Absa backs R12bn wind energy projects

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 28 Feb 2023

Big-four bank Absa says it acted as a mandated lead arranger and financer of three wind energy projects worth R12 billion.

According to a statement, the projects, being developed by independent power producer (IPP) Red Rocket, comprise of two 140MW wind farms, which will be located in the Western Cape, and one 84MW wind farm, in the Eastern Cape.

As SA continues to experience unprecedented power cuts, the electricity crisis has led to more homes and businesses deploying renewable energy solutions to circumvent power shortages.

Red Rocket will also invest in the equity of the projects, together with the Old Mutual-owned fund manager, IDEAS Infrastructure sub-partnership agreement, and Jade-Sky Energy.

The Western Cape-based, integrated renewable energy IPP develops, designs, constructs, operates and owns utility-scale grid-connected renewable energy projects, with operations in multiple countries across Africa.

Colin King, principal within Absa’s resource and project finance team, says: “Absa continues to support financing for renewable energy projects across Africa, including government-procured programmes, such as the REIPPPP and commercial and industrial projects with private off-takers, with more than 4GWs of projects financed to date.

“This transaction strongly demonstrates our ongoing commitment to the sector and the acceleration of investments that make a sustainable impact on the communities we serve, whilst contributing to the supply of much-needed new power generation capacity to the grid.”

In November, Absa announced it had financed two of IPP EDF Renewables’ renewable energy projects in the Northern Cape, developed at a total estimated cost of R7.7 billion.

According to Absa, the power generated by Red Rocket’s three wind projects will be supplied to Eskom under a 20-year power purchase agreement and once operational, will have the capacity to supply approximately 480 000 South African households with power.

Red Rocket has more than $1 billion invested in 606MW of projects currently in operation and under construction, and a pipeline of other projects amounting to more than 12GW, of which 1GW will reach financial close within the end of the year, notes the statement.

“The financing of projects in this sector is in line with Absa’s sustainable finance goals, which includes helping our clients on their journeys to becoming more sustainable, and also in assisting Eskom with the transitioning from fossil fuels to renewable energy sources, thereby significantly reducing greenhouse gas emissions in South Africa.

“The REIPPPP is critical in helping Eskom add renewable power generation capacity to the national grid, in line with the country’s just energy transition objectives and sustainable development goals,” adds King.

Embattled power utility Eskom announced last year it had put renewable energy projects at the core of bringing additional capacity to plug SA’s electricity shortfall.

According to the power utility, the new additional capacity will come from renewable energy sources and takes into account the current energy deficit of between 4 000MW and 6 000MW.