province of South Africa.
The Project is the first project under Sustineri Energy, a joint venture in which Kibo Energy PLC holds 65% and the balance of 35% is held by Industrial Green Energy Solutions PTY LTD (IGES).
Construction of the project is scheduled to commence during Q4 of 2022 with project commissioning 11 to 14 months thereafter.
“Following the Company’s disinvestment from coal, we are excited to have signed our first waste to energy PPA that aligns to our strategy on advancing clean energy in the African market,” said Louis Coetzee, Chief Executive Officer of Kibo.
“The Project is a first in a pipeline of projects under the Company’s waste-to-energy portfolio, which we are proud to have worked on together with our partners, IGES.”
The Project will provide the client with cleaner electricity, by making use of a high temperature pyrolysis process, where selected non-recyclable plastics will undergo thermal degradation to produce high quality syngas, which will in turn feed gas engines to generate both electricity and heat energy.
Additionally, there is potential to sell the heat energy generated as a by-product from the gas engines directly to customers inside the industrial park.
Kibo says the project will require a capital expenditure (CAPEX) of ZAR 180 million (US$11.95m) with Financial Close expected during Q3 2022.
Based on the optimised financial model, an EBITDA of ZAR 388 million (US$25.77m) over the life of the project is expected, for an installed capacity of 2.7 MW, of which an amount of ZAR 252 million (US$16.74m) is attributable to the Company.
There is potential to expand the project to 8 MW installed capacity in the future. An IRR between 11% – 14% per annum is projected on the initial installed capacity of 2.7 MW.
The waste to energy plant will help reduce plastic pollution as it uses a selected and specific high calorific plastic as fuel feedstock, which can under prevailing legislation no longer be dumped at landfill sites.
“I am very proud to announce that the city is opening its first round of procurement of power from independent power producers. The tender documents for this procurement will be made available on the city’s website today – and in fact they are already up and available this morning,” said the Mayor of City of Cape Town, Geordin Hill-Lewis.
The launch of Cape Town’s first round of renewable energy procurement comes after the city made the announcement two weeks ago that they will launch the process, following successive schedules of power blackouts in South Africa which have been costing the city and the country of much needed power for economic recovery.
Eskom, the state owned national utility which supplies almost all of City of Cape Town’s electricity requirements, has been battling to guarantee security of electricity supply as its ageing coal fleet experience constant breakdowns and performance failures.