10 June 2013 – The 670 MW Avon and 335 MW Dedisa peaking power plants in South Africa will be the first large scale independent power producer (IPP) based projects in South Africa, outside its renewable energy programme, following a power purchase agreement (PPA) entered into with state owned power utility Eskom. Mitsui has established two project companies in South Africa, and these projects will sell electricity to Eskom for 15 years from their completion through two power generation plants.
The Avon project involves the construction of a 670 MW diesel fired open cycle power plant near Durban, and the Dedisa project involves the construction of a 335 MW diesel fired simple cycle power plant near Port Elizabeth. The electricity will be supplied to the major cities in the southern sector of South Africa.
The total cost of the projects will be approximately US$1 billion and will be financed on a project finance basis following a loan agreement between the project companies and South African lenders. Commercial operation of these plants is anticipated to start from the first quarter of 2016 in the case of the Avon project and from the third quarter of 2015 in the case of the Dedisa project.
The project companies have received investments from Mitsui, GDF Suez and two local companies through their own investment vehicles.
Due to a tight power supply and demand balance, the South African government instituted the Integrated Resource Plan 2010, a power development plan which will double South Africa’s power capacity from about 44 GW at present to approximately 80 GW by 2030. The projects were among those receiving approval under the plan.