East and West African renewable energy services provider Starsight Energy and South African solar energy provider SolarAfrica Energy are merging to expand operations with the ambition of becoming one of the largest commercial and industrial (C&I) solar developers in Africa.

The proposed merger combines the strengths of the duo to unlock a pan-African renewable energy services provider positioned to serve a wider range of clients with a comprehensive mix of technology-enabled renewable energy solutions that provides power security, cost savings and carbon reduction.

The merger is subject to standard regulatory approvals including anti-trust approvals, which can take up to six months, says Starsight Energy Group CFO Paul van Zijl.

However, should it move ahead, the yet-to-be-named merged entity will comprise a portfolio of more than 220 MW of operated and contracted generation capacity – with an additional generation pipeline exceeding 1 GW – and 40 MWh of operational battery storage, spanning three key geographical hubs, namely East, Southern and West Africa.

Further pan-African diversification is being considered, particularly Francophone Africa.

The newly formed entity will comprise of 340 staff across multiple jurisdictions and create a combined shareholder group providing financial capacity to deliver renewable energy services across Africa.

The transaction is backed by Africa-focused private investment firm Helios Investment Partners and dedicated infrastructure private equity manager African Infrastructure Investment Managers (AIIM).

“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 Starsight Energy Group CEO Tony Carr.

The merger is expected to enable efficiencies across the group, ranging from procurement to funding, and further allow for the deployment of its proprietary technology platform across the continent.

“These efficiencies will assist the group in providing a unique and valuable offering, that takes customers on a green energy journey to solve their power struggles and enables a sustainable future for their businesses,” adds SolarAfrica Energy cofounder and CEO David McDonald.

AIIM MD and co-head Olusola Lawson comments that the transformational Starsight/SolarAfrica merger is a strong illustration of value creation in the nascent African commercial and industrial renewable energy space.

“As one of Africa’s largest renewable energy equity investors, and with a renewable energy portfolio of c.2GW, AIIM has been privileged to play a key role in the growth and expansion of the Starsight platform over the last five years.”

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 C&I wheeling market in South Africa, providing energy security and certainty of pricing to large C&I customers.

“We are delighted to continue to support the business with additional funding to expedite the realisation of its substantial pipeline, and we look forward to the continued success of the combined platform.”

The transaction creates a market leader across sub-Saharan Africa’s largest economies, with a long track-record of providing, cleaner and more reliable energy solutions for its customers delivered at competitive price levels.

Helios partner Ogbemi Ofuya says the group is excited at the significant growth prospects of the enlarged Starsight platform.

“Helios has been a part of Starsight’s journey from its inception and has supported the growth of the business leveraging on our experience in building and scaling market leading infrastructure businesses on the continent.”

Starsight Energy, founded in 2015 and backed by Helios and AIIM, offers reliable and sustainable energy and cooling solutions – on- and off-grid – to the C&I sectors in East and West Africa with over 656 sites in Nigeria, Kenya and Ghana.

Founded in 2011, SolarAfrica delivers energy solutions through power purchase agreements to businesses across Southern Africa, evolving from a specialist provider of rooftop solar photovoltaic systems to a full-service provider of capital expenditure-free, green energy solutions ranging from solar and battery storage options through to wheeling and electricity trading to the C&I market.

“SolarAfrica has already positioned itself as a competitive player in the newly enabled power wheeling space, having recently signed up large blue chip customers,” says McDonald.

“The group is now well positioned to service large power users with a lower cost electricity alternative from a recently developed centralised solar generation site, taking advantage of South Africa’s newly revised regulations permitting wheeling and self-generation of up to 100 MW by private generators.”

Looking ahead, the two parties believe that their combined expertise, along with SolarAfrica’s energy solutions software platform, which enables its sales teams to customise energy proposals and produce accurate savings projections, will not only position the group as Africa’s leading provider of green energy solutions to commercial and industrial power users, but will also accelerate Africa’s transition towards a greater renewable energy mix.

Over and above the global shift towards the reduction of greenhouse gas emissions through decarbonisation, the demand for cost-effective and reliable power by commercial and industrial users will continue to grow and open further opportunities in the renewable energy sector particularly in South Africa, where power supply is expected to remain constrained with a substantial deficit of generation capacity.