Discovery plans to link South African companies looking to reduce power costs or their reliance on fossil fuels with independent power producers who are selling renewable energy.
By joining local companies with power producers, the medical insurance and financial services provider expects to yield at least 400MW of additional power, it said in a statement on Wednesday. Discovery sees this climbing to as much as 1GW.
South African companies are grappling with the worst outages on record as Eskom, which provides almost all of the country’s electricity, has kept the grid from collapse by cutting power when it’s been unable to meet demand. Eskom still gets more than 80% of its electricity from coal.
“South Africa is largely using very dirty fossil fuels and the ability to get renewable power is very difficult,” Discovery CEO Adrian Gore said in an interview. “There’s no marketplace.”
The country has taken measures to add generation from independent producers through government auctions, though the process has been delayed and some projects held up due to grid constraints.
As a result, Discovery decided to build a platform that aggregates companies that want to buy renewable energy and match them with power producers that are trying to get into the market.
Johannesburg-based Discovery has already expanded into banking, extending its financial services beyond insurance and investments. It also runs South Africa’s biggest health insurance administrator.
Woolworths, Southern Sun
It’s been working with about 14 independent power producers and is considering building on as many as 27 sites across South Africa with a view to start operating by 2026.
It is also in talks with Eskom as to how these can be added to the grid as well as with companies including retailer Woolworths and hotel and casino operator Southern Sun, which are interested in signing up.
While the companies will enter a long-term contract with Discovery to purchase power, the cost may be as much as 20% cheaper than what Eskom is currently charging.
The companies “want to be carbon neutral as they’ve typically made those commitments to shareholders and stakeholders, but they also want to undercut prices they’re paying”, Gore said. “Because many companies have had considerable difficulty trying to solve this problem, we find we are knocking on a fairly open door.” — (c) 2023 Bloomberg LP