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IDC, ACWA Power sign R20bn deal to boost energy security in South Africa

An image showing the signing of a joint development agreement between the IDC and ACWA

JDA signing

7th December 2023

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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South African development funder the Industrial Development Corporation (IDC) and Saudi Arabia-based electric power generation company ACWA Power Company signed a joint development agreement term sheet (JDATS) to increase energy security in South Africa.

Under the terms of the agreement, shovel-ready solar photovoltaic and wind project sites will either be allocated from the ACWA Power pipeline or jointly procured.

The projects will have a capacity of up to 1 000 MW for fast-track implementation.

Construction of the projects will start with equity funding only and will require a total investment of about R20-billion.

Each project will be implemented through a separate special purpose vehicle with the parties, as well as other players, as shareholders.

The projects to be developed through the JDATS will supply multiple customers, each with an offtake of no more than 30% of generation capacity as a risk mitigation measure.

Construction will start with a minimum offtake secured of 40%, and the offtake book will be developed during construction to arrive at over-subscription by commercial operation date.

Debt funding will be introduced at a point where banks become comfortable with the overall risk profile of each project.

The JDATS builds on the IDC and ACWA Power’s established relationship and partnership in the 100 MW Redstone concentrated solar thermal power (CSP) plant, in the Northern Cape.

The plant forms part of the country's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The pioneering initiative is the first project-financed CSP with molten salt central receiver in the world and one of the largest investments in South Africa under the REIPPPP.

IDC COO Joanne Bate mentioned that the IDC's preference is to collaborate with proficient international companies with a demonstrated commitment and capability to construct and manage energy projects in South Africa.

“The IDC is jointly invested with ACWA Power in the Redstone CSP project that showcases their dedication to transformative practices in the energy sector. Additionally, the IDC and ACWA Power share a mutual interest in green hydrogen production, aligning seamlessly with renewable energy generation and facilitating the export of green energy,” she said.

This framework agreement, similar to pacts that the IDC has signed with other funding partners, is focused on boosting energy security.

“Our partnership with the IDC as a partner and funder of the Redstone project has anchored this latest agreement, enabling ACWA to continue to measurably contribute to energy solutions in South Africa.

“South Africa remains a key market for ACWA, and we are committed to reducing the country’s carbon footprint and driving sustainability,” said ACWA Power CEO Marco Arcelli

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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