THE INDUSTRIAL Development Corporation (IDC) said yesterday that its funding of black-owned Pele Green Energy, which is involved in South Africa’s largest renewable energy project, Redstone, underscored its “commitment to transformation” as well as improving security of energy supply in the country.
Redstone forms part of the South African Renewable Energy Independent Power Producers’ Procurement Programme. After a long delay, last week Saudi-based ACWA Power announced the it has secured R11.6 billion to fund the 100MW Redstone concentrated solar power plant, after being awarded the contract in 2015 and expected commercial operations to start in the fourth quarter of 2023.
The IDC’s exposure in the renewable energy space is currently more than R13bn.
It is a proud moment for the IDC, which has not been immune to the Covid-19 financial disruption. According to its 2020 report, the national development finance institution had to re-evaluate its investment portfolio as at March, 31,2020 amid a deterioration in the performance of the IDC’s clients, which had resulted in higher levels of impairment.
Last year as it “weathered the perfect storm”, its funding to black industrialists plummeted 48 percent to R3.1bn. However, over the past five years it had provided R24.5bn in funding support to black industrialists over the past five years, which Minister of Trade and Industry Ebrahim Patel said in the report would amount to R42.6bn if support for all black-empowered firms were collated.
IDC chief executive TP Nchocho said yesterday, “Our country’s energy deficit is well documented. What is important is that South Africa is now using modern technologies, including renewables, as we transition to adopting clean sources of energy. And the Redstone project demonstrates just that. For us as the IDC, we have identified several opportunities in the renewable build programme, top of which include skills and knowledge transfer and local economic empowerment through funding community trusts.”
Through its funding into the energy sector, the IDC said it sought to contribute towards South Africa’s Just Energy Transition and help improve security of energy supply in the country and the rest of the continent in support of growing economies. The IDC said it funded energy generation and efficiency projects that reduced greenhouse gas emissions or avoided them altogether.
The project is expected to reach close to 44 percent local content on procurement during the construction period, create more than 2 000 construction jobs at peak, with about 400 from the local community, and create approximately 100 permanent direct jobs during the 20-year operating period.
The IDC and ACWA Power also co-funded the community’s shareholding participation in this project, while the IDC added that it would appoint a socio-economic development specialist to support and advise the community representatives.
“Of significance to the IDC and in support of our transformation imperatives is that, our funding to this project has been customised to ensure full unencumbered ownership to Pele well before the end of the 20-year term of the Power Purchase Agreement (PPA) and the flow of tangible economic benefits to the community throughout the PPA term,” said Nchocho.
Gqi Raoleka, the managing director of Pele Green Energy, said “We … do not take lightly the opportunity we have been granted to expand our installed capacity, diversify our technological capabilities and contribute positively to the development of the communities that will host the power plant.”