News Article
Consortium Completes Financing for Two South African Solar Projects
A consortium consisting of SolarReserve a U.S. developer of utility-scale solar power projects; the Kensani Group, an experienced empowerment investment and financial advisory player in South Africa; and Intikon Energy, a South African developer of renewable energy projects, has successfully closed financing for two 75-megawatt (MWDC) solar photovoltaic (PV) projects. The Letsatsi Project and the Lesedi Project are located in the Free State and the Northern Cape, respectively. The projects were selected by the South Africa Department of Energy (DOE) in the first round of bids under the South Africa Renewable Energy Independent Power Producer Procurement Program (REIPPPP). Rand Merchant Bank (a division of FirstRand Bank Limited) acted as Mandated Lead Arranger and Bookrunner for the projects' debt funding requirements. Equity for the projects was provided by the IDEAS Managed Fund (managed by Old Mutual Investment Group South Africa), Kensani Capital Investments, GCL-Poly Energy Holdings, SolarReserve and Intikon, with Rand Merchant Bank providing preference share equity. Kensani Eaglestone Capital Advisory acted as financial advisor to the projects. International law firm Baker & McKenzie supported the project activities through its offices in Johannesburg and the United States.
Jointly yielding approximately 600 construction jobs and 100 permanent operational jobs, the two projects will provide rural development programs and education enhancement, as well as skills and technology transfer. The two projects combined are expected to generate an additional 2,640 indirect and induced jobs across the supply chain during the construction phase and 140 new indirect and induced jobs during operations. The two projects will set aside a percentage of total project revenues for enterprise and socio-economic development, amounting to a total of approximately ZAR 510 million (USD 59 million) over the life of the projects, which will be invested for the benefit of the local communities surrounding the projects.
"The successful financial closure of the first round of REIPPPP projects is precedent setting on a global scale and has once again demonstrated the South African Government's commitment to the enhancement of national infrastructure which will be a catalyst of economic development and job creation. Kensani and our partners congratulate the Department of Energy on an efficient and successful process and look forward to a positive partnership with Government," said Wandile Motlana, Chairperson of the Kensani Group. "Kensani applauds the South African government's large scale commitment to clean energy, and celebrates the exciting opportunities for empowering our rural communities," added Kelley Starke-Dow, CEO of Kensani.
The Letsatsi and Lesedi projects have each executed 20-year power purchase agreements with Eskom, the South African power utility, which ranks as one of the top twenty utilities in the world by power generation. The projects will jointly cost approximately ZAR 5.15 billion or USD 586 million, making these two of the largest project finance transactions ever completed in South Africa and among the largest renewable energy projects in Africa.
Daniel Zinman of Rand Merchant Bank said, "We are proud to be a part of these landmark projects which will not only produce clean, renewable energy, but will also bring hundreds of quality jobs to the region, thereby bolstering the South African economy."
"SolarReserve and its partners are pleased to be major suppliers of clean energy to South Africa, and we look forward to commencing construction of both projects, which will create jobs and provide further economic benefits for the region," said Kevin Smith, CEO of SolarReserve. "Financial close of these two South African projects marks a significant achievement for SolarReserve's international development and expansion. We have further advanced photovoltaic and solar thermal projects in development in the country under this progressive program initiated by the South African government, and look forward to continuing our work here."
Construction of the facility will be undertaken by a consortium led by one of the largest international contractors, ACS Cobra, along with Madrid-based Gransolar and South Africa's Kensani Energy EPC. Upon completion, scheduled for mid 2014, the projects together will power more than 50,000 homes with clean, renewable energy from the sun.
