Sola Group and African Rainbow Energy have reached financial close on two 100-megawatt solar power plants in South Africa’s North West province.
The debt was arranged by PepperTree Capital, with the Development Bank of Southern Africa (DBSA) lending 3.1 billion South African rand (US$186 million). Other senior lenders include major South African banks Absa, Nedbank, and Standard Bank.
Sola Group, a renewable energy developer based in Cape Town, secured approval from the National Energy Regulator of South Africa (Nersa) to build the projects back in May.
A long-term power purchase agreement was signed in March with US-based Tronox, the world's largest supplier of titanium chemicals. It operates several mines and smelters in the region.
The electricity will be supplied to five Tronox facilities in the Western Cape and KwaZulu-Natal via “wheeling agreements” under which state-owned utility Eskom will pay for the maintenance and upkeep of the infrastructure to transmit the electricity.
The project comprises of 387,000 solar panels mounted on single-axis trackers that track the sun’s position as it moves across the sky. It will be one of the first projects to directly feed into Eskom’s high-voltage transmission network. Construction is expected to take 14 months.
Legal advisers were Pinsent Masons, Hogan Lovells, Fasken, Allen & Overy and ENS.
Hogan Lovells advised Sola Group on the corporate aspects of the two solar projects. Pinsent Masons advised Sola on its PPAs with Tronox, which will transform the manufacturing business’ electricity supply and support its 2050 net-zero target. Via the PPAs, the solar projects are expected to provide approximately 40% of Tronox’s South African electricity needs.
Fasken advised the commercial bank lenders. CMS South Africa represented the Development Bank of Southern Africa.
Sola Group is a vertically integrated independent power producer and a leader in the supply of clean energy solutions to private companies in Africa. It partnered with African Rainbow Energy to provide equity for the projects. African Rainbow Energy is a leading renewable energy platform, and Sola’s largest shareholder.
The projects are seen as a breakthrough for the private energy market. Private energy generation of up to 100MW can now proceed without a licence, though the projects must still be registered with Nersa.
"As the regulatory environment shifts, we anticipate a groundswell of PPA activity as other businesses across the country explore viable options to boost supply via renewable sources," observes Pinsent Masons legal director Emma Roberts.
Chris Green, a partner at Hogan Lovells, adds: “Private power projects of this nature are key contributors to addressing South Africa’s ongoing energy crisis and ensuring a secure and reliable energy supply to South African industries, businesses and consumers alike.”