Discretionary managed fund Mahlako Energy Fund has concluded its investment in an industrial independent power generation project for the Harmony Gold Mining-commissioned 30 MW solar photovoltaic (PV) portfolio.

This project is among the first projects to be developed following changes to Schedule 2 of the Electricity Regulation Act.

The amended regulations allow for investment in new generation capacity of up to 100 MW without requiring a generation licence.

The investment facilitates one of South Africa’s largest solar PV plants and the biggest power purchase agreement (PPA) for commercial and industrial private offtake to date, which Mahlako says advances its vision of progressing the just transition and transformation of the country’s energy sector.

Located in the Free State, near Odendaalsrus in the Welkom area, and feeding energy into Harmony’s operations, the three power plants are expected to deliver 68 GWh in the first 12 months to Harmony’s mining operations when fully operational and mitigate 65 000 t of carbon dioxide equivalent yearly.

The fund, managed by Mahlako Financial Services, has invested alongside African Infrastructure Investment Managers’ (AIIM's) IDEAS Fund, and Rand Merchant Bank (RMB) as debt arranger.

The construction phase is anticipated to start this month, with the first energy to be delivered onto the grid in March 2023. The project is expected to produce 1.3 TWh of energy over the 20-year lifespan of facilities.

In a separate statement, Harmony says it has completed environmental, social and governance-linked loans and started with construction of the three 10 MW solar PV plants.

The company has concluded a new syndicated multi-tranche, multi-currency, loan facility, aimed at sustainable development, as well as a PPA facilitating Phase 1 (30 MW) of its renewable solar PV energy initiative.

The first phase of Harmony’s renewable energy journey consists of the 30 MW solar energy plant in the Free State.

In Phase 2, the company will be building an additional 137 MW of renewable energy at its various longer-life mines, while Phase 3 is in the planning stage.

Harmony expects Phase 2 of its renewable energy project to deliver over R500-million a year in electricity cost savings once it reaches full production in the 2025 financial year.

The Phase 1 solar plant projects are being jointly developed by Harmony, Energy Group and BBEnergy.

The project is funded by a project finance debt solution from RMB, a division of First Rand Bank, and with the support of African Clean Energy Developments, equity-funded by AIIM and Mahlako.

The plants rank among the biggest solar PV plants for private offtake in South Africa, to date, and first energy is expected to flow from the plants in March 2023.