• The ZAR 11.6 billion Redstone concentrated solar power (CSP) project to power 200,000 households upon completion
• Commercial operation scheduled to start in Q4 2023
• DEG provided a commitment of ZAR500m to the transaction.
At ZAR 11.6 bn total investment, the largest renewable energy investment in South Africa to date, the Redstone concentrated solar power (CSP) project has achieved its first debt drawdown.
Located in the Northern Cape Province of South Africa, the Redstone project will be equipped with a 12-hour thermal storage system that will deliver clean and reliable electricity to nearly 200,000 households round the clock. Commencement of operations is scheduled for Q4 2023. Through the successful mobilisation of international project finance, Redstone CSP has facilitated approximately ZAR 7 billion in foreign direct investment to fund and support the strategic energy transition goals of the country.
“In support of Sub-saharan Africa’s First CSP Molten Salt Tower Plant and the Renewable Independent Power Producer Programme (“REIPPP”), DEG approved a senior local currency loan of ZAR500m to its longstanding client ACWA Power. As such, DEG continues to play an active role in facilitating private sector investment into grid-connected renewable energy generation in South Africa”, commented Andreas Cremer, Head of Project Finance for Africa/Latin America at DEG.
The project has secured financing from leading international and South African financial institutions including African Development Bank (AfDB) who acted as the coordinating bank, Development Bank of Southern Africa (DBSA), CDC, FMO, ABSA Bank, Nedbank, Investec Bank, Sanlam Life Insurance and the Industrial Development Corporation of South Africa (IDC).
Redstone CSP will offset an estimated 440 metric tons of CO2 emissions per year while also providing value-adding ancillary services to Eskom, being the first renewable energy project to offer such services in the country. The project is certified under the Climate Bonds Standard and Certification Scheme and aligned with the goals of the Paris Climate Agreement which seeks to limit global warming to under 2 degrees Celsius. In addition to efficiently delivering clean energy to the national grid, the Redstone project will also offer tangible socio-economic value through offering job opportunities and utilising local supply chains. The project will reach close to 44% local content on procurement during the construction period; create more than 2,000 construction jobs at peak, with about 400 from the local community; and create approximately 100 permanent direct jobs during the operating period.
The project is led by ACWA Power, a leading Saudi developer, investor and operator of power generation, water desalination and hydrogen plants in 12 countries, who is also the lead shareholder in the project. ACWA Power’s co-shareholders in the project include the Central Energy Fund, Pele Green Energy and the local community.
The construction is well underway and is currently in the ninth (9th) month of construction. The engineering works for the project is over 58% complete, whereas procurement and construction work stand at over 45% and 6% respectively. The tower foundation – a key construction milestone for the project has already been completed.
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