DLO Resources Group, a renewable energy project developer, has acquired Conco Energy Solutions to form SA’s 100% black and majority female-owned power project champion.
The deal comes as the government opens up further bid windows under its Renewable Energy Independent Power Producer Procurement (REIPPP) Programme and has committed to lift the licensing cap for self-generation from 1MW to 100MW.
Linda Mabhena-Olagunju, founder and CEO of DLO Resources, now renamed DLO Energy Solutions, says the landmark deal comes at an opportune time in SA’s energy transition.
Q: What is the significance of your acquisition of Conco Energy Solutions, a company with a focus on the design, engineering, manufacture and commissioning of essential equipment?
A: DLO is a renewable energy developer. We’re a private producer of power, particularly in the clean energy space. We own one of Africa’s largest wind farms under the REIPPP with the capacity to power more than 200,000 homes in SA. While we have a track record in developing projects, what we needed was to get involved on the engineering and on the operations and maintenance side. So that’s why it was important to have this participation through the acquisition of Conco Energy Solutions.
Q: Being 100% black-owned, does DLO stand out in this space?
A: It’s not just a matter of race, you’ll find that there are very few SA companies that participate on the technology side, or on the EPC (engineering, procurement and construction) and O&M (operations and maintenance) side. It’s European or American companies that have formed subsidiaries in SA that are doing most of that work. So our direct competitors will be the likes of Siemens, so we’ve taken up space, which was previously not empowered or 100% empowered. And this isn’t a dynamic that’s unique to SA, as most of our African counterparts are relying on companies like those. What we are trying to do here is to offer a service that is also indigenous to the continent, and that is African-owned.
Q: Why does it matter whether the engineering, maintenance and operational skills are local or not?
A: I think we don’t really get to benefit until the technology and the engineering skill is in SA. It’s an important missing piece of the energy puzzle that we don’t really speak about openly. While the [REIPPP] projects have bought in a lot of money in terms of foreign direct investment, we also need to look at how we empower small enterprises and build a value chain.
So instead of importing key components, we should have those manufactured locally. For example, battery storage has become a huge part of the renewable energy programme. But there’s not a single battery manufacturer in SA. Those batteries are going to be imported from either China or the West and then the local companies here will play a small part in the assembly.
We [as SA] are creating a huge opportunity in this renewable energy market and in the power space, but we need to interrogate how our companies and people are benefiting ... we really need to look at this as an opportunity to grow our economy and create jobs and drive skills transfer.
Q: This deal comes after President Cyril Ramaphosa committed to lifting the licence cap for self-generation from 1MW to 100MW. Does this present opportunities for the sector, and for DLO specifically?
We had a six-year gap between the last bidding round for REIPPP and this one. It killed a lot of business, it killed a lot of manufacturing, it killed the momentum that had been created by the programme.
But lifting the licencing cap does breathe new life into companies like DLO because we’re no longer just reliant on the REIPPP. We can now go and source our own clients — for example we can go to small residential estates or to mining houses and offer a power solution. Without that, there wasn’t enough of the market to justify manufacturing, or to justify research & development. But now that the market is so open, SA is in a prime position to do that, and even to export its products regionally.
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