Northern Cape solar project – a major step towards a renewable future

The R5 billion refinancing initiative for the 50MW ACWA Power Solafrica Bokpoort CSP plant marks a new dawn for the country’s pioneering Renewable Energy Independent Power Producer Procurement (REIPPP) programme – a public-private partnership that promotes buy-in from independent energy producers for the development of utility-scale renewable energy projects.

This transaction is particularly significant in the context of the government's recently gazetted plans to increase the country’s reliance on affordable, reliable and sustainable electricity through solar and other Independent Power Producer (IPP) projects.

Commissioned in March 2016 and located in the Northern Cape province to maximise the country's enviable solar resources, Bokpoort was one of the first CSP projects awarded under the REIPPP programme. 

The CSP plant uses 241,920 pivoting concave mirrors (or parabolic troughs) to focus solar radiation onto a tube containing heat transfer fluid. This fluid is then used to either generate electricity by driving the plant’s steam turbine or exchanges its heat into a thermal energy storage system – made up of 38,100 tons of environmentally-friendly molten salt, that can store power up to 9.3 hours. This stored energy can then be used to produce electricity on demand, day or night.

“The Bokpoort plant boasts 1,300MWh of thermal energy storage capacity, making it the biggest storage facility of all CSP plants in South Africa. This equates to approximately 9.3 hours of additional electricity supply,” Nandu Bhula, Chairman of the Board of Bokpoort CSP.

The benefit of a CSP plant, unlike a photovoltaic system, is its ability to provide energy even when the sun is not shining. The Bokpoort project operates on a 20-year Power Purchase Agreement (PPA) with Eskom, consistently producing electricity to meet South Africa’s peak demand periods in support of the grid.

The positive impact on the environment is significant with Bokpoort keeping nearly 4.5 million tons of carbon dioxide out of the atmosphere annually.

The Global Concentrated Solar Power (CSP) Market report, which provides forecasts for the sector from 2020 to 2025, estimates that the global CSP market was valued at US$1.107 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 10.37% over the forecast period to reach a total market size of US$2.001 billion in 2025.

In 2019 South Africa's largest CSP plant, Kathu, started operations in the Northern Cape. This plant provides a 100MW boost for the SA electricity grid, lighting up over 179,000 households. 

In South Africa there are currently eight large-scale CSP plants generating 700MW of power. In 2018, CSP accounted for 1% of the energy mix with wind (4%), solar PV (3%) and hydro (4%) making up the bulk of renewable energy capacity. According to the Integrated Resource Plan, which outlines new generation capacity for the next decade, 23GW of renewable energy will be added to the energy mix by 2030, constituting 39.6% of the country’s total installed capacity.

Since achieving commercial operations date (COD) in March 2016, Bokpoort has set new production records, including the African continental benchmark for 13 days (312 hours) of continuous operations on 23 October 2020 and, recently, an all-time record for maximum daily production at 1,077 MWh, recorded on 30 November 2020 at a daily load factor of 89.8%.

The initial build project attracted approximately R1.4 billion in foreign direct investment into South Africa, with almost 42% of the total project costs directed to local content and value-add in civil works, reinforcing steel, structure steel, local manufacturing, as well as pre-assembly and on-site assembling.

Bokpoort achieved another auspicious industry-first on 14 December 2020 when project financiers, led by Investec Bank, concluded the first refinancing transaction in the REIPPP programme and the largest infrastructure refinancing initiative implemented in South Africa to date.

“Accelerating South Africa's transition to a cheaper and more sustainable energy mix requires innovative funding solutions,” explains Andre Wepener, Head of the Power & Infrastructure Finance team at Investec Bank.

“This refinancing transaction increases gearing and creates more favourable debt terms, effectively reducing the project’s cost of capital. The structure unlocks a reduced tariff to Eskom under the PPA, which directly impacts the cost of electricity for South African consumers.”

The refinancing transaction extends the socio-economic and community impact of this greenfield project, which created roughly 1,300 jobs during the peak construction period. The project's skills development component during construction provided more than 100,000 training hours, covering safety training (20%), small tools use (20%), job training and skill-specific training (60%). The plant's continued operation provides permanent employment to 61 people.