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Scatec confident R16.4bn solar-battery project will lay renewables ‘intermittency’ debate to rest

Preparatory work under way for Kenhardt projects, in the Northern Cape

Preparatory work under way for Kenhardt projects, in the Northern Cape

20th July 2022

By: Terence Creamer

Creamer Media Editor

     

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Renewable-energy solutions provider Scatec is optimistic that its R16.4-billion solar-battery project in the Northern Cape will finally address long-standing questions about the so-called “intermittency” of renewables.

The project, which achieved financial close this week, will couple 540 MW of solar photovoltaic (PV) generators to lithium-ion batteries with a capacity of 225 MW/1 140MWh to provide 150 MW of dispatchable power into South Africa’s grid under a 20-year power purchase agreement.

Renewables companies typically refer to the production profiles of their plants as variable, rather than intermittent, given that intermittency implies the type of unpredictability that is more in keeping with the current performance of Eskom’s breakdown-prone coal fleet than wind and solar PV plants whose production, while weather dependent, is more predictable. Nevertheless, variable renewables plants are often still referred to as intermittent.

In a briefing following the financial-close announcement, Scatec sub-Saharan Africa GM Jan Fourie said he expected the project, which will begin delivering electricity into the grid in 15 months, will lay the intermittency debate to rest.

“I think the other thing that [this project] signifies to the industry, and hopefully to government, is that the whole argument about renewables intermittency has now gone away.”

The massive facility, which will comprise three collocated projects on a 10-km-by-10-km site in the Northern Cape, will be able to dispatch electricity into the South African grid between 5:00 in the morning and 21:30 at night – a profile that is akin to so-called conventional fossil-fuel-type plants.

Nevertheless, the architecture of the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), under which Scatec’s Kenhardt projects are still the only ones to have progressed to financial close, has been criticised.

The request for these plants to be able to dispatch electricity from morning to night has been described as heavily weighted towards gas solutions, while failing to take account of both system needs and the energy and capacity potential that such large renewables-storage projects could offer.

Fourie confirmed that there would be periods when the electricity produced from the solar plants would be curtailed – this despite the fact that South Africa’s electricity supply industry faces the constant threat of load-shedding.

“We had to over install on the solar PV side … to cater for seasonality,” Fourie explains, adding that the design was finalised after an analysis of 20-years-worth of hourly solar data. The final design is premised on meeting the dispatch requirements during a “bad year”.

“So, there will be times of the day when will have a fair amount of excess electricity, that would be curtailed.”

There have been calls for the architecture of the programme to be adapted to ensure that South Africa is able to benefit from that surplus energy, as well as to lower the tariff, which was bid at 188c/kWh.

That said, Scatec has been widely hailed for finding a way to meet the requirements of the programme, as well as for using projects to show what is possible using a combination of solar PV generators and battery storage.

The projects will be the largest investment in Scatec’s history and are being financed by equity from the owners and R12.4-billion in nonrecourse project debt.

The debt, which is rand-denominated, is being provided by a group of lenders, including the Standard Bank Group as arranger and UK development finance institution British International Investments (BII).

Standard Bank Group head of power Rentia van Tonder said the bank was "honoured to be playing a leading role in delivering power to the grid by facilitating the first dispatchable and baseload renewable energy project in South Africa", while global power and infrastructure head Stephen Barnes noted that the financing formed part of the group's R50-billion commitment to renewables.

BII director Iain Macaulay added that the project would deliver "predictable clean energy to South Africa’s grid at a significant scale and at a critical time".

Scatec will own 51% of the equity in the project, with black economic empowerment company H1 Holdings owning the 49% balance.

Scatec will be the engineering, procurement and construction provider and provide operation and maintenance as well as asset-management services to the power plants.

Fourie said Scatec’s supply-chain team was alive to current market challenges and that “all the necessary contingency plans are in place to be able meet our timelines”.

He acknowledged that there had been some challenges in meeting the local-content requirements for the PV panels, but said it was sometimes underestimated just how much other local content can be secured in South Africa.

It was possible, for instance, to secure local solar trackers, cables and transformers, as well as construction services.

“So, there's a significant amount of local content in the projects.”

Meanwhile, in a statement confirming the financial close of Kenhardt 1, 2 and 3, the Department of Mineral Resources and Energy said the remaining eight projects under the RMIPPPP were “at varying stages of preparation to sign their agreements, and announcements for further project closures will be made in due course”.

Edited by Creamer Media Reporter

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