Construction at the R9.2 billion Kathu solar plant located in the Northern Cape has started.
A ground breaking ceremony took place last week at the Kathu 100MW Concentrated Solar Power project.
In June, French multinational electric utility company Engie secured R9.2 billion in loans for the 100MW solar thermal power project.
The project is jointly owned by Engie (48.5%), the Public Investment Corporation, on behalf of the Government Employees Pension Fund (17.5%), the SIOC Community Development Trust (12.5%), the Lereko Metier REIPPP Fund Trust (11.5%), Investec Bank (7.5%) and the Kathu Trust (2.5%).
Kathu Solar Park was awarded preferred bidder in the 3.5 round of the Renewable Energy Independent Power Producer Procurement Program (REIPPPP) led by the South African Department of Energy.
Earlier this year, Kathu Solar Park signed a 20-year power purchase agreement (PPA) with Eskom. The PPA signing makes it possible to start construction, which is expected to be completed in the fourth quarter of 2018.
The project is funded by a mix of debt and equity. The debt is funded from a club of South African banks, namely Rand Merchant Bank, Nedbank Capital, Absa Capital, Investec and the Development Bank of SA.
It is estimated the Kathu Solar Park will save six million tonnes of CO2 over 20 years and will further promote local economic development through various projects as part of its economic development objectives.
These include the sourcing of certain services from local entrepreneurs in the John Taolo Gaetsewe District Municipality in the Northern Cape, the commitment to spend part of turnover of the project on qualifying social and economic development once operational, and having the local community benefit through the community trust which has an indirect equity stake in Kathu Solar Park.
"Eskom is particularly interested in receiving additional electrical power during 'peak' times, for instance during the evening hours, when electricity consumption is highest," says Willem Laenen of Engie.
"CSP [concentrated solar plant] technology with molten salt storage can generate electricity at its maximum design capacity during the whole of the evening peak and thereby assist Eskom greatly by delivering power exactly when this power is needed."
Engineering and construction group, Sener, infrastructure, renewable energy and services corporation, Acciona's, consortium was appointed by Kathu Solar Park to provide engineering, procurement and construction services for the project. Approximately 500 jobs, with a peak of 1 200, will be created during the construction phase.
"Sener's patented Concentrated Solar Power solution, SENERtrough2, a solar thermal power innovation, utilises a molten salt heat storage system that allows for continued power generation when the sun does not shine - it is reliable, flexible and dispatchable with reduced carbon emissions," says Siyabonga Mbanjwa, Sener Southern Africa regional MD.
Sener designed and patented the parabolic trough technology, equipped with a molten salt storage system, that allows 4.5 hours of thermal energy storage and thus limits the intermittent nature of solar energy and will be able to supply electricity to 179 000 homes.
"We are committed to meeting all quality, environmental, health and safety standards for the project. Both the client and the local community demand high levels of social action, and thanks to our expertise, we are confident we will achieve these objectives with excellence," says Ram'on Jim'enez, CEO of Acciona.
Positive IPP move
Meanwhile, renewable independent power producers (IPPs) have welcomed the Department of Energy's unveiling of coal IPPs - Khanyisa and Thabametsi - as the preferred bidders to build two coal-fired power plants that will add 863.3MW of electricity to the country's system in the next five years.
This comes amid uncertainties regarding the future of local IPPs in SA. This is after power utility Eskom wrote a letter to the Department of Energy asking for clarity or a dialogue regarding the next contracting phase of IPPs beyond bid window 4.5.
"In a further display of commitment from the South African government to independent power producers, the long-awaited preliminary information memorandum for the liquefied natural gas independent power producer programme was released by the Department of Energy last week," says the South African Wind Energy Association in a statement.
"Additional progress was made earlier this week when the energy minister announced the first successful bidders for the coal-based IPP. It's good news for all independent developers, including those who are involved in renewables, and sends a clear message to Eskom that their actions, which directly contradict government policy, will not frustrate the roll-out of the Renewable Energy Independent Power Producers Programme, as they continue to progress the IPP programmes."
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