One of South Africa’s biggest banks is betting big on solar

Three renewable energy projects arranged and financed by Absa reached financial close on 23 February 2023.

According to Absa, the three projects for Red Rocket Energy Ltd comprise two 140MW wind farms, which will be located in the Western Cape and one 84MW wind farm set to be located in the Eastern Cape.

The projects are valued at an estimated R12 billion.

Absa has supported financing for renewable energy projects across the continent, including South Africa’s REIPPP (Renewable Independent Power Producer Programme) programs and commercial or industrial projects with private off-takers.

“The REIPPPP is critical in helping Eskom add renewable power generation capacity to the national grid in line with the country’s just energy transition objectives and sustainable development goals,” said Absa.

The group has financed more than 4GWs of projects to date.

“The power generated by these three wind projects will be supplied to Eskom under 20-year power purchase agreements (PPAs) and, once operational, will have the capacity to supply approximately 480,000 South African households with power,” said Absa.

Colin King, the principal in Absa’s Resource and Project Finance team, said the latest transaction demonstrates its ongoing commitment to the sector and the acceleration of investments that make a sustainable impact on the communities we serve whilst contributing to the supply of much-needed new power generation capacity to the grid.

Red Rocket is a locally based, integrated renewable energy Independent Power Producer that develops, designs, constructs, operates, and owns utility-scale grid-connected renewable energy projects with operations in multiple countries across Africa.

The group currently has 606MW of projects in operation and under construction, more than $1 billion invested, and a pipeline of projects amounting to more than 12GW, of which 1 GW will reach a financial close within the end of the year.

REIPPP timeline

The REIPPP program has come under scrutiny for being slow to bring new power generation online.

Alongside bringing new power onboard, it aimed to aid South Africa’s shift away from coal and address the power generation shortfall at Eskom.

In September last year, the CEO of Business Leadership South Africa, Busi Mavuso, said that South Africa had not seen one smooth procurement since 2015.

With load shedding hitting record highs, President Cyril Ramaphosa recently announced a more precise push toward renewables in the country.

During his state of the nation address, the president declared a national state of disaster over rolling blackouts with the aim of reducing red tape and fast tracking mitigation projects.

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