The Overseas Private Investment Corporation (OPIC) has agreed to provide $400 million in debt financing for the Redstone Concentrating Solar Power (CSP) project, a plant currently being developed by US-based SolarReserve and Saudi Arabia’s ACWA Power in South Africa’s Northern Cape.
OPIC’s pledge covers most of the debt portion of the financing, which according to SolarReserve amounts to R5.6 billion (€371.26 million; $421.66 million), representing more than half of the total R8 billion cost. An additional six or seven South African and international commercial lenders, however, are providing the remaining debt, a spokesperson for SolarReserve told Infrastructure Investor.
“Full financial close is expected by year end, after which construction will commence,” the person said. “We expect the project to be in operation by 2018.”
ACWA Power, which owns and operates power generation and desalinated water production plants in 12 countries, is providing a significant amount of the equity, the spokesperson added. ACWA is owned by eight Saudi conglomerates – including the Sanabil Direct Investment Company (in turn owned by Saudi Arabia’s sovereign wealth fund) and the Saudi Public Pensions Agency – as well as the International Finance Corporation (IFC).
The project is the first of its kind in Africa. Using SolarReserve’s molten salt thermal energy storage, the 100 megawatt (MW)-facility will have 14 hours of energy storage capacity, which means having the ability to deliver consistent baseload electricity even after the sun sets and without requiring natural gas or oil back up.
“The first-time deployment of CSP Tower technology in the country using a project finance framework, which was made possible by the galvanising leadership of OPIC financing, will enable this very important clean energy technology to be deployed at scale and at a faster pace than otherwise would have been possible,” said Paddy Padmanathan, president and chief executive of ACWA Power, in a statement.
The Redstone facility will be located in Postmasburg, in the Northern Cape province, next to the 75MW Lesedi and 96MW Jasper photovoltaic solar power projects, also developed by SolarReserve. “Together, the three projects comprise the world’s first combined CSP and PV solar park with a total of 271MW of generating capacity,” according to SolarReserve’s website.
OPIC’s financing to the project helps fulfill both the US commitment to clean energy in the developing world as well as the goals South Africa has set through its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which aims to add 3,725MW of clean power to South Africa’s energy generation mix.
It is also a “significant milestone” for President Barack Obama’s Power Africa initiative, of which OPIC is a key contributor, the agency said in its statement. Power Africa aims to bring new power access to Sub-Saharan Africa.
Established in 1971, OPIC works with the US private sector “to help solve critical development challenges and in doing so, advances US foreign policy.” The agency provides investors with financing, guaranties, political risk insurance, and support for private equity investment funds.
Photo/rendering courtesy of SolarReserve.