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AltX-listed Kibo Energy, the renewable energy focused development company, has extended a power purchasing agreement (PPA) in Gauteng from 10 to 20 years.
The agreement was first announced in February, 2022. It outlines the construction, commissioning, and operation of a 2.7MW plastic-to-syngas power plant to generate base-load electricity for an industrial business park developer in Gauteng.
According to the company, the extended term to 20 years would improve the already compelling project highlights.
It said the financials of the company would improve and that there would be an increase in projected earnings before interest, taxes, depreciation, and amortisation (EBITDA) from R388 million to R953m of which R619m was attributable to the company.
Kimbo Energy said there would also be an improved Internal Rate of Return (IRR) with a projected increase of 15 to 18 percent – up from11 to 14 percent.
Kibo chief executive, Louis Coetzee, said: “We are excited to be forging ahead with our first waste-to-energy PPA that aligns with our commitment and renewed strategy to disinvest from coal and advance clean energy in the African market. The original PPA guaranteed revenue generation over 10 years with the realistic potential to secure significant additional revenue from the sale of heat and other by-products, and gained keen interest from funders".
He said extending the term further cemented this potential.
“It signifies confidence in the project and significantly increases its attractiveness to prospective debt and project funders. We already saw significant interest from potential debt and project funders before the term extension, and we believe that the term extension will make the already advanced process of securing debt and project funding significantly smoother and quicker.”
The project is the company’s first under its joint venture, Sustineri Energy, in which Kibo Energy holds 65 percent and Industrial Green Energy Solutions holds 35 percent.
The project will provide the client with cleaner electricity by making use of a high-temperature pyrolysis process, where selected non-recyclable plastics would undergo thermal degradation to produce high-quality syngas, which would in turn feed gas engines to generate both electricity and heat energy.
There was also potential to sell the heat energy generated as a by-product from the gas engines directly to customers inside the industrial park. |
