Blu Label Unlimited is the latest private sector player to take on Eskom’s dominance in the energy trading market.
On Tuesday, the JSE-listed prepaid specialist group said its subsidiary BluEnergy Trading had been granted a multi-year energy trading licence by the National Energy Regulator of South Africa (Nersa).
This fits into the broader national power sector reform agenda which aims to increase private sector participation, enhance energy security and accelerate the transition to renewable energy.
While other entities that have been granted similar licenses are looking to capitalise on growing demand for renewable energy, Blu Label stands out because of its strong position as a prepaid electricity vendor. Its other business unit, Cigicell, provides prepaid electricity vending and revenue assurance systems to more than 95 municipalities across nine provinces.
According to Blu Label, BluEnergy’s execution and delivery capability is underpinned by its partnership with Cigicell.
The prepaid specialist group, which sells prepaid vouchers for cellphone data, airtime and electricity, has been working to grow its place in the power market for some time.
Through Cigicell, the group has traditionally made revenue by selling prepaid electricity tokens on behalf of municipalities and Eskom since 2004. However, Mark Levy, joint CEO of Blu Label, has told Business Day on a number of occasions their aim is to do more than simply supplying electricity tokens, a business with low margins.
Blu Label competes with banks and other companies such as Lesaka’s EasyPay in the electricity tokens business.
This latest development adds another building block to this strategy.
With regulatory approval in place, BluEnergy will focus on aggressively building out its project pipeline.
Aaron Suckerman, CEO of BluEnergy, said: “The licence is a critical enabler of BluEnergy’s strategy. It allows us to actively participate in the buying and selling of power.
“By combining long-term power purchase agreements with proven prepaid revenue collection and settlement infrastructure, we are removing the barriers to entry and providing municipalities with a secure, long-term solution for their energy needs.”
Levy, who has been spearheading the group’s energy initiatives, said BluEnergy’s ability “to act as off-taker and trader, supported by Blu Label’s strong balance sheet and fintech capabilities, positions the business to deliver sustainable energy solutions at scale while contributing meaningfully to national energy transition and decarbonisation”.
BluEnergy operates through three specialised entities: asset ownership, operations and maintenance and energy procurement and trading.
The company said this integrated approach enables BluEnergy to manage the technical and commercial aspects of energy delivery, grid integration, wheeling frameworks and contractual performance.
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