PIC puts R5bn into Northern Cape renewable energy projects

RENEWABLE energy projects received a boost with the announcement on Wednesday of two new solar power plants to be built in the Northern Cape.

The Public Investment Corporation (PIC) will invest R4.4bn, buying a 20% stake in each plant and providing debt funding for both totalling R600m. Worth R22bn, the Ilangalethu and Xina power stations are expected to contribute a combined 200MW to the national electricity grid. It usually takes two years to build a solar plant.

This is the largest single investment in SA’s solar power infrastructure. Since the government started inviting private investors to build renewable projects to provide electricity, 21 deals with a total capacity of just more than 1,000MW have been signed.

The government has set a target of producing 3,625MW of power from renewable sources, including wind and solar, by 2030.

So far it has concluded offtake agreements in three bidding rounds under the renewable energy independent power producer procurement programme.

The government hopes that independent suppliers will be able to help close the electricity supply deficit that Eskom has been struggling with since 2008. This was when the power utility was first forced to introduce power rationing as a result of demand outstripping supply and breakdowns in its ageing fleet of coal-fired electricity plants.

The PIC described the investments as one of the ways in which it could contribute to the expansion of the national grid and electricity provision. “Indirectly, we purchase bonds, which are used to fund electricity projects,” said CEO Daniel Matjila.

The company that manages the pensions of state employees said it had already contributed funding to seven other renewable projects in the past, which would contribute 554MW when completed. It would continue to invest in renewable energy projects.

“The mandate hangs on six pillars, one of which is investment in projects that are focused on environmentally friendly and sustainable projects,” the PIC said.

Ilangalethu was first awarded a contract to build a 125MW concentrated solar plant in the Northern Cape in 2011.

By Sikonathi Mantshantsha, BusinessDay, South Africa