South African Solar Power Plant Receives Financial Guarantees For Sustainable Energy Growth

A solar power plant located in South Africa’s Northern Cape has secured financial guarantees from a World Bank Group investment agency.

The MBP solar power plant, with a capacity of 75MW and situated near Prieska, is part of the government’s Renewable Energy Independent Power Producer Programme (REIPPP) Round 3. It has been operational since 2016.

The REIPPP was launched in 2011 as part of the government’s efforts to increase generation capacity and address the electricity supply and demand gap.

While South Africa has made progress towards achieving universal access to electricity, with about 85% of the population having access, chronic power shortages and frequent load shedding still persist, negatively impacting both commercial and household activities. The country’s industrialization and macroeconomic development are also affected by ongoing power issues.

To mitigate these energy challenges, the Multilateral Investment Guarantee Agency (MIGA) has provided guarantees to BTE Renewables, amounting to up to $18.9 million, to cover equity investments into MBP PV (RF) Pty Ltd. These assurances shield BTE Renewables from potential risks, including transfer restrictions, expropriation, war, civil unrest, and breaches of contract.

BTE Renewables acquired Sonnedix Solar South Africa Holdings Pty Ltd, getting a 60% stake in MBP.

The guarantees, spanning 15 years, aim to support the financial sustainability of the power sector and demonstrate the value of solar power plants in South Africa’s secondary market. MIGA’s initiative also aligns with a low-carbon and climate-resilient development path for the country.

The acquisition was facilitated by Actis Energy 4 (AE4), a $2.75 billion global energy fund managed by Actis, which invests in controlling stakes in electricity generation businesses across Latin America, Africa, and Asia. Actis Energy 4 owns BTE Renewables, that acquired the interest in MBP.

While South Africa’s power sector has significant greenhouse gas emissions primarily due to coal generation, MBP’s solar power plant contributes to positive environmental impacts and climate change mitigation with its low carbon footprint and renewable energy generation. The acquisition is expected to maintain the plant’s positive environmental benefits.