MIGA, a member of the World Bank Group, has issued guarantees in support of the construction, ownership and operation of two solar photovoltaic and two wind power plants in South Africa.
The Aggeneys and Konkoonsies II plants will be based in South Africa’s Northern Cape, and the two wind power plants (Golden Valley and Excelsior) will be based in the Eastern and Western Capes.
When operational later this year, the new plants will have a combined installed capacity of 288 MW, and the electricity will be sold to public utility Eskom under 20-year PPAs signed in 2018.
MIGA’s guarantees are covering 90 per cent of BioTherm’s equity investment for up to $46.9m in the photovoltaic solar plants and $68.9m in both wind production plants. The guarantees provide protection against the risks of Transfer and Inconvertibility, Expropriation, Breach of Contract, and War & Civil disturbance for up to 15 years.
BioTherm, the South African headquartered Independent Power Producer (IPP), which currently owns 394 MW of renewable projects in construction and operations in South Africa and Kenya, is wholly owned by global investor Actis.
The two solar plants are expected to create up to 1,100 temporary jobs during construction, helping alleviate the Northern Cape’s unemployment rate of 28.9 per cent. During operation, the project will create 160 jobs, 75 per cent of which will be for local communities.
The Excelsior wind plant will consist of 13 turbines, while Golden Valley will be made up of 48 turbines. Both wind plants will create 1,050 jobs during construction and 150 during operation.
“We are pleased to continue working with seasoned investors and promote investments across Africa despite the strained global environment,” MIGA Executive Vice President Hiroshi Matano said. “Increasing renewable energy capacity to serve demand and diversifying South Africa’s energy mix this project also helps to reduce GHG emissions.”
“MIGA’s political risk insurance plays an important role in attracting institutional capital to renewable projects across our markets with high growth potential” Actis Energy & Infrastructure Director Colin FitzRandolph explained. “Actis is pleased to build on our strong relationship with MIGA to deliver additional renewable power to the South African grid and to foster partnerships in the local communities surrounding the projects.”
Energy shortages are a major constraint to growth for South Africa, and by some estimates, load shedding in 2019 could have reduced economic growth by 1.1 per cent of GDP and cut about 125,000 jobs.
These projects are part of the Round 4 bid window of South Africa’s Renewable Energy Independent Power Producer Program (REIPPP), which is delivering low-cost renewable energy to fuel South Africa’s development. To-date, REIPPP has procured 6.4 GW of renewable energy to date and attracted more than $13.5bn in investment into South Africa.