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First utility scale commercial and industrial wind farm in South Africa

The ACED-IDEAS-REATILE Consortium has reached financial close with its lender Rand Merchant Bank on the 69MW Msenge Emoyeni Wind Farm. 

This marks the effective date of the Power Purchase Agreement (PPA) between Sasol South Africa Limited (“Sasol”) and Msenge for the supply of renewable energy to Sasol’s Sasolburg site via a wheeling arrangement. The power Sasol is purchasing from Msenge will be used to secure renewable energy supply for green hydrogen production. 

African Clean Energy Developments (“ACED”) represents a consortium of co-sponsors and equity investors consisting of ACED, African Infrastructure Investment Managers (“AIIM”) and Reatile Renewables (Pty) Ltd (“Reatile”). ACED and AIIM are co-sponsors and the equity in Msenge is owned 62% by AIIM, through its flagship IDEAS Fund, and 38% by Reatile. Rand Merchant Bank, a division of FirstRand Bank Limited (“RMB”), has partnered the consortium as sole Mandated Lead Arranger for the project. 

The Msenge Wind Farm is the first utility scale private wind farm in South Africa with its power wheeled across the national electricity grid. It is also the first of several renewables projects that the consortium intends to bring into construction in 2023. ACED is a leading renewable energy developer that has already spearheaded the delivery of more than 1 200MW of renewable energy under the Department of Minerals and Energy’s REIPPPP process and 30MW in the commercial and industrial market. 

The energy will originate from Msenge wind farm, located near the town of Bedford, about 200km North of Gqeberha in the Eastern Cape province of South Africa.  The farm was originally developed by Windlab South Africa but has been acquired, further developed and financially closed by ACED and AIIM. ACED will also manage construction and another AIIM affiliate, Energy Infrastructure Management Services (EIMS), will manage operations once construction is complete. 

Aside from needing to resolve the country’s power crisis, the South African government has prioritised the manufacturing of green hydrogen for strategic industrial usage. Sasol, the ACED-IDEAS-Reatile Consortium and Msenge Wind Farm are playing a role in both. Green hydrogen is a key component of a low carbon energy sector which will enable the decarbonisation of critical sectors of South Africa’s economy. Sectors that will benefit include hard-to-abate industries such as transport, refining of metals and cement, heat generation and back-up power supply. 

James Cumming, ACED’s General Manager, highlights: “ACED are very proud to have reached financial close and construction commencement on this much needed South African first, and we look forward to getting to the commercial operation date on Msenge for Sasol. It’s an amazing achievement by a large team of many businesses and advisors, that comes with a huge amount of hard work and sacrifice that we are very grateful for. We look forward to doing more of that in 2023 and beyond!”. 

AIIM Investment Principal Sechaba Selemela noted that the transaction was significant as it represented AIIM’s ongoing commitment to finding alternative energy solutions to South Africa’s current electricity crisis.  

“It also enables South Africa’s transition towards greater energy security based on clean energy production,” Selemela said. 

Through the IDEAS Fund, AIIM has funded projects which together contribute around 25% of the renewable energy currently powering South Africa’s grid and abating higher levels of load shedding on a daily basis. The Fund currently has a renewable energy portfolio valued at more than R 10-billion.