The investment is the first of its kind in the Norwegian context: KLP is the first institutional investor in Norway which makes this type of investment. Norfund has negotiated the agreement with Scatec Solar, which is the first investment in an agreement between KLP and Norfund of co-investing NOK 1 billion in projects in developing countries to promote sustainable development. The investments will be made over a period of five years in renewable energy (solar, wind and water) and financial institutions, based on commercial risk and return assessments and with strict requirements for environmental and social sustainability.
From Scatec Solar's solar power plant in South Africa. Source: Scatec Solar
The solar plants will be built in Linde in Northern Cape and Dreunberg in Estern Cape, both sun drenched regions that boasts some of the best conditions for solar power in the world. They will provide significant development impact by increasing the share of renewable energy production in South Africa and improve the balance between supply and demand in the power supply. After decades of under-investment in the power sector, the country experienced widespread power shortages in 2008 and 2009 and is still struggling with a low production of electricity. Scatec Solar's two new plants will together produce more than 225 million kWh annually, enough to meet the electricity needs of 53 000 South African households and reduce CO2 emissions by almost 190 000 tonnes. At the same time the investment will create jobs and contribute to the transfer of technology and expertise through the use of local subcontractors for construction, operation and maintenance.
Scatec Solar has so far been awarded three PV projects through the South African Department of Energy's program to increase the utilization of the country's major renewable energy sources (Renewable Energy Independent Power Producer Procurement Programme). The company is now a leading player in the development of solar energy in the country and expects to complete its first solar park in Kalkbult of 75 MW in October this year. The final agreements for the solar plants in Linde and Dreunberg totaling 115 MW were signed by Scatec Solar with the South African Department of Energy earlier this month and involves total investments of about NOK 2 billion.