P o w e r A F R I C A!
South Africa’s First Alternative Power Utility
An Alternative Power Utility
This project concerns the creation of a South African utility company providing renewable energy in which the financier will take part together with a South African developer and an EPC. The utility company will provide Solar Roof Top Installations to house holds and small/medium corporate off-takers whereby the utility company remains owner of the installations and in return the off-takers will sign a Power Purchase Agreement for being delivered the installation.
Advantages
Due to financial and maintenance problems at the national electricity utility (Eskom), the South African electricity market is under heavy constraints with a drastic price increase and regular power shut downs as a result. By providing the Solar PV installations the off takers will no longer depend on on-grid power supply and have their own installations to provide electricity at a much cheaper rate. They will no longer need to undergo the burdens of needing to invest in solar PV installations themselves and contribute to a cleaner environment at the same time.
Opportunity
Generating and selling electricity has become a huge opportunity in SA due to the relaxation of the national energy regulations by the government. This has been done for providing private developers access to the national energy market for increasing the country’s electricity supply in order to meet the demand and energy security needs of it’s off-takers as well as to establish energy savings. All of which will contribute to sustainability and provide the assurance of a supportive energy supply.
The renewable energy utility as well as the financial services being provided will be managed by knowledge based principles and professional human capital. This is being complemented by implementing Information and Communication Technology (ICT), all contributing to a successful management process. The project is further strengthened by making use of established and area located Small and Medium Enterprises (SME) which have been active in the alternative energy space for a number of years.
In brief, the project will address the following societal issues in South Africa;
This transition will also have an additional positive environmental impact by saving the large amounts of water Eskom is reliant on. The regenerative potential is noticeable, since the established savings coupled to Eskom not having to generate that electricity, is huge. The South African macro economy will be enhanced by no longer being under the present demand/supply constraints.
Job Creation
The installation of alternative energy equipment creates jobs in the manufacturing/ fabrication sector since every installation requires installation support structures, mostly steel. But will also increase the number of installers.
With reference to https://www.epi.org/publication/updated-employment-multipliers-for-the-u-s-economy/ and using same as a basis for calculating the number of jobs to be created. It is therefore calculated that the project will generate ± eighty four thousand (84 000). A significant number of jobs over the projected five year period.
Construction jobs direct: 7 989
Operational jobs direct: 41 177
Operational jobs indirect: 35 329
TOTAL JOBS: 84 495
Project Leadership
CEO: Mr Frederick Combrink Snyman [63]
Holds BCom (Hons) and LLB degrees from North-West University (Potchefstroom), and an MBA degree from the Graduate School of Business (University of the Witwatersrand, in Johannesburg). A non-practising attorney (formerly a commercial attorney in own practice) and also formerly on official JSE lists of:
CFO: Mr Henk Krüger [63]
Holds a BCom (Acc), MBA; both degrees from the University of Pretoria Henk is a Business Commerce Graduate, professionally trained by the Public Accountant and Auditors Board, which has been further enhanced by an MBA, specialising in Strategy Management, with a keen interest and experience in Marketing and Sales Management. He is also a Council Member of the Sustainable Energy Society of South Africa (SESSA).
His interest in the energy sector is based on years of practical experience. He founded two operating companies in the energy sector. One being the provision of electrical reticulation and maintenance and the other a refrigeration and air conditioning concern. The development strategy was based on energy efficiency and to implement a beneficial energy mix for customers as a value offering.
Feasibility
The feasibility of the project is dependent on the number of installations being installed (economies of scale). A breakeven turnover will be accomplished in the third year of operation.
The levelized cost of energy is a function of the repayment of the capital value over a period of 10 and 15 years as per the PPA. This is done to maintain a comparable rate per kWh, by comparison to Eskom or local government rates, as an alternative.
Once past the breakeven turnover and the anticipated continued growth, as reflected by the number of installations (ref. detailed business plan), the project will generate sufficient free cash flow and a sustainable positive return. This cash flow will be used to reinvest in the continued business activities of the project.
Investment and Securities
The investment is proposed to be structured as the following:
Equity participation
Debt funding
Draw down
Year 2 US$ 10m
Year 3 US$ 37m
Year 4 US$ 118m
Year 5 US$ 319m
Projected summary of the balance sheet/ financial wellness of the initiative is based on US $1.00 = ZAR15.00. For a detailed balance sheet please refer to the information in the project’s business plan.
In consultation with potential investors a 3 months upfront utility fee could be levied or a guaranteed payment (G-PAY) system can be set up with the off-takers. G-Pay guarantees payments, which by implication means that it reserves money in the customer’s bank account, which is visible to the customer and in line with the payment guarantee terms.
Return Profile
The financial projections on the proposed development potential reveal satisfactory levels of profitability and liquidity. This proposed initiative will exceed breakeven in year 3 of operation with the below Sales Revenues in the first five years of operations.
The turnover for the respective years, are as follows:
Year1
Seven Hundred and Forty six thousand and eight hundred and ten dollars (US$746,810).
Year2
Five million and sixty nine thousand and one hundred and seventy five dollars (US$5,069,175).
Year3
Twenty million one hundred and nineteen thousand and six hundred and eighty eight dollars (US$20,119,688).
Year4
Sixty two million six hundred and fifty two thousand and eight hundred and twenty seven dollars (US$62,652,827).
Year5
One hundred and fifty five million seven hundred and ninety nine thousand and seven hundred and fifteen dollars (US$155,799,715).
The proposed development initiative is projected to post a Net Loss of US$473k in the first year of operations and is projected to post a Net Profit of US$286m by the end of fifteen years.
For more detailed information please contact:
Jan Reijer Brons
jrb@firmfactoryafrica.com
Whatsapp/phone
+31653354494
+27647415394
This project concerns the creation of a South African utility company providing renewable energy in which the financier will take part together with a South African developer and an EPC. The utility company will provide Solar Roof Top Installations to house holds and small/medium corporate off-takers whereby the utility company remains owner of the installations and in return the off-takers will sign a Power Purchase Agreement for being delivered the installation.
Advantages
Due to financial and maintenance problems at the national electricity utility (Eskom), the South African electricity market is under heavy constraints with a drastic price increase and regular power shut downs as a result. By providing the Solar PV installations the off takers will no longer depend on on-grid power supply and have their own installations to provide electricity at a much cheaper rate. They will no longer need to undergo the burdens of needing to invest in solar PV installations themselves and contribute to a cleaner environment at the same time.
Opportunity
Generating and selling electricity has become a huge opportunity in SA due to the relaxation of the national energy regulations by the government. This has been done for providing private developers access to the national energy market for increasing the country’s electricity supply in order to meet the demand and energy security needs of it’s off-takers as well as to establish energy savings. All of which will contribute to sustainability and provide the assurance of a supportive energy supply.
The renewable energy utility as well as the financial services being provided will be managed by knowledge based principles and professional human capital. This is being complemented by implementing Information and Communication Technology (ICT), all contributing to a successful management process. The project is further strengthened by making use of established and area located Small and Medium Enterprises (SME) which have been active in the alternative energy space for a number of years.
In brief, the project will address the following societal issues in South Africa;
- Aid in the development of the alternative energy sector.
- To fulfil a desperate energy security need.
- Support the global energy transitional goals; to move away from coal generated electricity.
This transition will also have an additional positive environmental impact by saving the large amounts of water Eskom is reliant on. The regenerative potential is noticeable, since the established savings coupled to Eskom not having to generate that electricity, is huge. The South African macro economy will be enhanced by no longer being under the present demand/supply constraints.
Job Creation
The installation of alternative energy equipment creates jobs in the manufacturing/ fabrication sector since every installation requires installation support structures, mostly steel. But will also increase the number of installers.
With reference to https://www.epi.org/publication/updated-employment-multipliers-for-the-u-s-economy/ and using same as a basis for calculating the number of jobs to be created. It is therefore calculated that the project will generate ± eighty four thousand (84 000). A significant number of jobs over the projected five year period.
Construction jobs direct: 7 989
Operational jobs direct: 41 177
Operational jobs indirect: 35 329
TOTAL JOBS: 84 495
Project Leadership
CEO: Mr Frederick Combrink Snyman [63]
Holds BCom (Hons) and LLB degrees from North-West University (Potchefstroom), and an MBA degree from the Graduate School of Business (University of the Witwatersrand, in Johannesburg). A non-practising attorney (formerly a commercial attorney in own practice) and also formerly on official JSE lists of:
- approved sponsor executives, representing listed companies on the Main Board of the Johannesburg Securities Exchange (“JSE”); and
- approved designated advisers, representing listed companies on the Alternative Exchange of the JSE.
CFO: Mr Henk Krüger [63]
Holds a BCom (Acc), MBA; both degrees from the University of Pretoria Henk is a Business Commerce Graduate, professionally trained by the Public Accountant and Auditors Board, which has been further enhanced by an MBA, specialising in Strategy Management, with a keen interest and experience in Marketing and Sales Management. He is also a Council Member of the Sustainable Energy Society of South Africa (SESSA).
His interest in the energy sector is based on years of practical experience. He founded two operating companies in the energy sector. One being the provision of electrical reticulation and maintenance and the other a refrigeration and air conditioning concern. The development strategy was based on energy efficiency and to implement a beneficial energy mix for customers as a value offering.
Feasibility
The feasibility of the project is dependent on the number of installations being installed (economies of scale). A breakeven turnover will be accomplished in the third year of operation.
The levelized cost of energy is a function of the repayment of the capital value over a period of 10 and 15 years as per the PPA. This is done to maintain a comparable rate per kWh, by comparison to Eskom or local government rates, as an alternative.
Once past the breakeven turnover and the anticipated continued growth, as reflected by the number of installations (ref. detailed business plan), the project will generate sufficient free cash flow and a sustainable positive return. This cash flow will be used to reinvest in the continued business activities of the project.
Investment and Securities
The investment is proposed to be structured as the following:
Equity participation
- US$ 500 000 for an equity stake of 40%;
- Share buy back after 10 years at a P/E 2.5 times, Yr 10-Net Profit After Tax;
- Purchase consideration/Value of equity stake bought back: US$ 21,106m, post tax
- CAGR of equity stake: 45.4%
Debt funding
- a debt facility: US 100m
- denominated in US$
- on a draw down basis over 5 years or actual growth
- repayable over a 10 year term (from each draw down)
- bearing interest at NACM 8% (i.e. simple interest rate of~4.56%) per annum
Draw down
- The need for capitalisation is based on the projected growth.
- However, actual growth may outstrip any projections. Switching to renewable energy in SA is a function of Eskom’s inability to deliver, but also to become self reliant.Savings will also become disposable income. Coupled with a money multiplier, the macro economy will be boosted.
- Therefore, according to the business plan (ploughing the “excess” cash generated into new stand alone installations), the following draw down scenario evolves:
Year 2 US$ 10m
Year 3 US$ 37m
Year 4 US$ 118m
Year 5 US$ 319m
Projected summary of the balance sheet/ financial wellness of the initiative is based on US $1.00 = ZAR15.00. For a detailed balance sheet please refer to the information in the project’s business plan.
In consultation with potential investors a 3 months upfront utility fee could be levied or a guaranteed payment (G-PAY) system can be set up with the off-takers. G-Pay guarantees payments, which by implication means that it reserves money in the customer’s bank account, which is visible to the customer and in line with the payment guarantee terms.
Return Profile
The financial projections on the proposed development potential reveal satisfactory levels of profitability and liquidity. This proposed initiative will exceed breakeven in year 3 of operation with the below Sales Revenues in the first five years of operations.
The turnover for the respective years, are as follows:
Year1
Seven Hundred and Forty six thousand and eight hundred and ten dollars (US$746,810).
Year2
Five million and sixty nine thousand and one hundred and seventy five dollars (US$5,069,175).
Year3
Twenty million one hundred and nineteen thousand and six hundred and eighty eight dollars (US$20,119,688).
Year4
Sixty two million six hundred and fifty two thousand and eight hundred and twenty seven dollars (US$62,652,827).
Year5
One hundred and fifty five million seven hundred and ninety nine thousand and seven hundred and fifteen dollars (US$155,799,715).
The proposed development initiative is projected to post a Net Loss of US$473k in the first year of operations and is projected to post a Net Profit of US$286m by the end of fifteen years.
For more detailed information please contact:
Jan Reijer Brons
jrb@firmfactoryafrica.com
Whatsapp/phone
+31653354494
+27647415394