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South Africa’s first biomass project reaches financial close

Apr 13, 2018
South Africa’s first biomass project reaches financial close

The first biomass project to be concluded under South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), the Ngodwana Energy Biomass Project, has reached financial close. Baker McKenzie’s energy and finance team in Johannesburg advised on the 25 MW biomass to power project, which will be fuelled using waste wood chips from Sappi’s plantations and its Ngodwana Mill.

The project was one of the 27 power purchase agreements (PPAs) under rounds 3.5 and 4 of the REIPPPP, signed by South African Energy Minister Jeff Radebe last week.

Jen Stolp, Partner in the Banking and Finance Practice at Baker McKenzie in Johannesburg said, “Heartfelt congratulations to Sappi and Fusion Energy, sponsors of the Ngodwana Energy Biomass Project, and Nedbank and Absa, the lenders to the project.  We are thrilled to have acted as lender counsel on the first biomass project to reach financial close under the REIPPPP, and the first REIPPPP project in Mpumalanga, which will bring much needed job creation and social upliftment to the region.”

“After a long period of uncertainty, the signing of Power Purchase Agreements (PPAs) and Implementation Agreements for the latest round of renewables is a very positive step for all South Africans, and for renewing investor confidence in the country,” she noted.

Kieran Whyte, Head of the Energy, Mining and Infrastructure Practice at Baker McKenzie in Johannesburg said that the recent signing of 27 PPAs acknowledged and reinforced the role to be played by the private sector, in partnership with the public sector, in supporting the diversification of South Africa’s generation mix and the implementation of various socio-economic policies.

The list of 27 projects comprised mostly solar photovoltaic (PV) or onshore wind developments (24 projects), but also included the Redstone Concentrated Solar Power (CSP) project and the Kruisvallei Mini-Hydro Project. In addition to the Ngodwana Project, Baker McKenzie’s team also advised on two of the solar photovoltaic (PV) projects signed last week.

“The renewable energy programme should act as a catalyst for energy transition in South Africa, based on an energy mix that is progressive, responsive to customer demands, and that will assist South Africa in discharging its sustainability obligations,” added Whyte.