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2023 Annual - (released February 2024)

SA's quarterly Private Equity & Venture Capital magazine

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Lighting the way in SA’s energy crisis

by Michael Avery

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In a significant development for South Africa’s renewable energy sector, EDF Renewables has successfully achieved commercial and financial close on the Umoyilanga project, a pioneering hybrid power initiative under the Risk Mitigation IPP Procurement Programme (RMIPPPP).

 

The project, awarded to the consortium of EDF Renewables and Perpetua Holdings, combines solar, wind and battery storage technologies, offering a dispatchable and reliable power solution to the national electrical grid.

The commercial and financial close, reached on 28 November 2023, signifies a crucial milestone in the journey towards cleaner and more sustainable energy solutions. Following the signing of the Power Purchase Agreement (PPA) with Eskom and the Implementation Agreement (IA) with the Department of Mineral Resources and Energy earlier in August, Umoyilanga is set to operate as a virtual power plant across two sites – Avondale in the Northern Cape and Dassiesridge in the Eastern Cape.

With 115 MW of solar PV and 30 MW of battery storage at Avondale, and 63 MW of wind and 45 MW of battery storage at Dassiesridge, the project will provide 75 MW on-demand power from 05:00 to 21:30. This groundbreaking approach showcases the capability of renewable energy to deliver reliable and competitive power, addressing the country’s energy challenges.

The unique synergy of wind, solar and battery resources will be orchestrated by a sophisticated energy management system, ensuring optimal power supply in real time, based on weather forecasts and Eskom’s requirements. The Umoyilanga project is expected to meet the electricity needs of 120,000 households for two decades, contributing significantly to the national grid and reducing the carbon footprint.

 

Strategic Partnerships and Job Creation

To execute this ambitious project, EDF Renewables has secured contracts with major industry players, including China Energy Engineering Corporation (CEEC), Vestas, Power Construction, Adenco Construction, and Sungrow Power Supply. The commitment to local development is evident in the creation of around 890 job opportunities for South African citizens during the construction phase, and a dedication of more than 40% of capital expenditure to local content.

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Tristan de Drouas, CEO of EDF Renewables in South Africa, expressed the team’s pride in reaching this crucial milestone. He stated, “This flagship project demon-strates that wind and solar technologies, combined with batteries, can deliver flexible power competitively.”

Logan Govender, Director of Perpetua Holdings, echoed this sentiment, highlighting the solid collaboration and sense of partnership between the two entities. The Umoyilanga project not only represents a significant step forward for the consortium, but also aligns with the South African government’s commitment to developing low-carbon energy solutions.

British International Investment (BII): a continued commitment to South Africa

Meanwhile, British International Investment (BII) has reaffirmed its commitment to South Africa with a 

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R125m (US$6,7m) investment in two 140 MW wind farms in the Northern and Eastern Cape. This investment is part of a larger strategy to provide clean and affordable energy solutions, aligning with South Africa’s energy priorities.

BII has been a long-term partner in South Africa since 1995, with a portfolio that stands at $285m, supporting over 54,500 jobs annually. The investment in the wind farms is part of a three-project cluster, co-developed by H1 Capital and EDF Renewables, set to complete construction in 2024.

Nick O’Donohoe, CEO of BII, emphasised the DFI’s special relationship with South Africa, and its ambition to help solve pressing development challenges, particularly in the area of reliable, clean energy. He stated, “BII’s strategic objective in South Africa is to invest its patient, long-term capital to continue to meet the needs of those whose mission and purpose are to strive for equality, inclusive economic growth, and a more sustainable future.”

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Addressing South Africa’s Energy Crisis

South Africa’s severe energy crisis, characterised by daily electricity cuts averaging eight hours, has economic implications for the entire continent, costing 2% to 4% of its GDP annually. BII’s strategic investments in clean and renewable energy, including partnerships with local entities like H1 Holdings, demonstrate a commitment to supporting a just energy transition.

In a broader context, BII’s emphasis on technology and digital transformation is positioned to address inequality and accelerate growth in South Africa. The DFI’s collaboration with South African-based Liquid Intelligent Solutions and Tyme Bank underscores the significance of digital infrastructure in bridging gaps and providing crucial services to underbanked populations.

As South Africa grapples with energy challenges, these investments from EDF Renewables and BII signal a transformative shift towards sustainable, clean energy solutions. The Umoyilanga project and the wind farm investments are not only significant steps in addressing the country’s energy needs, but also exemplify the global commitment towards a more sustainable and equitable future.

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