Power and infrastructure finance
Investec has partnered with EDF Renewables (South Africa) to reach financial close on the third of the three Koruson 1 projects
Investec Power and Infrastructure Finance acted as joint mandated lead arranger and sole hedge coordinating bank for interest rate risk mitigation on the projects.The third of the three Koruson 1 projects has reached financial close, after the first two projects reached financial close in November 2022. The Coleskop wind energy project, with an installed capacity of 140MW, is located in the Umsombomvu Local Municipality on the boundary of the Eastern Cape and Northern Cape Provinces.
The Koruson 1 projects, developed by a highly skilled consortium led by EDF Renewables (South Africa), together with its local BEE partners, H1 Holdings, GIBB-Crede and a local community trust, were awarded preferred bidder status in October 2021, under Round 5 of the Renewable Energy Independent Power Producer Procurement Programme, and are the first projects to reach financial close under the programme.
The projects will sell power to Eskom under a 20-year Power Purchase Agreement. In addition, the Koruson Main Transmission Substation will be constructed as part of the Coleskop project, on behalf of Eskom and transferred to Eskom on completion.
The three projects, with a combined installed capacity of 420MW, will deliver power into the national grid by the end of 2024, and will contribute to the energy needs of up to 193,000 households. During the two-year construction period, the three projects will provide 400 permanent jobs to South African citizens, with at least a further 35 permanent jobs during the 20-year operating period. Approximately 40% of the project value will comprise local content, and during operations, 1.2% of revenue generated by the projects will be applied to socio-economic development initiatives for nearby local communities.
Through successful collaboration, Investec Trade and Risk Management executed a portion of the foreign exchange rate hedging and acted as sole hedge coordinating bank for the interest rate hedges. In addition, Fund Finance and Coverage issued Letters of Credit in support of the BEE partners’ equity contribution.
About EDF Renewables
EDF Renewables (South Africa), the lead sponsor in the transactions, is a locally based, fully integrated independent power producer that develops, finances, builds, owns and operates commercial renewable energy generation facilities, including wind, solar PV, battery storage and hybrid solutions.
EDF Renewables (South Africa) is a subsidiary of EDF Renouvelables, the renewable energy arm of the global utility EDF, which is majority owned by the French government.