EIB to fund South African solar power project

The European Investment Bank (EIB) will provide a ZAR2.8bn (€210m) loan to Ka Xu Solar One for the construction of 100MW concentrated solar power plant in north of Pofadder, Northern Cape, South Africa.

The loan, which is the first 20-year credit facility provided by the EU member institution, will be provided through FirstRand Bank Group and its subsidiary Rand Merchant Bank (RMB).

Around €110m will be on-lent by RMB to help secure financing for Ka Xu Solar One project, evwind reports.

RMB deal senior transactor Hugh Hawarden said that by accessing EIB funding, RMB is able to offer long-term finance to its clients at competitive rates and EIB, as a development finance institution, gets to participate more broadly in the South African renewable energy market.

"RMB has already closed and committed over ZAR14bn ($1.37bn) to nine solar and wind projects in the first two rounds of the REIPPPP," Hawarden added.

"As underwriter of senior and mezzanine finance, RMB is supporting a further 17 bids in the third round of the program, the results of which are due to be announced at the end of the month."

The goal of the project is to improve the supply of reliable, sustainable energy in South Africa and produce enough power to fulfill the needs of 60, 000 households during periods of peak consumption.

The project will leverage new technology with storage capacity that allows energy to be dispatched in the evening peak hours and when overcast.

The plant will include a field of pivoting concave mirrors to focus solar rays onto a small area to produce steam.

Under a 20-years power purchase agreement, the output of the project will be sold to Eskom.

Once completed, the project will be jointly owned by Abengoa, Industrial Development Corporation, and a community trust.

The plant, which is expected to begin operation in June 2014, will employ around 800 workers during the construction phase, with around 100 permanent employees once completed.