The Redstone concentrated solar power (CSP) project has achieved its first debt drawdown on the largest renewable energy investment in South Africa to date, development finance institution the African Development Bank (AfDB) says.

AfDB acted as the mandated lead arranger and coordinating bank, committing R2.31-billion to the transaction.

The R11.6-billion Redstone CSP project has also secured financing from international and South African financial institutions including Absa Bank, CDC Group, the Development Bank of Southern Africa (DBSA), Deutsche Investitions- und Entwicklungsgesellschaft, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, Investec Bank, Nedbank, Sanlam and the Industrial Development Corporation.

Redstone is led by Saudi water and energy generation developer ACWA Power, which is also the lead shareholder in Redstone, with co-shareholders including South Africa's Central Energy Fund, Pele Green Energy and the local community.

The strategic importance of this project was recognised by the South African National Energy Association, which awarded ACWA Power with the 'Leading the way in the energy sector' prize in October 2021.

“Redstone will play an important role in South Africa’s decarbonisation efforts. We are therefore pleased to have played such a prominent role in the project’s structuring and financing.

"Further, the bank looks forward to playing an even bigger part in supporting South Africa’s just energy transition by harnessing the abundant renewable sources of energy through innovative partnerships with the private sector,” AfDB power, energy, climate change and green growth VP Dr Kevin Kariuki says.

Redstone CSP will offset an estimated 440 metric tons of carbon dioxide emissions a year, while also providing value-adding ancillary services to State-owned power utility Eskom. It is the first renewable energy project to offer ancillary services in the country.

The project is certified under the Climate Bonds Standard and Certification Scheme and aligned with the goals of the Paris Climate Agreement which seeks to limit global warming to under 2 ºC above preindustrial levels.

In addition to efficiently delivering clean energy to the national grid, the Redstone project will offer tangible socioeconomic value through using local supply chains and creating job opportunities.

“The project will reach close to 44% local content on procurement during the construction period, create more than 2 000 construction jobs at peak, with about 400 from the local community, and create approximately 100 permanent direct jobs during the operating period,” the AfDB says.

Located in the Northern Cape, the Redstone project will be equipped with a 12-hour thermal storage system.

Construction of the project is well under way and is currently in its ninth month.

The engineering works for the project is more than 58% completed, whereas procurement and construction works stand at over 45% and 6% respectively.

A key construction milestone, the tower foundation for the project, has been completed with the commencement of operations scheduled for the third quarter of 2023.

“Through the successful mobilisation of international project finance, Redstone has facilitated about R7-billion in foreign direct investment to fund and support the strategic energy transition goals of the country,” the AfDB says.

“This project marks a landmark project finance investment in South Africa and demonstrates the commercial viability of CSP technology in enhancing clean energy generation. Redstone’s capability to convert solar power into baseload energy at scale, aligns with AfDB’s Climate Change & Green Growth Policy and Strategy of investing for clean and inclusive growth,” AfDB energy financial solution and policy regulations director Wale Shonibare comments.