NEWS

After the landmark legislation was passed in August 2021 to raise the licensing limit from 1MW to 100MW, the first two registered 100MW energy projects have reached financial close.

SOLA Group and African Rainbow Energy reached financial close on 200MW solar PV projects for Tronox Mineral Sands, making these the largest corporate renewable energy Power Purchase Agreement in Africa. 

The financial close of the projects happened less than 6 months after the power purchase agreements were signed in mid-March 2022.  Construction of the projects will now begin. 

A significant first for South Africa’s renewables industry

The purpose of the projects is to fulfil the obligations of a bilateral electricity sales agreement between SOLA Group and Tronox Mineral Sands. These renewable energy facilities will supply electricity, through wheeling arrangements with Eskom, to five Tronox facilities in the Western Cape and KwaZulu-Natal for their own use. Tronox’s operations are highly energy intensive and will ensure a 13% reduction in global carbon emissions.

Sola Group CEO Dom Wills called the PPA significant firsts for the renewable energy industry. “These are the first projects of this scale in SA that are based on pure private bilateral trade. It’s also a great plus for the country that these projects are 100% South African owned, financed, constructed, operated and managed.” 

Renewable projects are capital intensive and long-term. The projects needed to raise a total of R4 billion (Over $234.4 million) of funding for construction and development. In order for this to happen, SOLA reached an agreement with funding partner and shareholder, African Rainbow Energy. 

SOLA also entered into a Joint Venture Agreement with WBHO for the design and construction of the project, where SOLA performs the engineering services and WBHO will perform the construction. The project comprises 387,000 solar panels mounted on single-axis trackers that track the sun’s position as it moves across the sky. The project will also be one of the first projects to directly feed into Eskom’s high voltage transmission network.

Paving the way for private sector breakthrough  

This project is seen as a potential breakthrough for the private energy market and has paved the way for more projects like it. The options for developing projects for private buyers will only increase as the government finalises its plans to establish a trading market on the national grid.  

“Looking ahead, we hope the model of private power through bilateral agreements continues to become more widely adopted,” said Wills. “The benefits to the end user are competition, choice and ultimately a more diverse contribution to the power system.” 

The debt arrangement was led by PepperTree Capital, and senior lenders included three of the big banks in South Africa and the DBSA who provided a total of R3.1 billion (almost $181.6 million) of debt into the project. The legal advisors in the transaction were Pinsent Masons, Hogan Lovells, Faskens, Allen & Overy and ENS.