Hydropower developer NuPlanet Project Development achieved financial close and started construction last month on the 4.5 MW Stortemelk hydro project, near Clarens, in the Free State.
The project, which was awarded preferred bidder status under bid window two of government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), will be constructed over a two-year period, with commissioning scheduled for mid-2016.
Similar to the two hydropower plants previously developed by NuPlanet for the Bethlehem hydro plant, the project is situated on the Ash river and uses the outflow from the Lesotho Highlands Water Project.
The project will be constructed using a ‘split contract’ structure with an engineering, procurement and construction management (EPCM) arrangement and not the common engineering, procurement and construction (EPC) structure, which is commonly used in the REIPPPP.
NuPlanet MD Anton-Louis Olivier explains: “Based on our past experience with the Bethlehem hydro plant, we realised that small hydro does not lend itself as easily to the EPC contract structure as does solar photovoltaic (PV) or wind projects. Fortunately, our partners and lender agreed with this approach.”
The contractors include the ‘water to wire’ turbine, generator and switchgear contractors, Germany-based Andritz Hydro and Spain-based Indar Electrical SL; engineering, management, design, planning, project management and consulting company Aurecon South Africa, acting as the EPCM contractor; and civil works contractor Eigenbau.
The capital cost of the project is R186-million and is financed using project finance debt from Rand Merchant Bank, while equity financing was provided by the Mertech Group and an independent broad-based black economic-empowerment (BBBEE) entity.
Olivier explains that the ownership structure is also a unique aspect of the project: “Not only is Stortemelk one of the few REIPPPP projects that is wholly South African owned, but NuPlanet’s partner, Mertech Group, is also one of the largest philanthropic investors in South Africa.
“Combining that with BBBEEE ownership and an additional shareholding by a local Clarens-based charity results in a business which is ploughing back the bulk of its returns into poor communities across South Africa,” he adds.
The project will employ about 50 people during its construction. The appointed operations and maintenance contractor, TMC Operations & Maintenance, is also currently operating the Bethlehem hydro-power project and has the expertise to operate the plant within a project finance context.
Olivier adds that, through the ongoing cooperation with Aurecon, NuPlanet was able to implement a number of innovative measures in designing the project to take into account environmental considerations, ensure maximum availability and enhance maintenance.