US$586M financing extended to two South African solar projects

Two South African renewable energy projects Letsatsi Project and the Lesedi Project will benefit from US$586 million funding from U.S. developer of utility-scale solar projects SolarReserve, the Kensani Group, an experienced financial advisory player in South Africa and Intikon Energy, a South African developer of renewable energy projects.

The project aims to plug in 75 megawatts of electricity in the South African grid to help the communities in the two areas. Observers say it will be the largest “project finance transaction” the country has ever made on renewable energy.

It will power over 50,000 homes in South Africa through solar energy and is expected to be completed by mid-2014. A percentage of the revenue, approximately 510 million Rand (US$59 million) from the project will be set aside to aid the surrounding communities in different levels.

The projects are expected to yield 600 construction jobs, 100 permanent operation jobs while providing the rural areas with development programs, skills and technology transfers. Indirect jobs from the two projects will amount to 2,640 jobs, during construction and once the projects are completed.

“SolarReserve and its partners are pleased to be major suppliers of clean energy to South Africa, and we look forward to commencing construction of both projects, which will create jobs and provide further economic benefits for the region,” Kevin Smith, chief executive of SolarReserve said.

He added: “Financial close of these two South African projects marks a significant achievement for SolarReserve’s international development and expansion.

“We have further advanced photovoltaic and solar thermal projects in development in the country under this progressive program initiated by the South African government, and look forward to continuing our work here.”

According to Wandile Motlana, Chairperson of the Kensani Group, the successful financial closure of the first round of REIPPPP projects is precedent setting on a global scale and has once again demonstrated the South African Government’s commitment to the enhancement of national infrastructure which will be a catalyst of economic development and job creation.

“Kensani and our partners congratulate the Department of Energy on an efficient and successful process and look forward to a positive partnership with Government,” Motlana said.

Eskom, a major power dealer in South Africa has already entered into agreement to buy the power from the projects.

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