MIGA Guarantees BioTherm’s New Solar & Wind Projects in South Africa

  • Guarantees in support of the construction, ownership and operation of two solar photovoltaic power plants and two wind power plants in South Africa have been issued by MIGA, a member of the World Bank Group.
  • The plants have been developed by Biotherm Energy.
  • When operational later this year, the new plants will have a combined installed capacity of 288MW, the power of which, will be sold to Eskom under a 20-year PPA signed in 2018.
  • The solar PV plants are the Aggeneys and Konkoonsies II in the Northern Cape, while the wind projects are the Golden Valley and Excelsior wind farms, which are in the Eastern and Western Capes.

MIGA’s guarantees are covering 90% of BioTherm’s equity investment for up to $46.9 million in the photovoltaic solar plants and $68.9 million in both wind production plants.

The guarantees provide protection against the risks of Transfer and Inconvertibility, Expropriation, Breach of Contract, and War & Civil disturbance for up to 15 years.

BioTherm, the South African headquartered Independent Power Producer (IPP), which currently owns 394MW of renewable projects in construction and operations in South Africa and Kenya, is wholly owned by global investor Actis.

MIGA currently supports Actis on projects across multiple countries, providing about $900 million in guarantees. The guarantees in South Africa are part of Actis’ overall risk management strategy in the energy sector.

“We are pleased to continue working with seasoned investors and promote investments across Africa despite the strained global environment,” MIGA Executive Vice President Hiroshi Matanosaid. “Increasing renewable energy capacity to serve demand and diversifying South Africa’s energy mix this project also helps reducing GHG emissions.”

Job creation in South Africa

The two solar plants are expected to create up to 1,100 temporary jobs during construction, helping alleviate the Northern Cape’s unemployment rate of 28.9%. During operation, the project will create 160 jobs, 75% of which will be for local communities. The projects are compliant with Broad-Based Black Economic Empowerment (BBBEE) policies, and are 2.5% owned by local community trusts.

The Excelsior wind plant will consist of 13 turbines, while Golden Valley will be made up of 48 turbines. Both wind plants will create 1,050 jobs during construction and 150 during operation.

“MIGA’s political risk insurance plays an important role in attracting institutional capital to renewable projects across our markets with high growth potential” Actis Energy & Infrastructure Director Colin FitzRandolph explained. “Actis is pleased to build on our strong relationship with MIGA to deliver additional renewable power to the South African grid and to foster partnerships in the local communities surrounding the projects.”

Energy shortages are a major constraint to growth for South Africa, and by some estimates, loadshedding in 2019 could have reduced economic growth by 1.1% of GDP and cut about 125,000 jobs.

Wind and solar projects from REIPPP bid round 4

Supply constraints also affect neighbouring countries that are interconnected through the Southern Africa Power Pool (SAPP), and represent 80% of the pool power demand and installed capacities.

These projects are part of the Round 4 bid window of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which is delivering renewable energy to fuel South Africa’s development.

To-date, REIPPPP has procured 6.4GW of renewable energy and attracted more than $13.5 billion (ZAR 200 billion) in investment into South Africa. By 2030, South Africa’s REIPPP is expected to secure up to 19GW in renewable energy installed capacity for the people of South Africa.

Wind and solar power currently represent 8% of South Africa’s total installed capacity.

Author: Nicolette Pombo-van Zyl

This article was originally published on ESI Africa and is republished with permission with minor editorial changes.

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