Shell’s solar acquisition Daystar Power plans pan-African expansion

By David Whitehouse
Posted on Friday, 30 September 2022 06:00

Photo supplied by Daystar.

Daystar Power, the West African solar power provider being bought by Royal Dutch Shell, plans to expand across Africa once the acquisition is completed, says Olaedo Osoka, Daystar’s West Africa CEO.

Eastern and southern Africa are “attractive markets” with “huge potential,” says Ghana-based Osoka. “We can address those markets.” The company is aiming to increase its installed solar capacity from a current 32MW to 400MW by 2025.

African renewable energy providers are scaling up to target commercial and industrial customers as rising prices for fossil fuels prompt a search for cost savings. Nigeria’s Starsight Energy and South African-based SolarAfrica this month agree to merge to create a portfolio of 220MW of operated and contracted generation capacity, and a project pipeline exceeding 1GW.

Lagos-based Daystar provides renewable solutions to commercial and industrial clients. Management will stay in place under the agreement announced September 28. Financial terms were not disclosed, and the purchase is subject to regulatory approvals.  CEO and co-founder Jasper Graf von Hardenberg says that the company is on track to increase its installed solar capacity by 135% in 2022.

Plans for expansion are slightly more developed in eastern Africa, where the company has been developing its leads. Osoka expects that the expansion will start to be rolled out in 2023.

  • In West Africa, power costs can be up to five times levels in OECD countries, the company says. Osoka says that in most of its markets, the company can provide solar power which is 30% cheaper than other power sources. “It’s a simple value proposition.”
  • Daystar until now has offered clients long-term contracts with no need for initial capital expenditure, with the finance coming from development finance and private-equity shareholders.
  • That “zero capex” model will continue with Shell providing energy solution finance, Osoka says. Being part of Shell will make it easier to attract and retain talent, she adds.

New leaf ?

Founded in 2017 by Sunray Ventures, Daystar Power is active in Nigeria, Ghana, Togo and Senegal with a representative office in Côte d’Ivoire. Clients include Seven-Up, UAC Foods and Ghandour Cosmetics, the largest Ghanaian cosmetics manufacturer. The company also wants to expand in its existing countries where it is “still just scratching the surface” of demand, Osoka says.

Shell has been branching out from its traditional fossil fuel business, in August buying the Sprng Energy renewable platform in India. The company is in the process of buying UK solar farm projects with a total capacity of 100MW, and in July said it plans to build Europe’s largest renewable hydrogen plant in Rotterdam.

It remains to be seen whether being part of Shell will benefit or hamper Daystar’s reputation in Nigeria. Shell started drilling for oil in the Niger Delta in 1958, and pulled out amid protests against the resulting pollution in Ogoniland in 1993.

Despite clean-up efforts, spillages have continued due to historical lack of maintenance, pipeline sabotage, vandalism and theft. The Niger Delta, according to the Institute for Security Studies, remains one of the most polluted places on Earth.

Bottom line

The scaling up of African solar will continue whether or not businesses want to buy their energy from Shell.

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