Renewable energy solutions company African Rainbow Energy and solar technology and engineering firm Sola have reached financial close on two registered 100 megawatt (MW) energy projects.
This comes after the power purchase agreements (PPAs) for the projects were signed in March.
“The projects needed to raise a total of R4 billion of funding for construction and development,” notes a statement issued on Monday. “In order for this to happen, Sola reached [an] agreement with funding partner and shareholder African Rainbow Energy.”
The statement, which indicates that the deal marks the largest corporate renewable energy PPA in Africa, says the energy projects will fulfil the obligations of a bilateral electricity sales agreement between Sola Group and titanium dioxide producer Tronox Mineral Sands.
It says the renewable energy facilities will supply electricity, through wheeling arrangements with Eskom, to five Tronox facilities in the Western Cape and KwaZulu-Natal.
It notes that Tronox’s operations are highly energy intensive and that the projects will ensure the company’s economic viability and affordability of long-term electricity supply.
Melissa Zona, Tronox senior vice president and chief human resources and sustainability officer, says the energy projects will reduce the company’s global carbon emissions by approximately 13% compared to its 2019 baseline.
“Switching from coal-based to renewable power in South Africa is one of the many ways Tronox is implementing technology and best practices at our sites to protect our land, water, air and ecosystem and operate more sustainably,” Zona adds.
The projects will comprise 387 000 solar panels mounted on single axis trackers and will be among the first to directly feed into Eskom’s high voltage transmission network.
Design and construction
Sola notes that it entered into a joint venture agreement with construction engineering company WBHO (Wilson Bayly Holmes-Ovcon) for the design and construction of the projects.
“These are significant firsts here for the renewable energy industry. These are the first projects of this scale in South Africa that are based on pure private bilateral trade,” says Dominic Wills, CEO of Sola Group.
“It’s also a great plus for the country that these projects are 100% South African owned, financed, constructed, operated and managed.”
Sola says the project is seen as a potential breakthrough for the private energy market and will see more options for developing projects and private buyers as 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,” says Wills.
“The benefits to the end user are competition, choice and ultimately a more diverse contribution to the power system.”
Nondumiso Lehutso is a Moneyweb intern.