British International Investment (BII), the UK’s development financing institution (DFI) and impact investor, has partnered with Standard Bank and H1 Holdings to successfully reach financial close on the first sizable battery energy storage and photovoltaic (PV) solar project in South Africa.
The partners are funding three distinct Kenhardt projects that are totally powered by renewable sources. The project, worth approximately $1 billion, will be Africa’s largest and South Africa’s first baseload renewable energy project.
Standard Bank arranged the $720 million senior debt facility in collaboration with BII. As Lead
Bank, BII provided a $135 million senior debt investment and a $26 million mezzanine loan to H1 Holdings, a South African Broad-based Black Economic Empowerment (BBBEE) renewables investment, and development firm and project investor.
H1 Holdings is a partner of choice for BII, owing to the company’s expertise on several renewable power projects and its deep commitment to energy sustainability.
Standard Bank has acted as the Mandated Lead Arranger and underwriter to provide debt funding towards the project and has additionally arranged the ancillary facilities totalling c. $207 million. In addition to being a green loan, Standard Bank acted as the sole derivative and hedge provider, and executed one of the first ESG-linked derivatives on the continent, thereby leading the South African market in sustainable linked derivatives.
The project will be developed by Scatec ASA, a leading renewable energy solutions provider, under South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) and it is the first project to reach financial close under the programme. Once constructed, it will provide a total solar power capacity of 540 MW and battery storage capacity of 1.1 GWh of battery energy storage.
“Standard Bank is honored to be playing a leading role in delivering power to the grid by facilitating the first dispatchable and base load renewable energy project in South Africa, and supporting South Africa’s drive to energy security,” says Rentia van Tonder, Head of Power at Standard Bank. “This is not only about ensuring a reliable supply of power to citizens and a growing economy, but also in ensuring that we meet our obligations as a nation to reduce carbon emissions by bringing more clean energy onto the grid.”
“It is incredibly exciting to not only witness but to be a part of solutioning for South Africa’s power generation challenges and assisting the country’s developmental needs,” says van Tonder. “We are optimistic that this project will create the necessary momentum to shift the country’s reliance from carbon-based fuels towards sustainable energy, creating new green jobs and technical expertise in the sector.”
Iain Macaulay Director and Head of Project Finance, Africa and Pakistan, said: “BII is thrilled to be partnered alongside Standard Bank to back this largest-of-its-kind battery storage system by Scatec which aims to deliver predictable clean energy to South Africa’s grid at a significant scale and at a critical time. This investment builds on our existing partnership with Scatec across multiple clean energy initiatives and financial solutions across the African continent. BII is proud to back a project at the forefront of renewable energy technology that has the potential to be scaled commercially.”
This investment helps contribute to the UN’s Sustainable Goals (SDG 7) on affordable and clean energy, and (SDG 13) on climate action as it will increase the share of renewable energy in the energy mix to avoid greenhouse gas (GHG) emissions.