Overseas Private Investment Corp., the U.S. government’s development bank, will invest up to $400 million in a solar thermal plant in South Africa.
The Redstone solar project is being developed by Santa Monica, California-based SolarReserve and ACWA Power, a Saudi Arabian electricity producer. It will be located in South Africa’s Northern Cape province.
The funds from OPIC will be used as an investment guarantee to build and operate the solar plant. The project is financed by 5.6 billion South African rand ($422 million) in debt and 2.4 billion South African rand in equity from both local and international lending institutions, according to SolarReserve’s website.
OPIC is part of Power Africa, an initiative founded by President Barack Obama in 2013 to support the growth of energy access in Sub-Saharan Africa. The financial institution has pledged to provide $1.5 billion of financing and insurance to energy projects across the region by 2018.
South Africa has set a target to build 3.7 gigawatts of clean energy under its Renewable Energy Independent Producer Program. The Redstone solar project will provide electricity to over 200,000 homes during peak demand once complete.