Nigeria’s Starsight, South Africa’s SolarAfrica merge to scale up African renewables

By David Whitehouse
Posted on Friday, 23 September 2022 06:00

A worker cleans solar cells on a rooftop of a hotel in the resort town of Sharm el-Sheikh REUTERS/Mohamed Abd El Ghany

Nigeria’s Starsight Energy and South African-based SolarAfrica are merging to target commercial and industrial customers across the continent.

The combined group will have a portfolio of 220MW of operated and contracted generation capacity, with 40MWh of battery storage, and a project pipeline exceeding 1GW. Decisions on the name and leadership of the merged company are on hold pending antitrust regulatory approvals, which are expected to take between three and six months.

Starsight shareholder African Infrastructure Investment Managers (AIIM), which is part of Old Mutual Alternative Investments, will help fund the expansion of the South African subsidiary of the new entity. The goal of the merger is to build the “pan-African renewable partner of choice,” AIIM investment director Dami Agbaje told a briefing.

Starsight, founded in 2015, is Nigeria’s first renewable energy supplier to secure carbon credit accreditation. Also backed by Helios Investment Partners, it operates in all the country’s 36 states, as well as in Ghana. Last year it bought a 50% stake in the East African operations of Premier Solar Group to enter Kenya, Uganda, Tanzania and Rwanda.

SolarAfrica, set up in 2011, is led by co-founder and CEO David McDonald, and counts Unilever and Shoprite among its clients. The company built one of the world’s largest solar carports for Ford at its Silverton plant, which was commissioned in May. The Silverton plant gets 35% of its electricity needs onsite from the 13.5 MW facility.

  • SolarAfrica has 150MW in commercial solar power purchase agreements in southern Africa, compared with 71MW for Starsight, which has banks as its core customer base.
  • The combination will create the “unrivalled market leader across sub-Saharan Africa’s largest economies,” Tosin Awoyinka, senior vice president at shareholder Helios, told the briefing.
  • In the short term, the companies will continue to trade under their existing names. The merger, which was under preparation for 18 months, was carried out without a financial value being assigned to the two businesses, Starsight CEO Tony Carr said.
  • The merger will create Africa’s largest solar power player, Carr said. The commercial and industrial sector will continue to be the focus, rather than the residential market.
  • “We think the residential space is pretty hard work,” Carr added.

Further expansion

In terms of solar resource, Africa is better placed than any other continent to create a large-scale solar industry. According to the World Bank, about 20% of the global population lives in countries with excellent photovoltaic electricity potential. Countries in the Middle East, North and sub-Saharan Africa dominate this category, the bank says.

Carr still sees major potential for growth in west Africa. Less than 10% of Nigeria’s banks, the company’s core client group, are using renewable energy, and among commercial and industrial clients Starsight is “not even scratching the surface,” despite surging diesel prices, he said. “Our primary focus in Nigeria is to remove hydrocarbon fuels.”

  • Many of Starsight’s Nigerian clients have a wider presence in francophone west Africa, which may mean further expansion. Knowing your client is a sound route to expansion, Carr said.
  • “Francophone Africa is of significant interest to us” with the merger creating a “much broader scope to look at new geographies.”

Bottom line

Africa’s solar industry is starting to achieve the scale needed to achieve a transition to renewables.

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