BioPower, POWGEX Energy Joint Venture to Build $2.5B Solar Facility in South Africa

July 18, 2023
The project will initially start with a goal of 1 GW but can expand up to 30 GW of power to support the region’s various industries

BioPower Operations Corporation’s joint venture with POWGEX Energy South Africa and POWGEX-HYFI secured a green electricity generating facilities order to build, own, and operate up to 30 GW of solar power in the Municipalities of Mpumalanga, South Africa. The project will begin with a $2.5 billion 1 GW facility slated for installation in Q1 2024. Most of the project’s total cost will be attributed to solar photovoltaic panels, battery storage, EPC, and O&M.

This project is expected to be the first of many orders from municipalities looking to contract directly with POWGEX-HYFI and establish long-term Power Purchase Agreements to help support the activities of the region’s manufacturing, mining, construction, and power generation industries. These projects will all contribute to South Africa’s renewable power and net zero goals.

According to a government-backed report, Net Zero in South Africa – It All Hinges on Renewables, “By 2050, at least 190 GW of renewables needs to be deployed to fully decarbonize the power sector. Capturing the opportunity presented by the Green Hydrogen (H2) economy (a national aim) requires potentially up to 170-200 GW of additional dedicated renewable capacity. That means South Africa will need to build ~6-7 GW of renewables every year for the next three decades for the power system alone. The annual renewables build rate would further increase if the Green H2 opportunity is pursued.”

BioPower will own up to 19.99% of the joint venture and receive a $50 million equity investment in exchange for building relationships with OEM, EPC, and O&M companies and providing $450 million in initial financing.

A portion of these proceeds will enable POWGEX Energy to purchase 15%, or 7.5 million shares, of BioPower Common Stock with a valuation of $333 million for $50 million and secure one Board of Director seat at BioPower and three Board of Director seats on the joint venture – POWERGEX Energy will receive two seats, and POWERGEX-HYFI will receive one seat.

To help meet its additional financial requirements, the joint venture has also partnered with Signet Capital, which agreed to be the lead financial advisor. Signet Capital is currently arranging a $450 million private placement for use by the joint venture, which intends to continue building, owning, and operating green electricity facilities for the next 45 years.