South Africa wants to increase its renewable energy capacity by seeking bids for project developments, following shortages experienced by its state-owned, mostly coal dependent Eskom Holdings Ltd. South Africa has chosen 28 renewable projects costing about 47 billion rand ($5.4 billion) in the first round of bidding.
After agreeing power-purchase, funding and implementation deals, Mainstream Renewable Power is set to begin building a wind and two solar plants costing $636 million.
“We see South Africa as integral to our further plans in Africa,” Chief Executive Officer Eddie O’Connor said.
The Dublin-based company, which won licenses for projects in December bidding, agreed a 4.1 billion-rand debt deal and sold shares in the sites to investors led by Globeleq Generation Ltd to fund its plan, O’Connor said. It will retain about a 10% stake in each, he said. Old Mutual Plc’s IDEAS Managed Fund and Thebe Investment Corp Pty Ltd. also invested, as well as local community trusts and engineering companies.
ABSA Group Ltd, majority-owned by Barclays Plc, acted as debt lead arranger, with contributions from Development Bank of Southern Africa Ltd. and three other lenders, O’Connor said.
The developments, the 138-megawatt Jeffreys Bay wind farm in Eastern Cape and the De Aar and Droogfontein solar parks both with 50 megawatts in the Northern Cape, are expected to produce enough power for 48,000 households from 2014, he said.
Siemens AG (SIE) will supply wind turbines and Suntech Power Holdings Co. solar panels, O’Connor said. Eskom will buy the power, with guarantees from the government, he said.