Ilangalethu CSP 1 concentrated solar power project

June 22, 2016

Project description

The Ilangalethu CSP1 Project is a thermal renewable energy power station that utilises concentrated solar power (CSP) technology, which uses mirrors to concentrate the sun to produce steam that is used to drive a conventional steam turbine, which in turn drives a generator to produce electricity.

The Ilangalethu CSP 1 power station is a 100MW parabolic trough semi-peaking plant with a thermal energy storage system, capable of storing energy for up to five hours. The power station is located about 30 kilometres east of Upington in the Northern Cape Province of South Africa.

The Ilangalethu CSP1 Project was awarded preferred bidder status under the third bid window of the South Africa Renewable Energy Independent Power Producer (REIPPP) Programme and was undertaken by a consortium led by black industrialist entity Emvelo Holdings Proprietary Limited (Emvelo) and supported by the Industrial Development Corporation of South Africa Limited (IDC), Hosken Consolidated Investments Limited, Public Investment Corporation (SOC) Limited and Grazigystix Proprietary Limited, a wholly owned subsidiary of Grupo Cobra South Africa Limited, of the ACS Cobra Group (Cobra). Our Johannesburg team advised Emvelo, IDC and Cobra (as Sponsors) and Karoshoek Solar One (RF) Proprietary Limited (as Borrower).

Status

The Project reached Financial Close on February 25, 2015.

Construction on the Project commenced on October 1, 2015 and is expected to be completed within 36 months.

Scope of work

Our Johannesburg team advised the Borrower and Sponsors in relation to the project financing of development, construction, operation and maintenance of the Project, as well as the equity financing of the Project

  • Advised the Borrower and Sponsors in relation to all aspects of the Project, including, debt financing, equity financing, grid connection, construction, maintenance and operation, land, environmental and corporate
  • Advised Borrower and Sponsors in relation to strategic commercial and finance considerations in respect of the debt and equity financing
  • Reviewed and commented on all finance documents (including facilities agreement, security documents and equity documents)
  • Advised the Borrower and Sponsors on all government agreements and construction related agreements and performance guarantees
  • Drafted the corporate documents of the members of the consortium and Borrower
  • Negotiating amendments to land documents and corporate documents and advising on environmental issues and government regulatory issues in respect of the land documents
  • Managed and coordinated financial close of the Project on behalf of the Sponsors and Borrower

Main highlights

One of the most active and lucrative areas in the South African energy and infrastructure market continues to be the REIPPP Programme. Given the focus on energy and power in South Africa and Africa generally, the Ilangalethu CSP1 Project is both geographically and commercially important.

Apart from the significant job-creating opportunities, the Ilangalethu CSP1 Project promises to deliver over half a billion Rand annually to socio-economic development over a 20 year period. The surrounding areas will benefit from these socio-economic development initiatives.

The Ilangalethu CSP1 Project is geographically significant for Emvelo as the project forms part of the Emvelo Karoshoek Solar Valley Park, a renewable energy and real estate city development in the Northern Cape Province of South Africa, the solar valley concept was conceived by Emvelo with the aim of rolling out up to 1.1GW of concentrated thermal power stations capable of generating baseload solar electricity across the 34,000 hectare site.

The successful project financing transaction of the Ilangalethu CSP1 Project is commercially significant for IDC, a national development finance institution, set up to promote economic growth and industrial development in South Africa, which has assumed one of the most prominent roles in the financing of renewable energy projects in South Africa.

With specific reference to the South African context, the deal is significant from a black economic empowerment (BEE) perspective as Emvelo and its consortium partners are each representative of and committed to the policy outcomes of the South African government’s BEE objectives.

The Ilangalethu CSP 1 Project has won the following awards: 2015 Project Finance International Middle East and Africa Solar deal of the year and the 2015 EMEA Finance Best Renewables Deal of the year.