RMB spearheads private power funding in South Africa

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The 89MW Castle Wind Farm project reached financial close with a consortium consisting of African Infrastructure Investment Managers (AIIM), through its renewable energy project development and delivery platform African Clean Energy Developments (ACED), and Reatile Renewables (Pty) Ltd. RMB was appointed as the sole mandated lead arranger, hedge provider and transactional banker for the project.

Energy generated by Castle Wind Farm, being the largest private wind project to date, located near De Aar in the Northern Cape province of South Africa, will be wheeled over Eskom’s grid and sold to Sibanye-Stillwater’s South Africa operations over the next 15 years. This project will result in energy cost savings, increased energy security and decarbonisation benefits for Sibanye. Construction of the wind farm commences in June, with energy expected early 2025. Read more 

Sibanye-Stillwater Beatrix operations in South Africa. Image credit: Sibanya-Stillwater

Castle is Sibanye’s first private power project to reach financial close and represents a significant step in Sibanye’s 580MW renewable energy programme and journey towards carbon neutrality by 2040. The project which was co-developed by ACED and AIIM is the third renewable energy project to reach financial close in just over a year, with a significant further pipeline in implementation.

“Private power has become a beacon of hope in South Africa’s newly liberalised energy market, particularly for energy-intensive industries like mining. However, challenges to bring these projects to financial close remain, as the private sector faces significant levels of economic uncertainty, all the while trying to agree appropriate levels of risk allocation between buyer and seller. The IPP consortium and Sibanye have done incredibly well to reach this milestone and have demonstrated great commitment to the renewable energy sector,” says Cyprian Moloto, Infrastructure Sector Solutions transactor at RMB.

This project proves that the private sector is well-positioned to leverage and embrace the deregulation offered by the South African government. The energy produced by Castle not only provides direct benefits to Sibanye but also helps to offset the power deficit currently being experienced in the country.

The project, through minimum ownership and economic development requirements, also supports the advancement of transformation. Furthermore, all contractors on the project have been required to contribute to local economic development through local content commitments and ownership requirements.

“With all these benefits, we really want to help the private sector get operational projects onto the grid in an as efficient, cost effective and sustainable way as possible. For Castle, our agile and innovative approach to funding gave us the ability to move quickly and ensured that the requisite internal rates of return for the project sponsors and Sibanye were achieved. We look forward to the continued support of ACED, AIIM, Reatile and Sibanye as they roll out further investment into the sector” David Jones, Infrastructure Sector Solutions transactor at RMB concludes.

Author: Bryan Groenendaal


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