- South African state owned development funder, the Industrial Development Corporation (IDC), and ACWA Power Company have signed a Joint Development Agreement Term Sheet (JDATS).
- The purpose of the agreement is to increase energy security in South Africa in response to the current power crisis being felt throughout the country.
Under the agreement, shovel-ready solar PV and wind project sites will either be allocated from the ACWA Power pipeline or jointly procured. The projects will have a capacity of up to 1,000 MW for fast-track implementation. Construction of the projects will commence with equity funding only and will require a total investment of around R20 billion. Each project will be implemented through a separate SPV with the parties, as well as other players, as shareholders.
Eskom’s struggle to meet the country’s electricity demands and the ongoing liberalisation of the South African energy regulatory environment offer many opportunities for commercial and industrial customers to either self-generate or procure from an independent power producer. The projects expected through the JDATS will supply multiple customers, each with an offtake of no more than 30% of generation capacity as a risk mitigation measure. Construction will commence with a minimum offtake secured of 40%, and the off-take book will be developed during construction to arrive at over-subscription by commercial operation date. Debt funding will be introduced at a point where banks become comfortable with the overall risk profile of each project.
The JDA builds on IDC and ACWA Power’s established relationship and partnership in the 100MW Redstone concentrated solar thermal power (CSP) plant. The plant forms part of the country’s Renewable Independent Power Producer Programme (REIPPP). The pioneering initiative is the first project-financed CSP with molten salt central receiver in the world and one of the largest investments in South Africa under the REIPPP.
The Chief Operating Officer of IDC, Joanne Bate, mentioned IDC’s preference to collaborate with proficient international companies with a demonstrated commitment and capability to construct and manage energy projects in South Africa. “The IDC is jointly invested with ACWA Power in the Redstone CSP project that showcases their dedication to transformative practices in the energy sector. Additionally, IDC and ACWA Power share a mutual interest in green hydrogen production, aligning seamlessly with renewable energy generation and facilitating the export of green energy,” she said.
This framework agreement, similar to pacts that IDC has signed with other funding partners, is focused on boosting energy security.
ACWA Power’s CEO, Marco Arcelli, stated, “Our partnership with the IDC as a partner and funder of the Redstone Project has anchored this latest agreement, enabling ACWA to continue to measurably contribute to energy solutions in South Africa. South Africa remains a key market for ACWA and we are committed to reducing the country’s carbon footprint and driving sustainability”.
Author: Bryan Groenendaal