Scatec secures R3bn deal for South Africa’s first major battery storage project

Norwegian renewable energy group, Scatec ASA has reached financial close on a groundbreaking R3 billion battery energy storage project in South Africa’s Northern Cape.

The 103MW / 412MWh facility, the first of its kind in the country, marks a milestone in South Africa’s renewable energy transition and grid stabilisation efforts, the company said on Friday.

Scatec is set to begin construction on the Mogobe battery energy storage system (BESS) facility near Kathu in the Northern Cape. The project, awarded under the first bid window of the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP), represents a major step forward in South Africa's energy infrastructure development.

The Mogobe BESS project has secured a 15-year power purchase agreement (PPA) with the National Transmission Company of South Africa. Under the agreement, Scatec will receive payments for making the storage capacity available, which will be used to balance the national grid.

Terje Pilskog, Scatec CEO said: “The Mogobe BESS project is a first of its kind and reaffirms our standing as a leading renewable energy player in South Africa. We continue to see attractive growth opportunities in the market.”

Pilskog added that Scatec continued to see attractive growth opportunities in the market based on the need for growth in power generation, its strong position in the country and its competent local team.

The total estimated capital expenditure is R3bn - Scatec ‘s engineering, procurement and construction (EPC) contracts comprises about 83% of total capex.

On project financing, R2.7bn would comprise non-recourse project debt, with Standard Bank of South Africa the lead arranger. In terms of the equity structure, Scatec would hold 51%, Perpetua Mogobe (RF) 46.5%, and Mogobe Local Community Trust 2.5%.

Roar Haugland, Scatec’s Sub-Saharan Africa executive vice-president said dispatchable energy and grid infrastructure were cornerstones to the sustainability of South Africa's current and future energy system.

“By unlocking more grid capacity, we are enabling further electricity access, as well as enabling more renewable energy grid connections in years to come,” he said.

The Mogobe BESS project builds on Scatec’s previous successes, including hybrid solar and battery storage projects at Kenhardt. It represents one of Africa’s first and largest standalone dispatchable BESS systems, strategically located near high power demand centres.

Standard Bank said this facility represented a significant step forward in South Africa’s energy transition.

“Standard Bank is proud to continue our long-standing partnership with Scatec as the lead arranger for the groundbreaking Mogobe BESS project,” said Rentia van Tonder, head of power in the Corporate and Investment Banking at Standard Bank of South Africa.

“We’re committed to financing innovative energy solutions that drive sustainable development and economic growth in South Africa and across the continent.”

Scatec, which builds, owns, and operates plants with 4.7GW in operation and under construction across four continents, will serve as the engineering, procurement and construction provider, and will also provide operations and maintenance and asset management services for the project.

This project is set to play a crucial role in stabilising South Africa’s power grid, facilitating the integration of more renewable energy sources, and supporting the country's transition to a more sustainable and reliable energy system.