Johannesburg, South Africa, November 6, 2012 —
IFC, a member of the World Bank Group, is investing approximately 1.25 billion Rand (approximately $143 million equivalent) in direct financing, and coordinating approximately $264 million in parallel loans to support the construction of two landmark concentrated solar power (CSP) projects in South Africa to spur economic growth and create jobs.
The plants will enhance the supply of reliable, sustainable electricity and improve energy security in South Africa. They will be jointly owned by Spain-based renewable energy developer and contractor Abengoa, South Africa’s state-owned Industrial Development Corporation (IDC), and the Black Economic Empowerment (BEE) program.
In addition to its own funds and the other loans it arranged, IFC blended $41.5 million in concessional loans through the multi-donor Clean Technology Fund (CTF). The concessional financing was provided to reduce the impact of elevated solar power tariffs on electricity prices in South Africa.
“IFC’s investment in sub-Saharan Africa’s first concentrating solar power plants reaffirms our commitment to renewable energy in emerging markets”, said Saleem Karimjee, IFC Senior Manager for Southern Africa. “By investing in these innovative projects, IFC aims to demonstrate the benefits of private sector participation in South Africa’s power sector and the potential of solar thermal power technology, a currently underutilized but promising technology for energy production and greenhouse gas reduction.”
Located in the Northern Cape Province, the projects are the first CSP plants to be constructed in Sub-Saharan Africa and among the first independent power producers in the country. CSP technologies use mirrors to reflect and concentrate the sun’s rays to heat steam that can power turbines and generate electricity.
The 50MW Khi Solar One project is located near the town of Upington and includes a circular field of more than 4,500 mirrored “heliostats” which focus the sun’s rays onto a central receiver at the top of a 200 meter tower. The 100MW KaXu Solar One project is located near Pofadder and includes a field of pivoting concave mirrors, or “parabolic troughs,” which focus the sun’s rays on to pipes that run along the center of the troughs.
The plants are using innovative proprietary technology to specifically address South Africa’s needs, such as dry cooling technology that will reduce water consumption by two thirds and thermal storage which allows energy to be produced during periods of cloud cover or after the sun goes down.
The solar power plants will help diversify South Africa’s electricity away from coal-fired power, which contributes heavily to greenhouse gases. The plants are a result of the Government of South Africa’s Renewable Energy Independent Power Producer program, which is awarding 3,600 MW of private sector concessions for renewable energy generation. These are the first CSP plants to be constructed under this program, which was launched in August 2011, and whose first phase includes the construction of 28 renewable energy plants. The power plants will all sell power to South Africa’s state-owned power utility, Eskom Holdings, under twenty year contracts.
The lenders coordinated by IFC for the Khi Solar One financing include the Development Bank of Southern Africa (DBSA), the European Investment Bank, the IDC, CTF, La Société de Promotion et de Participation pour la Coopération Économique (Proparco) and the Nederlandese Financierings-Maatschappij voor Ontwikkelingslanden N.V. (F.M.O.). IFC’s co-lenders to Kaxu Solar One included CTF, DBSA, FirstRand Bank Ltd, IDC, and Nedbank Ltd. IFC is also providing currency swaps to both projects to synthetically convert dollar denominated loans into rand obligations. Rand loans will help the projects manage risk more effectively by limiting foreign currency risk.
Alongside the investment, IFC is also providing technical and structuring expertise to address the challenges of financing the Khi CSP plant in Upington. The plant is larger than any CSP tower currently operating anywhere in the world and although the technology has been tested at the Solucar Complex R&D Centre (Spain), it is the first to use superheated steam on a commercial scale.
The infrastructure sector is a key strategic priority for the IFC, especially in the face of the widening infrastructure gap in Africa. Increasing access to power is at the heart of IFC’s strategy for infrastructure development in Sub-Saharan Africa. IFC invested $1 billion in infrastructure projects in Africa in fiscal year 2012, up from $200 million five years ago.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit
www.ifc.org
.
About the Clean Technology Fund
The Climate Investment Funds (CIF) are unique financing instruments designed to initiate transformational change towards low-carbon and climate-resilient development through scaled-up financing channeled through the Multilateral Development Banks, including IFC. The Clean Technology Fund (CTF), one of the CIF funds, provides developing countries with positive incentives to scale up the demonstration, deployment, and transfer of technologies with a high potential for long-term greenhouse gas emissions savings.
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