Norway-based Scatec ASA has announced it has closed on financing for three solar photovoltaic projects in South Africa with a combined capacity of 273 MW, enabling construction to begin in the first quarter of 2024.

The PV projects, which were approved during the fifth bid window of South Africa’s Renewable Energy Independent Power Producer Procurement Programme in 2021, have a combined value of $270 million. The program is a scheme of increasing electricity generation in the country through private sector investment in renewable energy technology such as solar PV, concentrated solar, onshore wind power, small hydropower (less than 40 MW), landfill gas, biomass, and biogas.

Scatec ASA signed power purchase and implementation agreements for Grootfontein PV 1, Grootfontein PV 2 and Grootfontein PV 3, in December 2022. It is anticipated the three solar plants will help South Africa eliminate an estimated 630,000 metric tons of carbon dioxide annually.

The company has a 51% stake in the projects while H1 Holdings, its South Africa Black Economic Empowerment partner owns 46.5% with Community Trust taking up the remaining 2.5%.

Scatec, which in 2020 acquired Norway-based SN Power AS from Norfund for $1.17billion, will sell the generated electricity from the three solar PV plants to South Africa’s grid at $25.8526 per MWh under a under 20-year power purchase agreements it signed with Eskom, South Africa’s electricity public utility.

When the projects come online, Scatec will perform engineering, procurement and construction that accounts for 75% of the projects’ total cost, and will also provide operation and maintenance as well as asset management services for the power plants.

“We are now looking forward to starting construction next year and achieving commercial operation in 2025, while powering approximately 100,000 households in the region,” Scatec CEO Terje Pilskog said in a June 30 announcement.

Financing for the three solar PV projects has come from equity provided by the owners and $ 241million of “non-recourse project finance debt provided by Standard Bank of South Africa as mandated lead arranger.”

“This is a landmark transaction as the first ... solar PV projects in the fifth bidding round reach financial close,” Scatec said in a statement. 

The firm has four renewable energy plants operating in South Africa with a combined capacity of 448 MW including Upington (258MW), Kalkbult (75MW), Dreunberg (75MW) and Linde (40MW).

It was one of the 102 bidders that submitted bids during the BW5 with South Africa’s Department of Mineral Resources and Energy saying the fifth bid window was oversubscribed after receiving bids totaling 9,644 MW against the needed capacity of 2,583 MW. That total comprised 1,608 MW from 12 wind projects and 975 MW from 13 solar PV projects.

The Department of Mineral Resources and Energy says at least 123 renewable energy projects have been approved for development by independent power producers at an estimated cost of $17.32 billion.

As of 2023, four of the six bid windows have come online with a combined capacity of 6,200 MW, equivalent to 5% of South Africa's electricity supply.

New renewable energy capacity is needed in South Africa to end crippling load-shedding that peaked in 2022 when the country experienced a combined 3,776 hours (roughly 157 days) of power outages.