Norway Provides NOK 150 Million Guarantee for 254 MW Thakadu Solar Project in South Africa

Norway has issued a state guarantee of up to NOK 150 million to support the development of a major solar power project in South Africa. The initiative, announced by Norway’s Ministry of Foreign Affairs, is aimed at addressing South Africa’s continuing electricity supply challenges while supporting the country’s transition toward cleaner sources of energy.

The project will see Norwegian renewable energy company Scatec build and operate the 254 MW Thakadu Solar power plant in South Africa. Once operational, the facility is expected to generate enough clean electricity to supply approximately 150,000 to 200,000 households.

A key feature of the project is its electricity sales model. Instead of supplying power only through the traditional state-controlled electricity system, the Thakadu Solar plant will sell electricity directly to commercial customers through Lyra Energy, a power trading platform partly owned by Scatec. The model is expected to support the growth of private power purchasing arrangements and create new opportunities for renewable energy developers and corporate electricity consumers.

South Africa continues to face challenges related to an unreliable electricity supply, which has affected businesses, households and economic growth. At the same time, many energy projects struggle to secure financing because commercial lenders and investors often consider them high-risk.

Norway’s state guarantee is designed to reduce some of this financial risk and help unlock private investment. The guarantee will provide financial security to Lyra Energy by helping protect the platform against potential payment defaults from individual customers. By sharing part of the financial risk, the Norwegian government aims to give lenders greater confidence in financing the project and reduce the need for higher interest rates that could make such projects financially difficult.

Norwegian Minister of International Development Åsmund Aukrust said the initiative represents a cost-effective form of development assistance. According to the government, the guarantee does not result in direct costs for taxpayers unless an actual financial loss occurs.

The project is also expected to create local employment opportunities, support economic activity and generate tax revenues. These revenues could contribute to public services and wider development in South Africa.

The agreement marks the first time Norway’s renewable energy guarantee scheme has entered into an arrangement with a private-sector partner involving a Norwegian company. The initiative is expected to demonstrate how government-backed financial instruments can help attract private capital for renewable energy infrastructure in developing markets.

Beyond increasing solar generation capacity, the Thakadu Solar project is expected to support South Africa’s broader efforts to reduce its dependence on coal and lower greenhouse gas emissions. The project could also help strengthen the market for direct electricity sales between renewable energy producers and private businesses.

By using a state guarantee to reduce investment risks, Norway aims to mobilise financing that may otherwise be difficult to secure. The partnership highlights the growing role of international cooperation and risk-sharing mechanisms in supporting renewable energy development and expanding access to cleaner and more reliable electricity.