With many global firms signed up to 2030 clean energy targets, more companies are turning to mergers and acquisitions to gain market share in the ever-expanding global renewable energy business.
On Wednesday, Shell Plc announced the acquisition of Nigeria-based hybrid renewable energy provider, Daystar Power, a development aimed at building the firm’s renewable energy business to 400mw capacity in the next three years.
According to Christian Wessels, co-founder of Daystar, Shell’s acquisition will transform the company and enable it to achieve its broad objectives in a shorter time.
Wessels who spoke to BusinessDay from Tanzania where he is already exploring entry into the East African country, said Shell’s global footprint especially in Africa, will serve Daystar well as it seeks to grow out of its current markets.
“In the last one year, we have gained more knowledge of Shell and found quite a number of leaders of Shell who are genuinely interested in building a solid renewables business,” he said.
Daystar has raised about $90m in the last five years and Wessels said Nigeria will remain a core part of the business even after Shell’s acquisition.
“The acquisition of Daystar for an undisclosed sum was a fundamental step for Shell in growing its presence in emerging power markets,” Shell’s executive vice-president for renewable generation, Thomas Brostrøm, said.
Although the deal value is undisclosed, Brostrøm believes the deal represented Shell’s “first steps into the renewable power space” in Africa.
Buying Daystar Power is Shell’s plan to “address a critical energy gap for many who currently rely on diesel generators for backup power,” said Brostrøm.
Daystar Power, a Lagos-based company, installs and operates solar arrays on commercial rooftops in Nigeria, Ghana, Senegal, and Togo. Clients receive cheaper electricity from the panels and also have the option of systems with energy storage.
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Daystar Power’s co-founders and management team will stay in place as the firm looks to further build its operations in West African markets while expanding to East and Southern Africa.
The firm says it aims to install solar capacity of 400 megawatts by 2025 in a bid to supply the growing energy needs of commercial and industrial businesses.
The company, launched in 2017 by Jasper Graf von Hardenberg and Christian Wessels, is currently present in four countries, runs over 300 power installations with an installed solar capacity of 32MW, and has a team of 140 employees.
“It was important to find someone with a strong balance sheet to back us,” Daystar’s chief executive Jasper Graf von Hardenberg told the Financial Times.
The move comes after Shell’s incoming CEO Wael Sawan announced plans to accelerate the group’s drive to build its renewable energy business, including through a possible “transformative” clean power acquisition.
In May, Shell signed an agreement with Actis Solenergi to acquire 100 percent of Solenergi Power Private Limited for $1.55 billion and with it, the Sprng Energy group of companies.
Spring Energy supplies solar and wind power to electricity distribution companies in India. Its portfolio consists of 2.9 gigawatts-peak of assets with a further 7.5 GWp of renewable energy projects in the pipeline.
“This deal positions Shell as one of the first movers in building a truly integrated energy transition business in India,” said Wael Sawan, Shell’s integrated gas, renewables, and energy solutions director.
Apart from Shell, Chevron Corporation has also completed its acquisition of US-based Renewable Energy Group, Inc, in an all-cash transaction valued at $3.15 billion.
The transaction is part of Chevron’s goal to increase renewable fuel production capacity to 100,000 barrels per day by 2030 and brings additional feedstock supplies and pre-treatment facilities. After the acquisition, Chevron’s renewable fuels business will be headquartered in Ames, Iowa.
“We have brought together companies with complementary capabilities, assets, and customer relationships to make Chevron one of the leading renewable fuels companies in the United States,” Mark Nelson, executive vice president of downstream and chemicals for Chevron in June.
He added, “Chevron now offers our customers an expanded suite of cost-effective, lower carbon solutions that utilise today’s fleets and infrastructure.”
In Africa, renewable energy services provider, Starsight Energy, and South African-based solar firm, SolarAfrica Energy are planning a merger agreement that will transform the entity into one of the continent’s leading commercial and industrial solar providers.
“This merger demonstrates our joint commitment to expand our footprint across Africa. With SolarAfrica, the new combined group becomes one of the largest commercial providers of reliable and clean energy solutions to the commercial and industrial sector across the continent,” says Tony Carr, Starsight Energy’s group CEO.
The merger will result in a pan-African renewable energy services provider with a portfolio of over 220MW of operated and contracted generation capacity, and 40MWh of operational battery storage, with an additional generation pipeline exceeding 1GW.
Alongside the merger, funds managed by AIIM have committed substantial further funding to the South African subsidiary of the merged entity, to progress the build-out of the contracted pipeline in the commercial and industrial wheeling market in South Africa.
