Norwegian renewable energy company Scatec has closed the financing for the three Grootfontein solar projects, located in the Western Cape province, South Africa.

Scatec secured the project financing as part of Norway’s Department of Mineral Resources’ Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2021.

The projects, which represent Scatec’s first assets in South Africa, are the first REIPPPP Solar PV projects in the fifth bidding round to reach financial close.

With a combined capacity of 273MW, the three solar power plants are estimated to cost around ZAR5.1bn ($270m), of which Scatec’s EPC contracts account for around 75%.

They will be financed through equity from the owners and ZAR4.5bn ($241m) of non-recourse project finance debt offered by Standard Bank of South Africa.

Scatec will be the engineering, procurement and construction (EPC) provider and provide operation & maintenance as well as asset management services to the power plants. Construction start is expected during the first quarter of 2024.

Once operational, Scatec will own 51% of the projects, with H1 Holdings, a local Black Economic Empowerment partner will own 46.5% and the Grootfontein Local Community Trust 2.5%.

The three solar plants will deliver renewable energy under a 20-year power purchase agreement, eliminating 630,000 tonnes of CO2 emissions annually.

Scatec CEO Terje Pilskog said: “South Africa is a focus market and this value accretive investment with project returns above our return hurdle, is in line with our strategy to grow profitably and build scale in Sub-Saharan Africa.

“We are now looking forward to starting construction next year and achieving commercial operation in 2025, while powering approximately 100,000 households in the region.”

Earlier this year, Scatec signed an agreement to divest its 42% equity interest in the 258MW Upington solar power plant for a gross consideration of ZAR979m ($52m).

The company has signed the agreement with a subsidiary of STANLIB Infrastructure Fund II, managed by STANLIB Asset Management Proprietary (STANLIB).