Absa appointed senior lender in solar power project

Absa has been appointed as a mandated lead arranger, senior lender and hedge provider for one of South Africa’s largest Concentrated Solar Power (CSP) tower projects. The 100 MW CSP tower project, which uses molten salt technology and has 12 hours of thermal storage, will be built in the Northern Cape Province in South Africa at an estimated cost of R11.6 billion.

The CSP tower project, which is being developed by ACWA Power of Saudi Arabia, forms part of the South African Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). It is believed to be one of the first such CSP project-financed transaction with molten salt central receiver technology in South Africa.

A CSP tower plant generates solar power using mirrors (heliostats) to concentrate a large area of sunlight onto a small area (the receiver). Electricity is then generated when the concentrated light is converted to solar thermal energy.

Absa’s Shaun Moodley, Resource & Project Finance Executive, says the Redstone CSP Project, to be built about 30km east of Postmasburg in the Northern Cape, will be one of the largest renewable energy investments in South Africa under REIPPPP. Moodley says Absa will participate in the overall senior debt financing package with approximately R1.5 billion of senior debt term facilities for the project.

“An important feature of the Redstone CSP project is that it will have 12 hours of full-load energy storage which will enable the CSP power plant to reliably deliver a stable electricity supply to more than 200 000 South African homes during peak demand periods, even after the sun has set,” says Moodley.

He says at least 2 000 direct jobs will be created during the construction phase, of which 400 jobs will directly benefit the local community, while over 560 jobs will be created over a period of time once the power plant is fully operational. Moodley says the socio-economic benefits of the project will also extend beyond job creation, because up to 40% of the required equipment and materials has to be procured locally.

Construction will take about 33 months. Thereafter, the power plant will be progressively commissioned to reach 100% of design capacity, which should be finally achieved over 365 consecutive days within a three-year period after the Commercial Operations Date (COD).

“Overall, one can see that this is a very important project not only from an energy perspective, but also in the form of both direct and indirect job creation. Absa is pleased to have been appointed as a mandated lead arranger for this project. We have strong appetite to finance commercially viable renewable energy projects in Africa and we have already established a track record in this area,” Moodley says.

“Absa has been a leading financier of renewable energy projects in Africa and we have so far arranged and provided more than R50 billin of financing for more than 30 such projects and we certainly have appetite for more, whether it is wind, solar PV, solar CSP, or biomass,” Moodley says.