South Africa Mainstream Renewable Power Khobab Wind (RF) Pty Ltd; Loeriesfontein 2 (RF) Pty Ltd; Noupoort (RF) Pty Ltd; Kangnas (RF) Pty Ltd; and, Perdekraal East (RF) Pty Ltd

Project description

This summary covers equity and shareholder loan investments by Lekela Power B.V. (Lekela) in five wind farm projects (the “Projects”) in the Northern and Western Cape Provinces in South Africa. The investor has applied for a MIGA guarantee for equity and shareholder loan investments of total up to $36.5 million and  $109.5 million, respectively, for a period of up to 20 years against the risk of expropriation, transfer restriction, breach of contract, and war and civil disturbance.

The proposed projects consist of the construction, ownership, operation and maintenance of five wind energy generating facilities with capacity ranging from 81MW to 140MW. The electricity output will be sold to Eskom SOC under a 20 year power purchase agreement. The projects were awarded under Round 3 and Round 4 of the South African Renewable Energy Independent Power Producers Procurement program (REIPPP).  

Environmental Categorization

The project is a category A under MIGA’s Policy on Environmental and Social Sustainability due to potentially significant adverse and diverse impacts related to mortality caused by seasonal and other bird movements across the project sites and potential loss of habitat of high conservation value. In addition, there is an incremental risk of cumulative impacts on birds from several wind farms and solar projects currently under development regionally and in some cases near the Projects. Click here to view the Environmental and Social Review Summary.

Development Impact

Renewable independent power producers have grown rapidly in the past five years.Although South Africa remains heavily dependent on coal, the government plan is to have 17.8 gigawatts of renewable capacity by 2030.

Supporting the development of these wind power projects fits in with the Government of South Africa’s renewable energy plan of helping develop clean, renewable and low-cost electricity in the country.The projects are expected to (i) support the diversification of South Africa’s energy mix, (ii) contribute to increased generation capacity (iii) reduce carbon omissions by producing green, emission-free electricity (iv) create employment opportunities (v) contribute to local community development through financial benefits generated by the projects and (vi) provide strong demonstration effects in South Africa and neighboring countries.

MIGA’s support for this project is aligned with the agency’s strategic priority in supporting investments in climate change and in continuing to increase MIGA’s activities in Sub-Sahara Africa.