We are preparing our Solar Power Purchase Agreement (SPPA) to be signed for a 25-year period between Tses Glass (Pty) Ltd, Tses Village Council, and Tses Solar (Pty) Ltd.
Tses Solar is an off-grid 60MWac Solar (PV) Power Plant being developed to supply clean and sufficient electricity to Tses Glass and the Municipality of Tses. Namibia-based HopSol Africa (Pty) Ltd, part of the Switzerland-based HopSol AG is our appointed turnkey technical engineer for the development, engineering and commissioning of the Tses Solar (PV) Power Plant in Tses.
For your info; a Solar Power Purchase Agreement (SPPA) is a financial arrangement in which a third-party developer (Tses Solar) owns, operates, and maintains the photovoltaic (PV) system, and a host customer (Tses Glass and Tses Village Council) agrees to site the system on its roof or elsewhere on its property and purchases the system’s electric output from the solar services provider for a predetermined period.
This financial arrangement allows the host customer to receive stable, and sometimes lower cost electricity, while the solar services provider or another party acquires valuable financial benefits such as tax credits and income generated from the sale of electricity to the host customer.
Tses Solar (Pty) Ltd is a joint-venture between a Namibian-based and owned Omoni Investment CC and Groot Management Systems (Pty) Ltd each with 40% percent. The other 10% is owned by a group of minority Namibians, while 10% is reserved for future investment.
It will cost about US$150 million (N$1.6 billion) for the development and construction of the 60MWac Tses Solar (PV) Power Plant in Tses starting around early 2016.
So our 60MWac Tses solar power plant project, 40MW of this is for the Tses Glass factories and 20MW is for the Tses Municipality. This will become the biggest off-grid connected solar power plant in Namibia and this 20MWac will produce about 54 million kWh per day and thus it will supply about 10,000 residential houses in Tses with clean, stable and environmentally-friendly electricity.
Our SPPA is fixed at N$1.96 per 1kWh for 25 years adjusted on inflation.
20MW per day equals to 54 million per day. Hence Tses Solar will be profitable for self-sustained. If we sell 1 kWh for N$1.96 (US$0.20), then 20MWac will generate about N$105.8 million (US$10.6 million) per day. This is what we will generate by selling that 20MWac to Tses Municipality. And 40MW per day equals to 108 million kWh per day for the Tses Glass factories. And at N$1.96 (US$0.20) to Tses Glass for 108 million kWh per day equals to N$211.7 million (US$21.2 million) per day; for a total of about N$317.5 million (US$31.8 million) per day or about N$1.2 billion (US$120 million) per year for a fixed guaranteed period of 25 years as per the SPPA.
This is good and less risky for an investment to take up the remaining 10% stake in Tses Solar (Pty) Ltd.