Standard Bank funds SA's largest solar project

From the newsletter

South Africa's leading bank in assets, Standard Bank, and renewable energy aggregator NOA Group have finalised financing for the 349 MW solar PV project in South Africa. Set to be the country's largest single-asset solar facility, the plant will supply power to corporate clients in mining, manufacturing data centres and real estate via the national grid.

• The deal marks Standard Bank's third financing agreement with NOA Group this year, showing significant demand in the market. This latest deal follows the financing of two wind projects, totalling 234.5 MW.

• South African manufacturers are rushing to embrace renewables to secure their European export markets, with the Carbon Border Adjustment Mechanism (CBAM) becoming fully operational in 2026, targeting carbon-intensive imports such as iron, steel and cement.

More details

• NOA is backed by African Infrastructure Investment Managers, part of Old Mutual and one of Africa's leading infrastructure private equity fund managers. It has a portfolio of over 740 MW of grid-secured projects, with several currently in development and expected to become operational from 2026. Most of these projects have secured power purchase agreements.

• Standard Bank will provide a guarantee facility, which acts as a financial catalyst, enabling NOA to free up equity capital that would typically be used as credit support.

• “The guarantee facility enables us to deploy equity more efficiently, ensuring the rapid rollout of projects while supporting liquidity across our development pipeline. It also strengthens our position as a credible aggregator in energy supply agreements with commercial and industrial off-takers,” said NOA CEO Karel Cornelissen.

• Renewable energy developments in South Africa have taken a new angle with the enactment of the Electricity Regulation Act 2023, which liberalised the market. Independent power producers are striking deals directly with consumers and aggregating demand, then wheeling electricity through Eskom's grid, enabling access to renewable energy, especially for commercial and industrial customers.

• The act has allowed energy companies to participate across the electricity value chain. Some companies are securing licences across different segments of the electricity supply chain. For instance, NOA Group was granted a trading licence by the energy regulator NERSA in January. Through NOA Trading, a subsidiary formed after that, it can trade in electricity.

• The demand for renewable energy is very high given the risks South Africa is facing with the CBAM becoming fully operational in 2026. The country exports goods worth $135 billion to countries with net-zero targets and is at high risk of losing some. The South African Reserve Bank warns CBAMs could cut national exports by up to 10%. The EU CBAM alone could reduce exports to the bloc by 4% by 2030.

• Growth in renewables is expected to save the country from any market loss, and despite the progress made in generation capacity, the transmission network is constrained. Energy developers are integrating projects in such areas with battery storage to allow for load shifting and to maximise the export of clean energy from their assets.

Our take

• Demand for renewables in South Africa is poised for an accelerated increase, driven by industrial manufacturers of export products keen to meet the growing global demand for lower-carbon production.

• Market liberalisation, combined with the aggregation of demand, is expected to make power more affordable. This is because energy companies will be motivated to create competitive deals to attract a wider range of customers.

• However, grid constraint bottlenecks are expected to slow down the integration of renewables into the national grid. The government must therefore act swiftly to build the necessary transmission infrastructure and battery storage plants to enable load shifting.