The European Investment Bank, Europe’s long-term lending institution, has agreed to provide EUR 50m for the Khi Solar One Project. This is the first large concentrated solar power project in sub-Saharan Africa and one of the first private sector renewable energy projects in the country. The project will help South Africa meet renewable energy targets by increasing renewable energy output.
“The European Investment Bank is committed to supporting investment in renewable energy technology in Africa and fully shares the mission of the Department of Energy to foster renewable power projects that will lead to a reduction in energy costs. Development of the Khi Solar One project is a milestone, that will help convert South Africa’s immense solar resource into clean and sustainable power that can be stored, and complements more intermittent renewable energy sources. This benchmark initiative continues the drive for green energy in South Africa reinvigorated at COP17 in Durban a year ago.” said Pim van Ballekom, European Investment Bank Vice President responsible for sub-Saharan Africa.
European Investment Bank support was formally agreed at the financial close of the project during the official closing ceremony for REBID 1 projects.
The Khi Solar One project consists of a 200m high tower and more than 4,500 heliostat moving mirrors to reflect light onto the tower. It is located on a 600 hectare site close to Upington, in South Africa’s Northern Cape Province. Jointly owned by Abengoa, the Industrial Development Corporation (IDC) and the Black Economic Empowerment (BEE) program, the 50 MW project will be Abengoa´s third commercial solar tower and its first outside of Spain. The South African plant will have more than double the capacity than the last tower Abengoa built in Andalucia. Khi Solar One will use concentrated solar technology that harnesses solar radiation by focusing it onto a small area in order to produce steam, which drives a turbine and produces electricity. Advanced dry cooling technology will reduce water consumption by two thirds.
The Khi Solar One plant will sell its electricity to South Africa’s state owned electricity utility, Eskom, for 20 years, agreed under a power purchase agreement (PPA). An average of 600 construction jobs on average will be created during the construction period per annum and around 35 full-time plant operations employees. It will be able to store thermal energy for 2 hours and will prevent approximately 183,000 tons of CO2 emissions per year.
The Khi Solar One scheme was financed using a project finance framework and is expected to attract developments, investors and lenders to support other renewable energy schemes and secure broader support for financing innovative renewable projects in South Africa. IFC, FMO, Proparco, IDC and the Development Bank of South Africa (DBSA) are also supporting the project.