Africa Renwables: Standard Bank’s Contribution to South African Renewables

Standard Bank is the mandated lead arranger, underwriter and hedge provider of seven of the total 27 projects which have signed power purchase agreements with Eskom as part of South Africa’s Renewable Energy Independent Power Producer Procurement Program, (REIPPPP), after a long delay. Standard Bank was the first bank to close a project under this round, with a total of four projects already closed. The remaining projects have until end July to reach financial close.

Collectively, the four projects already closed, being the Sirius, Dyasons Klip 1 and Dyasons Klip 2 solar projects in the Northern Cape and the Wesley-Ciskei wind project in the former Ciskei region of the Eastern Cape Province, will add 258 MW of renewable energy to South Africa’s national grid. The four projects represent a combined investment of ZAR 6.6 billion in South Africa’s renewables sector.

The three Northern Cape solar projects, being constructed by Norway’s Scatec Solar ASA were amongst the first projects to reach financial close in the current round of the REIPPPP process.

In addition to providing innovative funding structures, crowding in asset managers and capital markets, the three Scatec projects were also significant, “as they represent the first time that Standard Bank has provided inflation linked CPI debt to a renewable energy project,” said Rentia van Tonder, Head of Power and Energy at Standard Bank. Once commissioned Scatec will have a portfolio of six projects Solar projects in South Africa.

The Wesley-Ciskei wind project to be commissioned by Riverbank Wind Power (Pty) Ltd will add 33 MW to the national grid. As well as being the first project to reach financial close under the fourth round of South Africa’s REIPPPP process, the project is also significant in being the first renewable energy project located in a former homeland. The Wesley-Ciskei wind project, “demonstrates the significance of renewables in empowering marginalised communities,” according to Ms van Tonder. Beyond the impact of a ZAR 1.03 billion investment in an economically marginalised region of South Africa, the project provides an example of how rural communities can be key participants and benefit the broader economy – as suppliers of energy and attractive destinations for investment.

The Wesley-Ciskei wind project is owned by a South African consortium consisting of:  60% shareholding by EDF Renewables; 22.5% shareholding by Telagystix (being a subsidiary of the BEE company Calulo Renewable Energy); 5% shareholding by the landowners of the site where the project is located, (enabled by a donation made to them by EDF Renewables); and 12.5% shareholding by Riverbank Winds of Change BBBEE Co (RF) Ltd being the trust established for the local community.  EDF Renewables, with offices in Cape Town and Port Elizabeth and supported by its French parent company, EDF, represents the growth of a domestic renewables capability that Standard Bank is particularly proud to support.

The Integrated Resource Plan is expected to be tabled in Parliament by the middle of August which will set the path for the future energy mix in South Africa. Diversifying South Africa’s energy supply by expanding the contribution from renewable energy will support environmentally sustainable energy supply that provides secure and affordable energy to all South Africans.