South Africa: African Development Bank approves a ZAR 3 billion loan to bolster renewable energy in South Africa
The Board of Directors of the African Development Bank has approved a senior loan of ZAR 3 billion to the 100 MW Redstone Concentrated Solar Power Project, which is expected to boost South Africa’s energy mix and hasten transition to renewable energy.
Located in the Humansrus Solar Park, Northern Cape Province of South Africa, the solar power project is expected to generate 466 GWh/year. This will offset diesel-fueled Open Cycle Gas Turbine’s (OCGT’s) operating at peak demand, thereby avoiding and mitigating carbon dioxide (CO₂) emissions from fossil fuels.
The project will also improve South Africa’s power supply and access to energy, and green the energy mix which is currently dominated by coal at 82%.
Commenting on the importance of the project, President of the African Development Bank Akinwumi Adesina said “there is no other country – that has made bold efforts at promoting solar power – apart from South Africa and Morocco. Of the countries currently using coal, South Africa is one of the few with an aggressive strategy towards developing a solar-based power.” At the heart of this transition to a low-carbon energy sector is a complete transformation of the future energy mix.”
The project is one of 27 renewable energy Independent Power Producer projects under the Renewable Energy Independent Power Producer (REIPPP). Once commissioned, it is expected to create over 3500 jobs over the project life cycle. The project will also fulfil South Africa’s social development requirements on citizens employed, Black Economic Empowerment, procurement from small and medium-scale enterprises, local content, and shareholding by local communities.
“The development of this concentrated solar power project will provide green baseload energy and contribute to a further diversification of South Africa’s energy mix, which is fundamental to South Africa’s strategic vision of transitioning to green growth”, said Amadou Hott, the Bank’s Vice-President for Power, Energy, Climate, and Green Growth.
The project comprises a 12-hour molten salt thermal energy storage system, which will enable the project to meet peak electricity demand in the absence of sun, and allow for dispatchability to adapt generation to electricity demand. The project will also involve the construction of a new 132 kV switching station, and a 34 km long single circuit 132 kV transmission line.
This Project is aligned with the Bank’s Ten-Year Strategy, The New Deal for Energy in Africa under the Hi5 Priority to ‘Light Up and Power Africa’, and the South Africa Country Strategy Paper (CSP 2018-2022), which supports economic transformation for inclusive growth and job creation.
The project is also fully in line with the Bank’s green growth strategy, energy strategy and private sector development strategy to finance clean renewable energy projects, increase access to energy, and reduce dependence on carbon intensive power generation.
The project makes a significant contribution to efforts of the South African government to implement its nationally determined contribution (NDC) by pursuing investments in renewable energy and energy efficiency in order to mitigate CO₂ emissions.
Technical Contact: Jing Li, Principal Investment Officer, PERS2