- USA based BioPower Operations Corporation t/a HYFI Corp., has announced a joint venture with POWGEX ENERGY SOUTH AFRICA to to build, own and operate an initial 1 GW facility with the potential to expand to up to 30 GW of solar power for the municipalities of Mpumalanga, South Africa.
It is contemplated that project installations for the first 1 GW will begin in Q1 2024 with a total project cost of $2.5B, with the main costs attributed to solar pv panels, battery storage, EPC & O&M. A market leading solar pv and battery storage OEM has been selected for the first 1 GW of deliverables to be provided and installed. POWGEX-HYFI is presently in discussions with a world leading EPC and O&M provider for installation of the project deliverables.
This is the first of what is expected to be multiple orders from municipalities looking to contract directly with POWGEX-HYFI and establish long-term Power Purchase Agreements (PPAs). The Municipalities in Mpumalanga Province have a vibrant economic region with activities in manufacturing, mining, construction, finance and power generation.
POWGEX-HYFI has been invited to provide an initial 1 GW Solar Power Plant, with future expansion between 5GW to 30GW within the larger Mpumalanga region.
Total transmission capacity in Mpumalanga Province is close to 22GW in Substation and Transformer Capacity, but only 6.5GW of readily available generating capacity. Adding additional capacity can comfortably be accommodated within the current infrastructure and in time up to 30GW could be added on the basis of Eskom’s Grid Connection Capacity Assessment.
The scale of the challenge for renewable power investment in South Africa was highlighted in a government-backed report: Net zero in South Africa – It all hinges on Renewables. South Africa National Business Initiative, September 2022. “By 2050, at least 190 gigawatts (GW) of renewables need to be deployed to fully decarbonise the power sector. Capturing the opportunity presented by the Green Hydrogen economy (a national aim) requires potentially up to 170-200 GW of additional dedicated renewables capacity. That means South Africa will need to build ~6-7 GW of renewables every year for the next three decades for the power system alone. The annual renewables build rate would further increase if the Green H2 opportunity is pursued.”
BioPower has greatly expanded its consortium of interested banks, investment banks and funds to provide structured finance for the projects and discussions are advancing with world leading financial institutions to fund the projects’ requirements.
Signet Capital has agreed to be the lead financial advisor of record and is arranging a $450 Million private placement for the first trance(s) of a green electricity generation project of the joint venture with POWGEX ENERGY called POWGEX-HYFI which intends to build, own and operate green electricity generating facilities for the next 45 years.
BioPower will own up to 19.99% of the joint venture and receive a $50m equity investment in exchange for various deliverables including providing initial structured finance for $450 Million and our OEM, EPC & O&M relationships.
A portion of the use of proceeds will enable, subject to certain terms and conditions, POWGEX Energy to buy 15% of BioPower Common Stock or 7,500,000 shares at $6.67 per share at a $333 Million valuation for $50,000,000 and get one Board of Director seat. HYFI will have one Board of Director seat on the JV and POWGEX will have 2 seats.
Author: Bryan Groenendaal