Global independent power producer Sonnedix, which focuses solely on the development and operation of solar photovoltaic (PV) facilities, has earmarked South Africa as a potential core future investment destination for both projects and acquisitions.

The company, which is backed financially by long-term investors primarily from the Americas and Europe, currently has a fleet of 23 solar plants with a combined operating capacity of over 100 MW across France, Italy, Spain, Thailand and Puerto Rico.

President Franck Constant tells Engineering News Online that it will seek to build a portfolio in South Africa with a “critical mass” of between 50 MW and 100 MW over the coming few years.

He indicates, though, that part of this domestic portfolio could be derived through the acquisition of existing assets, owing to the fact that a number of investors in the country’s nascent solar sector are not necessarily long-term plant operators.

Sonnedix has participated, together with local partners Mulilo Renewable Energy and Ixowave-Women in Power, as a participant in the Department of Energy’s (DoE’s) third bidding round under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), having adopted a wait-and-see stance while identifying high quality local partners and projects during the subsequent two windows.

The DoE has already allocated 2 460 MW across 47 renewables projects, including 27 solar PV projects. Another 1 165 MW is to be allocated in the third round, with an allocation of around 400 MW for solar PV anticipated. It is widely believed that pricing will be particularly aggressive for the solar PV projects.

Constant has been impressed by the design of the REIPPPP, but indicates that it places a significant administrative burden, especially for small projects, on developers, which has increased barriers to entry.

However, that burden has been partially offset through a systematic allocation of capacity across the various renewables technologies, which, together with the competitive bidding framework, has balanced the needs of investors with government’s desire for lower tariffs.

For Sonnedix, which is pursuing opportunities in jurisdictions that offer long-term, fixed-price contracts with premium customers, South Africa’s power sector policy and regulatory stability is even more attractive to it than the country’s solar resource.

Subject to DoE approval, Constant expects acquisition opportunities to begin arising as the projects start to come into operation. However, he stresses that the company’s growth strategy will be balanced between organic and acquisitive growth.

“Some of our current global portfolio is made up of projects we have developed, with the balance made up of projects we acquired either during construction or once they began operating,” he explains.