The African Development Bank, acting in its capacity as the “Mandated Lead Arranger” – MLA, and Coordinating Bank for the ZAR 11.6bn total investment in one of South Africa’s largest renewable energy projects, a Redstone concentrated solar power – CSP, has announced achievement of the first debt draw down on the project whose commercial operation is billed to start Q4 2023. The African Development Bank will on its own commit ZAR 2.306 billion to the project which will provide power to about 200,000 households when completed.
The project, according to a release, has also secured financing from leading international and South African financial institutions including ABSA Bank, CDC Group, Development Bank of Southern Africa, DBSA, Deutsche Investitions- und Entwicklungsgesellschaft, DEG, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, FMO Investec Bank, Nedbank Limited, Sanlam Limited, and the Industrial Development Corporation of South Africa.
Redstone is led by ACWA Power, a leading Saudi developer, investor and operator of power generation, water desalination and hydrogen plants in 12 countries, and also the lead shareholder in the project, with Central Energy Fund, Pele Green Energy and the local community as co-shareholders.
Located in the Northern Cape Province of South Africa, the Redstone project will be equipped with a 12-hour thermal storage system that will deliver clean and reliable electricity to nearly 200,000 households round the clock. The project which is currently in its ninth month of construction has its engineering works already completed more than 58 per cent, with procurement and construction jobs standing at over 45 and 6 per cent respectively. Redstone has facilitated approximately ZAR 7 billion in foreign direct investment, geared towards funding and supporting the strategic energy transition goals of the country.
According to the release, the Redstone CSP will offset an estimated 440 metric tons of CO2 emissions per year while also providing value-adding ancillary services to Eskom, making it the first renewable energy project to offer ancillary services in the country. Certified under the Climate Bonds Standard and Certification Scheme and aligned with the goals of the Paris Climate Agreement, the project seeks to limit global warming to under 2 degrees Celsius, offering tangible socioeconomic value through utilizing about 44 per cent local content via contract supply mechanisms and job creation, direct and indirect.
AfDB’s Vice President in charge of Power, Energy, Climate Change and Green Growth Dr. Kevin Kariuki said: “Redstone will play an important role in South Africa’s decarbonization efforts. We are therefore pleased to have played such a prominent role in the project’s structuring and financing. Furthermore, the Bank looks forward to playing an even bigger part in supporting South Africa’s just energy transition by harnessing the abundant renewable sources of energy through innovative partnerships with the private sector.”
And Wale Shonibare, AfDB Director of Energy Financial Solution and Policy Regulations said: “This project marks a landmark project finance investment in South Africa and demonstrates the commercial viability of CSP technology in enhancing clean energy generation. Redstone’s capability to convert solar power into baseload energy at scale, aligns with AfDB’s Climate Change & Green Growth Policy and Strategy of investing for clean and inclusive growth.”
The Director General of the Southern African Region Leila Mokaddem has this to say: “The African Development Bank is privileged and proud to play the MLA and Coordinating Bank’s role for this largest renewable project in South Africa alongside our partners ABSA, CDC, DBSA, DEG, FMO, Investec, Nedbank, and Sanlam, reflecting our shared objectives of supporting the energy transition to address the threat of climate change across Africa.”