BB Energy, Solarcentury aim to trade power on Southern African Power Pool end 2023

By David Whitehouse
Posted on Wednesday, 21 September 2022 06:00

(AP Photo/Stephen Wandera)

Global trading group BB Energy and its Solarcentury Africa unit aim to be trading solar-generated power on the Southern African Power Pool (SAPP) around the end of 2023, executives tell The Africa Report.

Solarcentury is developing solar projects in Botswana and Namibia, either of which would meet the threshold needed to gain access to SAPP as a market participant, says Jason De Carteret, head of Solarcentury Africa. The aim is to commission at least one of these projects by the end of 2023, and de Carteret hopes that SAPP trading access would follow immediately.

SAPP membership is made up mainly of national power utilities from the 12 countries in the Southern African Development Community (SADC) region. Membership was extended to market participants in 2021, but trading has been dominated by utilities and overall volumes have been limited, de Carteret says.

BB Energy was founded in Lebanon in 1937 as a grain and asphalt trading company before entering the oil industry in 1963. Solarcentury Africa, which develops solar power and storage projects, was bought by BB Energy in April 2021. BB Energy’s global trading and back-office capacity would enable it to trade 24/7 on SAPP, de Carteret says.

Most solar developers have “zero trading experience,” de Carteret says. “The market needs confidence. They need a steady pair of hands.”

A decision on which entity will carry out the SAPP trading has yet to be taken, but Mark Sims, who spent 35 years at Eskom and has served on SAPP sub-committees, will head the power trading desk, to be based in the SADC. Getting market participant access to SAPP will be a “very significant step,” he says. Ongoing load-shedding in South Africa shows that “there needs to be a new route to market” for power suppliers.

  • In July, South African President Cyril Ramaphosa said  that state-owned utility Eskom will start to buy power through the SAPP pool.
  • “We’re confident we can take on the market risk,” Sims says. “We think we have a headstart.”

Direct Utility Supply

De Carteret says Solarcentury is open to new funding. Projects costing less than $50m tend to be equity financed. Once that amount is exceeded, there can also be a debt component, he says. De Carteret notes that it’s harder for funders to take a view of the potential of SAPP compared with a standard offtake agreement. Still, he says, there’s “no bottleneck” on funding for current projects.

Solarcentury could also supply power to a national utility in a host country rather than via SAPP. Namibia, for example, does not currently allow power to be imported. While a free market would be a step forward, transmission infrastructure across the region is the bigger barrier, de Carteret says.

In July, Solarcentury Africa agreed with Renewable Energy Services Africa and Checunda Investimentos to build a 100 MW-peak solar plant in Chimuara, Mozambique. The plan is to feed the electricity into the  state-owned Electricidade de Moçambique (EDM) grid.

  • Final negotiations with EDM are taking place, and de Carteret says he expects the project to be generating at the end of 2023.
  • A further Solarcentury Africa project in Mozambique will provide a solar power and battery storage system for the Balama graphite mine owned by Syrah Resources of Australia.
  • De Carteret says the in-construction project will make Balama the “greenest offgrid mine in Africa.” He expects it to be online at the end of the first quarter of 2023.

Bottom line

The SADC region needs SAPP market participant trading as soon as it can get it.

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