Telling empowering stories, South Africans want to hear

Friday, 03 May 2024 11:47

Motsepe-backed GoSolr wants to solve South Africa's power crisis.

By Antony Sguazzin.

GoSolr, a company backed by South African billionaire Patrice Motsepe and the continent’s biggest bank, plans to spend R10 billion to roll out a model of renting solar panels and batteries to homes in the nation plagued by blackouts.

The two-and-a-half-year-old company seeks to install about 500 megawatts of solar-generation capacity in four years.

That's up from its current 70 megawatts, said Andrew Middleton, GoSolr's chief executive officer.

It has attracted investment and financing from Motsepe's African Rainbow Capital Investments and Standard Bank Group

The company, which says it's the biggest of its kind in South Africa, is one of a number capitalizing on the power cuts and surging electricity prices that have afflicted the country since 2008.

The amount of rooftop solar in South Africa more than doubled to 5,440 megawatts in March from the year earlier. According to data compiled by the Johannesburg-based company, about 620 megawatts of that was on residential properties.

"That's our mission," Middleton, 39, said in an interview at GoSolr's head office on Monday. GoSolr, together with "all the other companies combined, can end this crisis," he said.

Middleton said future funding for the company will come in the form of debt and equity, with existing shareholders such as Motsepe's ARC and Standard Bank likely to contribute.

While founders currently own less than half of GoSolr, they have retained voting control.

Its subscription service competes with more expensive rent-to-buy operators and households that pay about R150,000 to install a standard system of eight solar panels and 5-kilowatt hours of battery storage themselves.

While South Africa has some of the world’s best solar potential, just 0.7% of its 17.8 million households use the technology for electricity. That compares with 31% for Australia, 4% in the UK and 3% in the US.

According to GoSolr, 9.9% of the country’s power comes from solar energy, and 77% comes from coal.

While solar doesn’t produce greenhouse gas emissions, South Africa's dependence on coal has made it the world's 15th-biggest source of climate warming gases.

Still, for most South Africans, the systems are unaffordable.

GoSolr targets 2.2 million households that earn more than R360,000 a year, and its subscription service is beginning to save clients money in Cape Town, which has the highest electricity costs of major South African cities.

With the national power utility Eskom Holdings Ltd. having won permission to raise tariffs by 12.7% this year, more than double the inflation rate, savings for solar users are expected to increase.

Earlier this year, power outages known locally as load shedding sometimes extended to more than 10 hours a day.

Middleton said his company, which charges between about R1,400 and R2,900 a month for most of its products, is looking into cheaper systems to target less affluent households.

"We started at the core where we could get scale, and we can just understand how the equipment behaves and how the credit profile looks," said Middleton, a former investment banker. Then the company needs to determine whether it can 'continue to raise capital at scale," he said.