Standard Bank and British International Investment (BII) have partnered with renewable power producer Scatec and black-owned investment firm H1 Holdings, to fund what is set to be Africa’s biggest and SA’s first baseload renewable energy project.
The partners said in a joint statement on Wednesday that they had reached financial close on the R18bn battery energy storage and photovoltaic (PV) solar project, which is the first to be agreed on under the government’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).
Standard Bank acted as the lead arranger and underwriter on the deal, which will see it providing debt funding for the project via a green loan in addition to acting as sole derivative and hedge provider through the provision of Africa’s first ESG-linked derivative instruments. BII, the UK government’s development finance arm, is providing R2.2bn in senior debt for the project as well as a further R445m in equity-linked mezzanine financing for H1 Holdings, the BBBEE investor in the project.
The project will provide total solar power capacity of 540 megawatts (MW) and 1.1 gigawatt hours (GWh) of battery energy storage (BESS), enabling the delivery of clean power to SA’s beleaguered power grid, which has left the economy battling the worst-ever power cuts.
“This is not only about ensuring a reliable supply of power to citizens and a growing economy, but also in ensuring that we meet our obligations as a nation to reduce carbon emissions by bringing more clean energy onto the grid,” said Rentia van Tonder, head of power at Standard Bank.
Standard Bank says the project is also aligned to its ESG framework outlined in the climate policy it revealed in March, which commits the bank to mobilising between R250bn and R300bn for sustainable finance by end-2026. This target includes R50bn of financing for renewable energy and a further R15bn for underwriting renewable energy projects by end-2024.
“BII’s flexible capital is playing a crucial role in backing pioneering solar PV and battery storage technology, which, if proven to be commercially competitive, can significantly catalyse the market for hybrid renewable and storage projects,” said Iain Macaulay, director and head of project finance for Africa and Pakistan at BII.
“This investment builds on our existing partnership with Scatec across multiple clean energy initiatives and financial solutions across the African continent.
BII’s funding of the project aligns with its ambition to help boost investment in sustainable infrastructure projects in SA that help solve the country’s energy challenges while promoting the country’s efforts to reduce its reliance on carbon-intensive energy sources.
“We are optimistic that this project will create the necessary momentum to shift the country’s reliance from carbon-based fuels towards sustainable energy, creating new green jobs and technical expertise in the sector,” Van Tonder said.
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