MIGA has issued guarantees covering the construction, ownership, operation and maintenance of six solar photovoltaic (PV) power plants in South Africa.
The guarantees cover 90% of investments by Scatec Solar ASA for up to 15 years against the risks of Breach of Contract and Transfer Restrictions and Convertibility.
Three of the plants (Kalkbult, Dreunberg and Linde) have been in operation since 2013 and 2014, while the others (Sirius, Dyason’s Klip 1 and Dyason’s Klip 3) are currently under construction.
The six plants are expected to generate a combined 1,000GWh of power that will be sold to Eskom, South Africa’s state-owned utility, under 20-year PPAs. Read more: US, South Africa partner on solar energy storage
“By covering not only greenfield, but also brownfield projects, we are encouraging additional investments in renewable power,” said MIGA EVP & CEO Keiko Honda.
“We are helping decrease perceived levels of risk and increasing capacity for sponsors,” Honda added.
South Africa’s energy mix
These plants will contribute to the diversification of South Africa’s energy mix, helping avoid 17 million tons of GHG emissions.
The six projects were selected as part of the South African Renewable Energy Independent Power Procurement Programme (REIPPP).
The REIPPP has successfully channelled substantial private sector expertise and investment through multiple rounds of bidding into grid-connected renewable energy at competitive prices.
Prices have dropped over four rounds of bidding, with average solar PV costs dropping by 75% in nominal terms, and making renewables the most price-competitive power source in South Africa.
The REIPPP requires that Independent Power Producers (IPPs) undertake economic development obligations in addition to proposing competitive tariffs.
In this context, Scatec Solar is contributing a fixed percentage of its IPP revenues to develop stakeholder engagement plans and implement local community development initiatives within education, health and infrastructure.
“These MIGA guarantees are a cost-efficient way of mitigating risk in an important part of our asset portfolio. We are working with multilateral finance institutions across emerging markets and with these agreements we are again demonstrating how strong partnerships are improving the robustness of our long-term investments," said Raymond Carlsen, CEO of Scatec Solar.