South Africa’s independent power producers (IPPs) are set to roll out multibillion-rand battery energy projects to boost the country’s energy security.
Last week, IPPs Mulilo Renewable Project Development and Norwegian renewables firm Scatec announced significant investments in battery energy storage projects in the North West and Northern Cape provinces.
This, as South Africa sets its sights on adding more renewable energy sources to the national grid, which has been under pressure for many years.
Battery energy storage systems (BESS) are crucial for managing and storing energy, particularly from renewable sources like solar and wind. They work by storing electricity in batteries when production exceeds demand and releasing it when demand is higher than production.
Last year, power utility Eskom unveiled what it dubbed the first of its kind and the largest BESS project, not only in South Africa, but on the African continent – the Hex BESS site at Worcester in the Western Cape.
Scatec announced on Friday that it has reached financial close for the Mogobe BESS facility totalling 103MW / 412MWh, and is now making final preparations to start construction of the project in Kathu, North West.
Mulilo, in partnership with EDF International, also reached commercial close on the Oasis Mookodi BESS project under the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP), in Vryburg, North West.
Financing details
According to Scatec, Mogobe BESS was awarded a 15-year power purchase agreement (PPA) under the first bid window of the BESIPPPP in South Africa.
As part of the PPA, Scatec will receive payments for making the storage capacity available for the National Transmission Company of South Africa, which will utilise the capacity to balance the grid.
The firm notes the estimated total capex for the battery energy storage project is R3 billion ($170 million), of which Scatec’s engineering, procurement and construction (EPC) contracts account for approximately 83%.
It adds that the project will be financed by R2.7 billion ($154 million) of non-recourse project debt, with the Standard Bank of South Africa as mandated lead arranger, and the remaining by equity from the owners.
Scatec will own 51% of the equity in the project, with Perpetua Mogobe owning 46.5% and a holding company of the Mogobe Local Community Trust 2.5%.
The Norwegian firm will be the EPC provider, and provide operations and maintenance, as well as asset management services to the project.
“This marks a new milestone for Scatec in South Africa and for the renewable energy transition in the country. We continue to see attractive growth opportunities in the market based on the need for growth in power generation, our strong position in the country and our strong and competent local team,” says Scatec CEO Terje Pilskog.
“Replicating successes from our hybrid solar and battery storage projects at Kenhardt, we will proceed to construct one of Africa’s first and largest standalone dispatchable BESS systems. The project is located near Kathu, Northern Cape, close to high power demand centres.”
Mulilo, which did not disclose the financial details of the Oasis Mookodi BESS Project, says this is the first in the portfolio of three Oasis projects to reach commercial close, with Oasis Aggeneis and Oasis Nieuwehoop soon to follow in November.
According to the company, all three projects are scheduled for financial close and commencement of construction in November 2024. The three projects will reach their commercial operations dates in October 2026, it adds.
Portfolio boost
Mulilo points out that this is a significant milestone for the firm to reach a commercial close in the BESS space, including the signing of the PPA and implementation agreement by minister Kgosientso Ramokgopa, who represents the Department of Electricity and Energy, and the project sponsors.
Oasis Mookodi is a 77MW / 308MWh BESS project in the Vryburg area of the North West province and expands Mulilo’s existing projects, which consist of six operational sites comprising 420MW of both wind and solar PV farms.
Mulilo CEO Jan Fourie says: “This is a significant milestone for Mulilo, introducing BESS into our existing portfolio. We are cementing our position as a diversified IPP in South Africa, with the competency and depth of experience to address the country's energy needs.”
The firm says BESS projects are critical for South Africa’s electricity generation fleet to increase the country’s integration of variable renewable energy sources like solar and wind.
Fourie says: “The Oasis projects are three of the first five BESS projects awarded under the BESIPPPP programme to support the national grid. Implementations of technologies like these are essential for safeguarding the future of the South African energy landscape.”
Mulilo says with a combined capacity of 257MW / 1 028MWh, the three projects will be located in the Northern Cape and North West, providing storage to bolster the country’s electricity grid.
The projects will operate under a 15-year PPA with Eskom.
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