KaXu Concentrated Solar Power - South Africa

In 2011, the International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, provided approximately USD 108 million in financing for the USD 884 million 100 Megawatt KaXu Solar Concentrated Solar Power project with storage in South Africa.

Fast facts:

KaXu generates enough electricity to power 80,000 households, the equivalent of providing more than 400,000 South Africans with clean, renewable power;
The plant will mitigate an estimated 315,000 tonnes of CO2 emissions each year, the equivalent of taking 66,000 cars off the road;
The project has already created approximately 1,000 jobs, more than 700 of which were hired from the local community, which has directly helped reduce the province’s rampant unemployment.

The problem

For decades, South Africa’s power sector has been reliant on domestically-sourced, low cost coal, which powers over 90% of the country’s electricity generation. South Africa’s coal-fired power plant fleet is the most significant contributor to the country’s CO2 emissions, which are the 12th highest in the world.

The solution

IFC focuses on investing in climate-smart, clean energy solutions in developing countries that find it challenging to obtain suitable private sector financing. In 2011, technology costs for concentrated solar power production remained high, and a limited number of successful demonstration projects made investors hesitant to enter the market, especially in higher-risk developing markets such as South Africa.

IFC recognized the potential for concentrated solar power technology to displace fossil-fuel power generation in South Africa, as well as how KaXu could help transform the regional concentrated solar power market and drive significant economic growth in some of South Africa’s most impoverished areas. Therefore, IFC committed USD 81.8 million from its own funds, along with USD 26.5 million in concessional funds from the Clean Technology Fund, to the project, which helped bring financial institutions to the table, ultimately providing KaXu with a cost-effective project finance package. KaXU along with other concentrated solar power projects will help unlock billions in clean energy finance, while reducing hundreds of thousands of tonnes of CO2 each year.

Helping the planet

KaXu’s concentrated solar power projects will reduce hundreds of thousands of tonnes of CO2 each year in South Africa.

Helping people

The concentrated solar power project has directly stimulated local economic growth and generated over 1,000 jobs in the Northern Cape, an impoverished province with one of the highest youth unemployment rates in the world. The project includes a significant minority ownership by the community and will directly support long-term education and economic development initiatives in local areas. The project has also stimulated the growth of a local supply chain for the region’s booming solar sector, generating both skilled and unskilled jobs in the local green economy.

Scaling Up

Concentrated solar power plants are highly scalable in regions like the Northern Cape where land availability is not a constraint. The successful completion of KaXu helped pave the way for two follow-up concentrated solar power projects in the Northern Cape province, Khi and Xina. The three plants will unlock over USD 2.2 billion in clean energy finance, while reducing approximately 890,000 tonnes of CO2 each year. KaXu’s demonstration effects have helped spark a concentrated solar power boom in the region that is attracting billions of dollars of additional investment, as well as thousands of jobs.