In a significant show of support for South African renewable-energy projects, the European Union’s (EUs) long-term lending institution, the European Investment Bank (EIB), has agreed to provide €210-million, or R2.8-billion, for the construction of the Ka Xu Solar One concentrated solar power (csp) plant, to be located north of Pofadder, in the Northern Cape.

The loan, which is the first 20-year credit facility provided by the EU member State-owned institution, will be provided through South African partner banks FirstRand Bank Group and its subsidiary Rand Merchant Bank (RMB).

Some €110-million will be on-lent by RMB to help secure financing for Ka Xu Solar One – one of the largest concentrated solar power projects in the South African government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

EIB VP for South Africa Pim van Ballekom said in a statement on Tuesday that increased energy generation was essential for local economic growth.

“The Ka Xu Solar One project will not only create jobs during construction and operation, but also demonstrate the immense potential of harnessing solar energy to provide power to Africa and to reduce greenhouse-gas emissions.

“This benchmark initiative continues the drive for green energy in South Africa, which was reinvigorated at the seventeenth Conference of the Parties, in Durban,” he commented.

The landmark 100 MW Ka Xu project is one of the first csp projects in sub-Saharan Africa and one of the first private-sector renewable-energy projects in South Africa.

It aims to improve the supply of reliable, sustainable energy in South Africa and generate enough electricity to power more than 60 000 households during periods of peak consumption.

Commenting on the bank’s decision to participate in the funding arrangement, RMB senior transactor Hugh Hawarden said its ability to access EIB funding would enable RMB to offer long-term finance to its clients in the renewable-energy market.

RMB had already closed and committed over R14-billion to nine solar and wind projects in the first two rounds of the REIPPPP.

“We have become a significant participant in the funding of renewable-energy projects, which we believe deliver clean energy to an energy-constrained country,” he added.

The Ka Xu Solar One project will leverage innovative technology with storage capacity that allows energy to be dispatched in the evening peak hours and when overcast.

The plant will include a field of pivoting concave mirrors to focus solar rays onto a small area to produce steam, which drives a turbine and produces electricity.
Under a power purchase agreement, electricity generated by the project will be sold to electricity utility Eskom for 20 years.

Once completed, the project will be jointly owned by Spanish renewable-energy developer and contractor Abengoa, South Africa’s State-owned Industrial Development Corporation, and a community trust.

Scheduled to start operation in June 2014, the plant is expected to employ around 800 workers during the construction phase, with around 100 permanent employees once completed.

In 2012, the EIB agreed to provide €50-million to Africa’s first solar tower project, the sister Khi Solar One plant, in Upington.

The EIB is one of the world’s largest lenders for renewable energy, having provided nearly €2.2-billion for projects in a range of sectors across Africa in 2012.