Norway firm budgets P650m for Phikwe solar plant

Mbongeni Mguni | Monday March 27, 2023 06:00

Free but pricey: The natural raw material for solar is free, while operating costs are also very low. However, the high start-up expenses are where most projects flounder

The Norwegian firm won a highly contested tender for the contract last August and this week published an estimate for the costs, as part of disclosures in its annual report.

The project is being done on an Independent Power Producer (IPP) basis, where Scatec will bear the costs of building, running, and maintaining the plant with the Botswana Power Corporation (BPC) purchasing the power under a 25-year agreement.

Scatec directors said of the $49 million required for the Phikwe plant, 70% of the amount would be raised through non-recourse project debt and the balance funded via equity from partners.

“The solar project is the first of its kind in the country,” the directors stated. “Scatec currently owns 100% of the project and will provide Engineering, Procurement, and Construction services, as well as asset management, operations, and maintenance services.

While significant in size for Botswana, the Selebi-Phikwe project is the smallest of Scatec’s 'backlog' projects, meaning those it plans to implement this year. These range from a 380MW solar project in Tunisia to a 260MW hydro and solar plant in Egypt.

For Botswana, however, the Selebi-Phikwe project is key to proving the viability of solar in the national grid. The 50MW represents about 14% of Botswana's off-peak consumption of about 365MW. The country's power demand peaks at about 600MW and is currently powered completely by fossil fuels except for a 1.3MW solar plant set up in 2012 and funded by the Japanese government as a trial for renewables in the country.

Government is finalising a similar tender for a 50MW plant in Jwaneng after the first round of bidding did not identify a suitable contractor.

Minerals and Energy minister, Lefoko Moagi recently told Parliament that government was fast-tracking projects under the 20-year Integrated Resource Plan to attain a 30% contribution of renewables to national generation by 2030.

“There has been substantial uptake of the renewable energy programme as witnessed by the continued implementation of two by 50MW solar photovoltaic power plants in Selebi-Phikwe and Jwaneng as well as the development of the 12 solar PV grid-tied electricity generation mini plants ranging in the order of one to 4MW across the country with a total generation of 35MW. “This is very important as the country has already committed to addressing climate change issues by reducing greenhouse gas emissions by 15% by 2036,” he said.

While the Phikwe and Jwaneng plants are closer to development, the country’s single largest renewable energy plant will be a 200MW Concentrated Solar Power station due to be operational by 2027. Four bidders have been shortlisted for the contract and include Power China Resources Limited and Shandong Electric Power Construction Corporation III consortium, another partnership involving the China-Africa Development Fund and Shouhang High Tech Energy, as well as ACWA Power Company, and Cobra Industrial Services.