Norway’s Scatec Wins 540 MW Solar, 1140 MWh Battery Bids In South Africa

Norway based renewable energy developer Scatec has won preferred bidder status for 540 MW of solar projects alongside  225MW / 1,140MWh of battery storage in South Africa. For Scatec, the bid aligns well with its target of 15 GW of renewable energy with a strong mix of storage by 2025.

The tender was run by the South African Department of Mineral Resources and Energy’s technology agnostic Risk Mitigation Power Procurement Programme (RMPPP). South Africa has been looking to ramp up its grid capacity desperately in recent years, thanks to a severe power shortage and issues with grid maintainance. The country has been put through blackouts in recent months to manage the situation.

Scatec will be developing the capacity across three sites in the Northern Cape Province of South Africa and has been awarded 50MW of contracts for each of the Kenhardt 1, 2 and 3 projects, on which it will now be seeking financial close this year and targeting grid connection by the end of 2022. Scatec will be responsible for engineering, procurement and construction (EPC) as well as being the projects’ operations and maintenance (O&M) and asset management service provider.

The weighted average price of previous bids, which included various technology options like natural gas as well as renewables with about 430MW / 1,300MWh of energy storage, was South African R1,575 (US$106.63) per MWh, Scatec, which has not shared  prices for the new bids, has indicated that they are broadly in range with the previous bids. It has estimated that project CapEx will be around US$1 billion for the three solar-plus-storage projects. The company expects to raise project finance debt funding from a consortium that includes commercial banks as well as Development Finance institutions with an 80% expected debt leverage.

Developers participating in the tender were given a July 2021 deadline for financial close, due to the urgent need for the projects to go online quickly.

The Kenhardt 1-3 projects are expected to provide dispatchable power to the grid between 5 am and 9:30 pm daily. Set to receive payment under a 20-year power purchase agreement (PPA) with a paid capacity charge, Scatec did not disclose the value of its awarded tariffs, but said that they lie “within the range” of those previously awarded through the tender.

Scatec will own 51 percent  equity in the Kenhardt portfolio, while H1 Holdings, a local Black Economic Empowerment partner. Ownership of 49 percent  by a black-owned business was a key condition.

Scatec already has a presence in South Africa, through  six existing solar plant contracts won through the country’s Renewable Independent Power Producer Programme (REIPPP).

In India, Scatec does not have any operational assets at present, though the firm has announced plans to have a serious presence in the near future.