The project, which is being built on the river Lusutfu near Sidvokodvo, is designed to generate average annual output of 64 GWh, increasing Eswatini’s power generation by 20 per cent. Its entire output is to be sold through a 25-year PPA to the Eswatini Electricity Company, at an inflation-indexed tariff rate, in accordance with an agreement signed in May 2023. The project will entail the construction of a diversion weir, a 2 km-long, 66 kV transmission line, a foot bridge across the dam and substation upgrades, as well as works to integrate the powerplant to the Sidvokodvo substation.
Construction of the hydro station is expected to be completed in late 2027. At the end of the PPA term, EEC will take over the plant at no cost to the company, and by extension, to the consumer.
Standard Bank South Africa acted as the mandated lead arranger, with Standard Bank Eswatini, Standard Bank South Africa and the Eswatini Public Service Pensions Fund (PSPF) providing the debt financing. The project was sponsored and developed by South African renewable energy developer ACED, with the African Infrastructure Investment Managers (AIIM) managed IDEAS Fund and the Eswatini Public Service Pensions Fund (PSPF) as shareholders. ACED and EIMS Africa were advised by Eaglestone, Cliffe Dekker Hofmeyr, Pinsent Masons, Fasken, Bastion, AEVO, Lockton and DNV. ACED will provide construction management services, while EIMS Africa, will act as both the Operations and Maintenance (O&M) contractor, and the operating phase management services provider to the project.
In recent years, the Government of Eswatini has embarked on the development of additional generation capacity, alongside reforms in a move to liberalize its energy market, enhance energy security and improve access to reliable and affordable electricity. Eswatini imports about 80 per cent of its power primarily from South Africa and Mozambique, with 65 per cent imported specifically from South Africa’s state utility Eskom. The project is one of the first independent power producers to close in Eswatini and will help shift the country away from reliance on imported electricity generated largely from coal.
“We are immensely proud to have achieved financial close and construction commencement on our first hydroelectric project, and our first project in Eswatini, in partnership with our supportive shareholders, lenders, contractors, the EEC and all of our Eswatini partners and regulators. In addition to energy security, this project will also create jobs and support development locally,” said James Cumming, CEO of ACED. “This deal will unlock critical renewable energy development to support Eswatini’s energy security and access to affordable energy. It also assures the country’s steady journey towards reducing its reliance on traditional forms of energy and pivots it towards cleaner, sustainable sources of energy,” said Sherrill Byrne, Executive Vice President for Energy and Infrastructure at Standard Bank.
ACED, one of the most successful renewable energy developers in the South African market, has successfully developed 1.4 GW of solar and wind projects (either operating or under construction) in the Department of Mineral Resources and Energy’s Renewable Energy Independent Power Producer Procurement Programme , and in the private Commercial and Industrial offtake market (C&I). ACED is 50 per cent owned by the African Infrastructure Investment Managers (Pty) Ltd and 25 per cent by the Infrastructural, Developmental and Environmental Assets Managed Fund (IDEAS) from Old Mutual Life Assurance Company (South Africa) Ltd with the balance held by the company’s management.
