Standard Bank, its asset management unit Stanlib, and renewable energy company Scatec have partnered on a new electricity trading platform for commercial and industrial businesses whose electricity requirements do not justify the procurement and implementation of a dedicated large renewable energy project.
The new entity, Lyra Energy, will offer distributed access to “affordable and predictable utility-scale renewable energy” to this “previously unserved segment of commercial and industrial energy users”.
The renewable energy offering will not only help businesses save on energy costs but also to cut their scope 2 emissions associated with their electricity usage, which are often the most difficult emissions to cut for companies in SA that rely on Eskom — which produces more than 85% of its electricity from coal.
Customers will be provided with green energy certifications.
Scatec already has close to 1GW of renewable energy under operation in SA and it has an existing portfolio of mature renewable energy projects in development that could be integrated into the platform.
With access to Scatec’s development pipeline “the Lyra platform is in a strong position to leverage economies of scale, minimise risk and ensure successful, consistent generation of clean electricity,” said Scatec CEO Terje Pilskog.
According to the project partners, Lyra Energy’s aggregator model will fund, build, own and operate electricity generation assets. The energy from these projects will be transmitted (or wheeled) to multiple off-takers, across the Eskom grid.
“[Customers] can expect increasing savings over time — especially if standard Eskom tariffs, which have risen by an average of about 14% annually over the past four years, continue to outpace inflation,” the partners said.
Lyra Energy, acting as the aggregator, will enter a network use agreement between the generation assets, and Eskom, whose transmission lines will be used to wheel power to the relevant location. Customers will sign a standardised, fixed-tenor power purchase agreement (PPA) which, the partners said, has been developed to address traditional risks associated with bilateral PPA’s and wheeling of energy.
Customers will be able to get power purchase agreements of between five and 20 years, and given that the aim is to mitigate electricity costs, pricing will be at a material discount to reference pricing from Eskom. Price increases will be indexed to the consumer price index (CPI).
Projects with available grid capacity have been secured for the platform and construction of an initial 200MW facility is expected to start later in 2024.
Standard Bank and Stanlib will help mobilise capital to fund the generation projects for the new platform to “see SA’s economy thriving in the medium-to-long term”.
The bank has committed R50bn towards financing renewable energy, which will roll out over the course of 2024.
Standard Bank’s head of corporate and investment banking, Kenny Fihla, said this “strategic investment” aligned with the banks broader objectives to support SA’s just-energy transition.
The launch of Lyra Energy is a sign that competition is starting to heat up in SA’s electricity market, which has long been dominated by Eskom, but is in the process of becoming fully liberalised.
Much progress has been made in setting up the National Transmission Company of SA, one of three entities to be created through the unbundling of Eskom — after obtaining regulatory approvals in 2023, a board was appointed for the company in January.
Once the transmission company has been operationalised, work will begin on setting up a range of new trading platforms that will allow for the buying and selling of electricity among multiple parties.
However, buyers and sellers are already able to trade via physical bilateral or wheeling contracts.
In 2023, financial services group Discovery launched a similar energy offering with its Discovery Green renewable energy platform, which will also operate through a wheeling process. The group will act as an electricity trader, connecting businesses to renewable power generated by independently run utility-scale renewable plants.
The Discovery Green offering is also targeting businesses that are medium to large consumers of electricity connected to Eskom distribution.
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