Independent power producer Sola Group and renewable energy investment company African Rainbow Energy have reached the financial close on 200 MW solar power projects in South Africa. The two 100 MW solar plants will supply electricity to the operations of US-based Titanium products supplier Tronox in the country.
Following the landmark legislation passed in South Africa in August 2021 to raise the licensing limit from 1 MW to 100 MW, the first two registered 100 MW solar energy projects have reached their financial close. This process was achieved in less than six months after the power purchase agreements (PPAs) were signed between Tronox and Sola Group in March 2022.
The two solar power plants will supply electricity, through wheeling agreements with the public utility Eskom, to Tronox’s facilities in the Western Cape and KwaZulu-Natal provinces. Under the agreements, Eskom will pay for the maintenance and upkeep of infrastructure to transmit the electricity.
The deal is one of the largest corporate renewable energy power purchase agreements in Africa. The solar projects required a total of R4 billion (Over $234.4 million) of funding for their construction and development.
To achieve this funding, Sola reached an agreement with its funding partner and shareholder, African Rainbow Energy. The debt funding round was participated by Absa Bank South Africa, Development Bank of Southern Africa (DBSA), Nedbank, and Standard Bank.
Dom Wills, CEO of Sola, said, “These are the first projects of this scale in South Africa 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.”
Sola Group also signed a joint venture agreement with the South African company Wilson Bayly Holmes (WBHO) for the design and construction of the project. The solar plants will be equipped with 387,000 solar panels, mounted on single-axis trackers. The electricity produced will be directly fed into Eskom’s high voltage transmission network.
Tronox’s mining operations are highly energy intensive. The two solar plants will provide around 540 GWh of electricity annually for the company’s mines & smelters and will ensure a 13% reduction in its carbon emissions.
According to the developers, the solar project is a potential breakthrough for the private energy sector in South Africa and has paved the way for more renewable power projects like it. The options for project developments for private players in the energy market will only increase as the government finalizes its plans to establish a trading market on the country’s power grid.