South Africa’s largest renewable energy project achieves its first debt drawdown

SOUTH AFRICA – Redstone concentrated solar power (CSP) project, a R11.6 billion (US$767.59m) and South Africa’s largest renewable energy project by investment, has achieved its first debt drawdown.

The African Development Bank acted as the Mandated Lead Arranger and Coordinating Bank, committing R2.306 billion (US$152.59m) to the transaction.

South African government owned development finance institution (DFI), the Development Bank of Southern Africa (DBSA) provided a commitment of R1.91 billion (US$126.39m) to the transaction, comprising R1.5 billion (US$99.26m) in senior debt and R410 million (US$27.13m) in equity-linked funding.

Located in the Northern Cape Province of South Africa, the Redstone project will be equipped with a 12-hour thermal storage system that will deliver clean and reliable electricity to nearly 200,000 households round the clock.

Commencement of operations is scheduled for Q4 2023. Through the successful mobilisation of international project finance, Redstone CSP has facilitated approximately R7 billion (US$463.2m) in foreign direct investment to fund and support the strategic energy transition goals of the country.

Redstone’s development is led by ACWA Power, a leading Saudi developer, investor and operator of power generation projects.

ACWA Power’s co-shareholders in the project include the Central Energy Fund, Pele Green Energy and the local community.

Redstone CSP will offset an estimated 440 metric tons of CO2 emissions per year while also providing value-adding ancillary services to Eskom, being the first renewable energy project to offer such services in the country.

The project is certified under the Climate Bonds Standard and Certification Scheme and aligned with the goals of the Paris Climate Agreement which seeks to limit global warming to under 2 degrees Celsius.

In addition to efficiently delivering clean energy to the national grid, the Redstone project will also offer tangible socio-economic value through offering job opportunities and utilising local supply chains.

The project will reach close to 44% local content on procurement during the construction period; create more than 2,000 construction jobs at peak, with about 400 from the local community; and create approximately 100 permanent direct jobs during the operating period.

The construction for the project is well underway and is currently in the ninth (9th) month of construction.

The engineering work for the project is over 58% complete, whereas procurement and construction work stand at over 45% and 6% respectively. The tower foundation – a key construction milestone for the project has already been completed.

ARE signs MoU with EEP Africa

Meanwhile, a Memorandum of Understanding (MoU) has been signed between the Energy and Environment Partnership Trust Fund (EEP Africa) and the Alliance for Rural Electrification (ARE).

The MoU sets out the shared goals of the two organisations to address the barriers within the clean energy sector across Southern and East Africa. Both organisations are committed to promote social and economic development by increasing the share of renewable energies in the energy mix in the region.

The partners aim to work together on a number of activities, including joint offers and support services for African decentralised renewable energy (DRE) actors who work to address energy access, energy security and climate change challenges, co-organising workshops, and webinars on related topics as well as co-hosting networking events and providing direct business support to DRE companies.

In this regard, both parties aim to develop the capacity of renewable energy stakeholders in Africa to create local jobs and enhance the capacity of the sector to attract adequate financing for renewable energy projects and businesses.

This will, for example, be achieved by spearheading “DRE Investment Academies” or similar trainings for early-stage DRE companies and other stakeholders, with the aim of raising additional fundraising and technical support.

Finally, the MoU states that the partners will collaborate on enhancing the knowledge base of the DRE sector in Africa to address key issues and bottlenecks for the smooth deployment of renewable solutions to achieve universal electrification.

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