Johannesburg, South Africa, November 6, 2012
— IFC, a member of
the World Bank Group, is investing approximately 1.25 billion Rand (approximately
$143 million equivalent) in direct financing, and coordinating approximately
$264 million in parallel loans to support the construction of two landmark
concentrated solar power (CSP) projects in South Africa to spur economic
growth and create jobs.
The plants will enhance the supply of reliable, sustainable electricity
and improve energy security in South Africa. They will be jointly owned
by Spain-based renewable energy developer and contractor Abengoa, South
Africa’s state-owned Industrial Development Corporation (IDC), and the
Black Economic Empowerment (BEE) program.
In addition to its own funds
and the other loans it arranged, IFC blended $41.5 million in concessional
loans through the multi-donor Clean Technology Fund (CTF). The concessional
financing was provided to reduce the impact of elevated solar power tariffs
on electricity prices in South Africa.
“IFC’s investment in sub-Saharan
Africa’s first concentrating solar power plants reaffirms our commitment
to renewable energy in emerging markets”, said Saleem Karimjee, IFC Senior
Manager for Southern Africa. “By investing in these innovative projects,
IFC aims to demonstrate the benefits of private sector participation in
South Africa’s power sector and the potential of solar thermal power technology,
a currently underutilized but promising technology for energy production
and greenhouse gas reduction.”
Located in the Northern Cape
Province, the projects are the first CSP plants to be constructed in Sub-Saharan
Africa and among the first independent power producers in the country.
CSP technologies use mirrors to reflect and concentrate the sun’s rays
to heat steam that can power turbines and generate electricity.
The 50MW Khi Solar One project
is located near the town of Upington and includes a circular field of more
than 4,500 mirrored “heliostats” which focus the sun’s rays onto a central
receiver at the top of a 200 meter tower. The 100MW KaXu Solar One
project is located near Pofadder and includes a field of pivoting concave
mirrors, or “parabolic troughs,” which focus the sun’s rays on to pipes
that run along the center of the troughs.
The plants are using innovative
proprietary technology to specifically address South Africa’s needs, such
as dry cooling technology that will reduce water consumption by two thirds
and thermal storage which allows energy to be produced during periods of
cloud cover or after the sun goes down.
The solar power plants will
help diversify South Africa’s electricity away from coal-fired power,
which contributes heavily to greenhouse gases. The plants are a result
of the Government of South Africa’s Renewable Energy Independent
Power Producer program, which is awarding 3,600 MW of private sector concessions
for renewable energy generation. These are the first CSP plants to
be constructed under this program, which was launched in August 2011, and
whose first phase includes the construction of 28 renewable energy plants.
The power plants will all sell power to South Africa’s state-owned
power utility, Eskom Holdings, under twenty year contracts.
The lenders coordinated by
IFC for the Khi Solar One financing include the Development Bank of Southern
Africa (DBSA), the European Investment Bank, the IDC, CTF, La Société de
Promotion et de Participation pour la Coopération Économique (Proparco)
and the Nederlandese Financierings-Maatschappij voor Ontwikkelingslanden
N.V. (F.M.O.). IFC’s co-lenders to Kaxu Solar One included CTF,
DBSA, FirstRand Bank Ltd, IDC, and Nedbank Ltd. IFC is also providing
currency swaps to both projects to synthetically convert dollar denominated
loans into rand obligations. Rand loans will help the projects manage
risk more effectively by limiting foreign currency risk.
Alongside the investment, IFC
is also providing technical and structuring expertise to address the challenges
of financing the Khi CSP plant in Upington. The plant is larger than
any CSP tower currently operating anywhere in the world and although the
technology has been tested at the Solucar Complex R&D Centre (Spain),
it is the first to use superheated steam on a commercial scale.
The infrastructure sector is
a key strategic priority for the IFC, especially in the face of the widening
infrastructure gap in Africa. Increasing access to power is
at the heart of IFC’s strategy for infrastructure development in Sub-Saharan
Africa. IFC invested $1 billion in infrastructure projects in Africa
in fiscal year 2012, up from $200 million five years ago.
IFC, a member of the World Bank Group, is
the largest global development institution focused exclusively on the private
sector. We help developing countries achieve sustainable growth by financing
investment, mobilizing capital in international financial markets, and
providing advisory services to businesses and governments. In FY12, our
investments reached an all-time high of more than $20 billion, leveraging
the power of the private sector to create jobs, spark innovation, and tackle
the world’s most pressing development challenges. For more information,
About the Clean Technology Fund
The Climate Investment Funds (CIF) are unique
financing instruments designed to initiate transformational change towards
low-carbon and climate-resilient development through scaled-up financing
channeled through the Multilateral Development Banks, including IFC. The
Clean Technology Fund (CTF), one of the CIF funds, provides developing
countries with positive incentives to scale up the demonstration, deployment,
and transfer of technologies with a high potential for long-term greenhouse
gas emissions savings.