Episode 3 - 20 March 2026 - 1st Guest - Jason Delaney, Business development Consultant at SOLA Group

Unpacking South Africa's Energy Transition and IRP Welcome to the latest episode of the Energy Pulse podcast. My name is Lee Smith. Speaker 2 And I'm Matthew Cruz, and today we are. Speaker 1 Very graciously welcoming Jason Delaney, who is a business development Consultant at so the group. And then we'll be getting into a bit of history in a little bit. The topics we're gonna be covering today, logic and be focused on what is happening with the energy transition in South Africa. Some of the barriers and constraints that we're facing. In particular carrying on with the theme that we've had of winning into municipalities and Solar group being the first app to do a multi party virtual reading IPP project. So we'll be unpacking that and they're looking at how the future of the market is going to be evolving with all of these factors in mind. So in order to kick off, Jason, would you like to introduce yourself? Speaker 3 Sure. Thanks, Lee. My name is Jason Delaney. I own a consulting company called Soda Sage Renewable Energy and I am a business development consultant for The Solar Group. I have a very strong passion for sustainability, whether that be energy sustainability, water sustainability, anything that really involves having some kind of significant social impact, I care a lot about. That's why I found myself in this space in particular. It is definitely a privilege to be here today to be able to discuss the solar industry in particular in this forum and on this platform. So thanks to both of you. Great. Thanks very much. Speaker 1 So just diving into what we're going to be discussing today, we're going to open up with the continuing theme of the energy transition within South Africa and where we stand. We've recently had the long-awaited integrated resource plan from the Department of Energy and Electricity. Jess, would you like to give us your views on that recent visit at IOP? Speaker 3 So I think that South Africa has had a lot of different challenges, a lot very specific challenges socially in terms of our change after 1994. It's been very interesting to see this transition happen and all of the challenges that we've had. And I think that we are working very hard to ensure that we strike a balance between what our state owned generation capacity can provide, but also understanding that we ultimately do need private injection of capital and obviously human capital and knowledge at the same time to reach those goals. I think that it's very important in terms of the transitions that we are making is with specific reference to the IRP that is very critical for our move forward and our growth in South Africa in particular. Speaker 2 And from my side, were you surprised to see any additions there regarding like nuclear and gas? It will certainly surprising to me to see that kind of inserted into that RP given the context of the gasket is coming. But there was any surprises on your side and you took. Speaker 3 It no, not particularly. I think that from the research that is provided on gas and nuclear in particular, it is a very safe form of energy production as long as it's managed correctly. Obviously, we've had a number of disasters throughout history that have soured public interests in nuclear in particular. But when you look at it in terms of the actual KJ production of energy versus the waste that's actually produced by nuclear, for example, it's very low and it's very sustainable if it's managed properly. But I think that having a very mixed form of energy production is very critical for the survival of the energy infrastructure and at least the generation infrastructure in South Africa, because soil is very good at one thing, wind is very good at one thing, water is very good at one thing. But ultimately we've relied on coal for a very long time because we're able to produce energy consistently. So ultimately, I do think it's important to have that split. Speaker 2 Good energy mix. And interestingly, the internationally of the European Union both labelling natural gas and nuclear as no carbon fuels and assisting in their transitionary fuels in transitioning away from coal as clean energy sources. It's interesting to see the recent shift in the narrative around those two sources. Yeah, so that's from my side. It's good to see because it's kind of a balanced view on what's going to happen going forward and how are we going to actually supply our peak demands in the evenings, in the mornings. Speaker 1 And I think some key considerations, we've recently seen talks of restarting up the Pebble bed modular reactor program and they're talking about full scale reactors, which we know many investors around the world are taking very seriously, Bill Gates included. And the benefits of small reactors is that they can use spent fuel from larger reactors. And so there are a lot more sustainable and we're using essentially a waste resource from a previous cycle. Also nice thing about nuclear is it we'll build job creation, which as we've discussed previously, unfortunately wouldn't. Solar and battery energy storage won't perhaps on a distributed generation scale in Mt is being employed across the country rather than being centrally located as the model has typically been historically. So nuclear can build that into the program and of course you know having that base load security from a sustainable source gives the energy system manager a good base to work from. And then gas, it works very well with renewables. It's obviously cleaner than burning oil and coal and it can take care of the merits and peak demands very nicely provided that we do learn Lang and not diesel as we have been doing. Addressing South Africa's Grid Capacity and Transmission Challenges So just to close off on energy transition, what are some of the structural constraints being, is it political grid and what's happening with the public sector competition and other private sector fits into that well? Speaker 3 I think the most important thing to consider is that it's in the name. It's a transition, and transitions need to happen over time, which is I think part of the reason. That's why they're looking at gas as a alternative over traditional coal burning. Even though it is still an emission aspect to it, it's much lower depending on the type of ask that you do burn. But we can't move fully over to renewables because solar by itself is obviously much more affordable than it's ever been. But battery technology, especially battery on utility scale is still developing and it's still quite expensive in that context. So in order to supplement the energy generation infrastructure, it's quite important that we do have this split and they've obviously identified that. And I think that it's part of a a longer process. I'm very optimistic in terms of where we've come from, the changes that we've made and the plans that we still do have going forward. Something interesting that I learned from a colleague of mine who is CFA, he said that for the last two years, interestingly, if you remove debt, South Africa is actually in a positive cash flow position in the context that our earnings are higher than our expenditures. And I do think that we are moving in the right direction in terms of the changes that we are making, identifying where these changes need to happen. But again, then it's just the process that needs to happen over time because there are a lot of dynamic, interchanging processes that are ongoing all the time. Speaker 2 So one thing that I'd like to just check in on your opinion about is the grid capacity constraints that we heard about in the 2022 bid window 5 RPG. That's Noble Energy independent producer program where a whole bunch of wind was submitted, like half of all the bids that were submitted with wind. And then we were informed, ohh, whoops. Turns out there's no grid capacity for any of this win. Seemed like the Department of Energy at the time that they put out the Rapp window didn't really check with ESSCOM about will this energy that we're procuring public ebb available to be put onto the grid? Is the capacity constraint, is the capacity available? And then it turned out that it was quite a big failure between the five. I remember watching on TV turn off was the saying that when he flew back from overseas in an emergency saying at stage 6 of we have now decided to 55 from 2600 watts to 5200 megawatts and this will solve the energy crisis and bring down the cost of the wind. And now in the union Google that is very difficult to find any kind of mention of, but No 5 doubling you have to dig really deep, but it's there. And now in reality it has come about 25 and less than 1000 megawatts is actually coming online from that Bundo because these constraints, I just wanted to understand as solar group being impacted by requested constraints and doesn't have impact currently with your projects that you've been developed. Speaker 3 I think it's a challenge for the industry at large, of course, because it's obviously becoming clear that generation is no longer the bottleneck and transmission is the bottleneck, right, which is what you're describing. I think there's a couple of factors that influence it. The location is obviously quite important where you are actually building your facility. At Solar, because we've been doing it for so long, we will only develop a project once we've identified these factors ahead of time and we won't be looking for buyers for that particular project unless all of those grid guarantees are in place. So from our side, we obviously take quite a few steps to ensure that that is not a problem specifically in the context of the projects that we are developing. But I can understand why that is or can be a very huge problem depending on the entity that is developing the project. But at the same time, much like the RIP program that was implemented, we are obviously seeing a similar process being implemented now with the transmission infrastructure. So the next step is now that we have this massive ball rolling in terms of generation, we now need to solve the transmission infrastructure challenge. But it's not a challenge everywhere. It really just depends on the location. We are always working to identify new spaces where we're going to strike that balance of solar radiance with the actual location to ensure that we don't have good constraint issues. Speaker 2 Great. And from my side, my hope is that as the capacity becomes available, there's been promised from SCOM Transmission or now the National Transmission Company, South Africa in 2028 and 29 that it will be allocated types. The hope from my side is that doesn't just get allocated automatically Tesco Green, but there's a fair markets approach to the transition towards the truly democratised each sector. Speaker 3 Yeah, Of course, like I mentioned before, it's a transition, but you can see how much development has taken place and how we seem to be making bigger and bigger strides, especially in that space. So I'm very optimistic about the changes to the transmission infrastructure that need to take place in order to provide that kind of free market exchange that needs to happen. And we've had very positive experiences with ESCOM and dealing with our great guarantees and our project development. So we can't say that it's been particularly difficult under certain circumstances, but it is obviously an ongoing process. And this is a challenge I think that the IPP does need to be aware of in the process of developing these projects. Speaker 2 It's great to know that Isco's playing nicely with that. Speaker 1 And of course, we've seen the recent launch of, well, at least the precursor to the launch of Triple P transmission infrastructure construction. Unfortunately, it seems like the RFP for that is going to be delayed, but so transmission will take time to develop. And I think the patience required will pay off because as we've seen, the success of Triple P's within the renewable energy industry have paid off. And so it's definitely the right move, I think for transmission. And of course, it's paving the way for independent Tso's within some regions and definitely it's going to pave the way for private DSOs as we've spoken about previously. Speaker 2 Triple B is public private partnership, RFP is questionable puzzle and the TSR transmission system operator kind of like the free market operator for specific regions for distribution. Speaker 1 And then on that topic as well in this context, exercising and stepping rights recently to take over indebted municipal grids. And so I think it's a matter of time before the private sector is allowed to step into that realm, perhaps with in partnership with SCOM or independently. But that's definitely the way that the future is going to map out because we've seen that happen in other developed markets. Historically. It was very similar situation. And as we've discussed before, we are not unique. We are following very similar path to what other developed nations have already gone through and so we can take lessons directly from that. SOLA Group: Pioneering Wheeling Projects in South Africa So now we're gonna move on to the Solar Group and what it has achieved. I've had the privilege of working with the Solar Group for a long time. In actual fact, it started before that with more power when the founders were part of a development company and then decided to transition into the EBC and IPP space. What started out as essentially A rooftop EPC company grew into an IPP. They were the first licensed grid feed project within Cape Town at Black River Park, which was quite significant at the time and then grew into a vertically integrated CNI IP and that led to the first Wheeling project in the country with Amazon. I also worked on that project on the due diligence side, which was very, very cool. And now they are a full tilt utility scale IGP who have really broken grounds with most recently the Springbok 150 MW project, as mentioned previously, which is the first multi buyer virtual Wheeling project in the country. And I think some of the success mentioned in there as well has been the right financing partnerships. So historically there was the investment of African infrastructure investment managers together with Nedbank into a 40 MW rooftop CNI portfolio. I was part of the due diligence team. And then later on it was African Rainbow Energy and Power, which is founded and owned by Patrice Masepe. And that's really catapulted the company into the stratosphere. They've definitely been the leaders to show how what starts out as a the roots of EPC can grow into a fully fledged vertically integrated IPP. So very much one of the flagship success stories and congratulations to them. It's been very cool to watch and see that can actually take place within a very challenging market. They've managed to be ahead of the curve and sort of write the rule book for how others have all the playbook for how others have followed. So with that in mind, what's some of the lessons that you can share from this experience that the company's gone through? Speaker 3 It's very interesting that you mentioned Blackwater Park. It's quite a niche bit of information that you would probably only go if you were involved directly with the company. So that's very interesting. I think the first thing that comes to mind is that the REIP process was started in the early 20 tens, but it wasn't until the Amazon Adams project, the 10 MW Wheeling facility where it actually materialised. And that process takes time. You have to be very patient and you have to be very pragmatic about what it is that you're doing. And Solo has always been very, for me, it's still always surprised to see what the team does on a daily basis, the miracles that they work in terms of the permitting that they need for a specific location or whatever the process it is, the people in the organization just seem to deliver results. So it's just like you said, it's, it's a process that takes a lot of patience. Obviously we have a lot of institutional knowledge in the company in terms of how these things need to happen or what it takes for these things to happen. It's a process that you can only learn by doing, which is what they've been doing for a very long time. That's the best place to be for me at this point in time to understand what's going on in the utility space and also just have a part in finding clients and buyers who are going to take part in this actual Wheeling process and to see how it develops with time. Speaker 1 Indeed. And then just as we've discussed before as well the length of time it takes to see some of these projects through to light. I remember the Adams project started out initially as REIPPP round one project and then there was the small projects program which went on for a number of years and eventually failed and fell over. Adams was submitted and I think made it to preferred bidder status, but unfortunately the program fell over and it very, you know, very much seemed like it was dead. Then it held on and saw the light of day through the first reading project within the country. So it just shows you to those out there who are in the development game, it can take a very, very long time. This is not a two to three-year long process. This is typically 5 to 7-8, even 10 years in some cases for projects to be realised. And yeah, absolutely. If you don't have that patience in this game isn't for you unfortunately. Absolutely. Speaker 2 That timeline of years makes me think about how when I was in Esscom working in the top Consulting Group providing consulting to the executive suites and board of Esscom about the transition, that selection would go through. The kind of optimal time that it was projected that we would be able to do a transition to a democratised in each sector was five years. And then they said it's more likely going to be 8 years. And at the time it was being, it was providing consulting as a kind of consulting house to the executive board. And that was on kind of modelling that they had done from developed nations, how they, each nation as they kind of join the EU, was able to transition from a very similar model of a state owned central utility that's provided energy for the whole nation to then kind of connected to the grid and becoming a democratised energy markets. And then also developing nations that are going to the same process. Like looking at the Philippines and other kind of countries around the world that we're developing and also going towards this transition, which pretty much like for me, symbolises a developed nation versus a developing nation. In my opinion, key hallmark of it says you've got 1 central energy supplier utility, that's kind of reliance on the government to provide energy for your nation. A developed nation is where you've got a democratised energy markets, Idps are providing energy to the grid and there's competition market and that's kind of showing that now you're not reliant. Speaker 1 On all that kind of centrally. Speaker 2 Controlled government utility for the security of energy in your, in your country that you can rely on competition forces to provide excellence in terms of low cost energy and also going towards stability. And that 5 to 8 year period was kind of provided in 20/17/2018 when the process started. And now we're kind of sitting in 25 minutes already seeming like it's going to be now three to five years from now that we're actually gonna have like a democratization. Demystifying Virtual Wheeling: How it Works in Practice Sorry on that notes Jason to chat been about virtual Wheeling. I've kind of first heard this think in webinar and as it was discussed virtual Wheeling I was like isn't feeling currently virtual like I thought really was virtual. You know some actual electrons that go and then transferred over the grid to financial instruments. Anyway, Wheeling and sauce like what is this virtually? It took me a long time and it said if I'm also expected now it's still very complex and I don't feel like I can explain the seven-year old at all. So I know some groups. Exciting things they will needing first class 1st in South Africa projects regarding virtual Wheeling. If you can just take us through like 4-7 year old, what's the difference in Wheeling and virtual Wheeling and then what is kind of the things that solo groups doing and exciting things to look forward to for the next two years from solo group in this space? Speaker 3 Sure. I've actually had a client mentioned that to me as well. I thought that Wheeling was already virtual like you say, the financial instrument is important in terms of the distinction. But the way I like to think about it in terms of putting it into buckets is that with traditional Wheeling, it was always SCOM to SCOM, right. So you would have to be a SCOM direct connected client and you would have the PPA. PPA stands for partnership agreement signed between the utility of solar and the end user or the buyer. And there's a very clear distribution of energy between those two entities. And more specifically, on your scam account, you would get your bill each month. It would show you exactly how much power you used in total and then how much power you will wield and then you would get a credit, right? Escom did try to or has been trying to figure out how to implement Wheeling in the musical context, but it's a lot more complicated than let's put down a contract between two entities. You buy power, I sell you power, right? There's a number of reasons for it. One of the reasons is the municipalities generates a lot of revenue from their energy sold to the entities that belong to that particular municipality. But it's also an effective tool for allowing has come to regulate the space to ensure that it is fair in terms of who can sell and at what rate. So with virtual Wheeling specifically, you now have the introduction of the WIPS rate, which is the wholesale electricity pricing system. And it's quite, in my opinion, it's very smart way to implement this system because with my actual virtual Wheeling PDF that you can access from Tesco's website, there's a schematic that shows you what the flow of energy and money looks like. So with the web's rate, we essentially have an agreement in place that Escom bias the power from us at that rate. They then sell it to the municipality. The municipality sells it to its end user and we have a contract that we signed between ourselves and the end user for that specific tariff for the PPA. And then instead of getting a credit on your bill, you still pay your bill and your traditional way to your municipality and you get a rebate, a cash rebate, which is essentially the difference between a contracted energy that you choose to buy from us versus that same volume of contracted energy that is then indexed against the website, right? And so then your municipal goal becomes or is untouched, right. And when we discuss later about rooftop solo, you'll understand also a little bit better the benefits of both virtual Wheeling and rooftop solar in that context. And with the virtual Wheeling system, it also gives us a solar a lot more flexibility in terms of how we allocate that power, which is part of the reason why we've been able to have this multi buyer project with Springbok is because with the virtual Wheeling mechanism. And that is I think also paving the way for the trading atmosphere that is currently being developed and is kind of being introduced by ESCOM as a potential option. But again, there's a lot of things that need to take place in order for these steps to happen. But just like you mentioned earlier, it democratises states of the energy of buying and selling of energy that we see in developed nations. This is very much sort of the basis for that process. So it gives us the energy utility provider IP flexibility and how we distribute that power and then also how we are able to then allocate it to our buyers, especially with municipalities in good standings as municipalities not in good standing. Navigating Municipal Debt and its Impact on Wheeling I think that leads very nicely into the next topic we're going to discuss, which is the good standing and not good standing of municipalities given the significant IT situation to Escom as we've discussed previously. So perhaps you can give us your views on that and then perhaps touch on what you think about the elements of the tokenization that might be emerging to try and bring some solutions to this essentially an accounting problem. Speaker 3 All that means is that the municipality is in debt essentially to SCOM. And so they're sort of like in a kind of grey space where an unknown space with one. And one of the limitations with virtual Wheeling is being able to wield to an end user or a buyer who's within the municipal bounds of the municipality. That's not in good standing. We can't actually do it at this point in time. So it is a bit of a limitation. Most of the municipalities in the Western Cape are in good standing and there are couple interspersed throughout the country, but is a bit limited. Nobody actually knows clearly which municipalities those are because it's obviously not officially released. At this point. It's difficult to say, but the way that we sort of envisage it being managed is that the municipality could potentially move into good standing on a mathematical basis. It's the responsibility of the IP to place that energy with the buyer if they can, if that energy is available, first of all, and if that municipality is in good standing. For example, if you're in the City of Cape Town, it's pretty much almost not guaranteed, but you're very confident that you'll get your allocated energy each month. But specifically with municipalities and not in good standing, it's difficult to say how we can manage that right now. It's also difficult to say how it will be managed in the future. We just taking it one step at a time. Obviously, getting the virtual Wheeling package up and running has been a challenge in and of itself, so we're busy taking our learnings from that process. This is more of an opinion as opposed to directly what's happening in Solo. But the talk that we have in terms of moving the essentially democratising the energy infrastructure where you then have a choice at some point in the future of who you get to purchase power from. They will potentially be a mechanism where being in the municipality not and concerning is not a limiting factor being able to access it, which is I think we're the question about tokenization potentially comes from. The problem is that the energy has to be placed right. In other words, the customer does need to be able to use that energy whether or not they are in a municipality of good standing or not. So how that will look in the future is difficult to say, but his comments been very progressive. They've been very smart in terms of how they are going about it. So I'm pretty confident, you know, in the next couple of years there will be a mechanism that will allow a buyer to purchase power from an IPP if there are any musicality that's not currently in good standing. Speaker 2 That's yeah, makes me think about how several in the previous budgets, I think the 2024 potential budget was mentioning how electricity services within local governments are going to be professionally managed. And that was really exciting to hear because that means when he says professionally managed, it means it's not going to be reliant on the municipality staff that all public servants to be like. All of a sudden you must quickly upskilling, misunderstand how this whole Wheeling thing works, understand how it's gonna integrate to the billing system and understand how it's going to be delegated to have money flowing through your. It's very complex things that need to happen. Professionally managed means there's going to be allocation in the budget for professional companies to come in, private companies to come and assist with municipalities and their budgeting of the electricity. And also he mentioned ring fencing of the money that's collected from the literacy sales within municipalities. That was also really exciting. Yeah, because it opens up their conversation that you mentioning of even if municipality itself is not managing its budget very well or its expenditures that the money collected from electricity will be ring fenced by professional service. And so the IBPS can then integrate with the professional service and not necessarily the musicality to get their money for the future of virtual link power that's going to the musicality. So that's really good to hear from the person coming from his office that's already being thought about and legislation is being developed within the Electricity Regulation Act and amendments are more anticipated to come that they already anticipating. What do we do in the situation where the municipality is not in good standing? That's not like the entities within the respect shouldn't be punished because of the the way that managers are managed by the musicality. Everyone should be able to benefit from solar renewable energy. Comparing Onsite Solar, Wheeling, and Tariff Dynamics Absolutely. So that notes the topic that I would like to explore because I'm coming from the EPC side by large scale based deployment and large scale solar farms deployed on rooftops and also on grandma's systems. We're talking more pros and cons of onsite solar and the benefits to having wheeled energy coming in from larger for the forms and best forms that are deployed by solar and your opinion about that and so this position. Speaker 3 It's a good question. We recently published A blog post on our website about the benefits of Wheeling versus behind the meter. Shout out to Melissa Lombard. She's the Marketing coordinator, Business Development Coordinator at Solar Group and she wrote a really nice blog post on the benefits of behind the meter versus Wheeling. We sometimes use the term behind the meter because what that means is that the installation has been done on the client side behind their municipal or meter. So in terms of return on investment, typically if you're wanting to spend cash and you want an asset that will pay itself off in a relatively short period of time, we're looking at three to five years. Putting down a behind the meter solution is going to be in your best interest because once the asset is paid off, it's yours and obviously it generates a revenue quote, UN quote, which is the savings that you have on the behind the meter context. And an important caveat is that the behind the meter solution, you save on your retail tariff, on the tariff that you have with the municipality with ESCOM. So if you're standard tariff in the daytime is through and for example, and you are saving 100% of that with the solar, then you're going to be saving through Rand, right. That's not necessarily the case with Wheeling obviously, because we own the asset. The asset is in a remote location and you are accessing the benefit of the solar through your grid supply itself. So I'll get to the sort of summary that I have in mind of the benefits. If you have an onsite battery solution or behind the meter battery solution, the benefit of that is that you then have a system that can essentially if the grid does go down, depending on how it's designed, you can still run parts or your entire facility with the battery. You can't do that in a Wheeling context because of the grid goes down then you obviously can't access the benefit of the solar. And if you have the space on your site to put down a behind the meter solution then it may be worthwhile. The benefit of Wheeling specifically is that it is purely a cost saving exercise. You don't own the assets, we own the asset. We are able to construct the asset at scale. Meaning that those economies of scale work and are favour to essentially allow us to offer a competitive tariff to you as the buyer. Whereas the behind the meter solution, you're obviously paying for all of that infrastructure that's required and the economies aren't working in your favour as much. Some businesses have roof constraints. They might have an asbestos roof which the cost to replace it throws up the business case entirely, in which case it makes sense maybe to go with solar. Or if you are a an industrial user and let's use an example of milling, you produce a lot of fine particulates harder that might go over the solar panels on the roof and you might have to clean them more regularly. And even in a lot of cases that we have where it's combined solution, the client already has maxed out their solar capacity. Like plastics is a big industry, it maxed out their solar capacity. Plastics has a very high energy consumption per square meter. And so they've maxed it out. It's giving them 10% of their bulk. And then we can come in and provide the battery portion for their peak time offset as well as the balance that is they have available in their standard supply. Together. We've worked with other ECS where they have an existing solution on site and they just want to maximise the benefit to their client, in which case then is behind the meter solution plus a Wheeling solution. So it really just depends on what you are looking for as the end user and I don't necessarily see it as a competing product because like I said, they both have their benefits depending on what it is that you're trying to achieve as the end user. Speaker 1 Indeed. And then I think just coming in on some of the economies of scale that you would speaking about there, just some that come to mind from my side. You've obviously got relationships with existing landowner groups. So you don't have to go back to the drawing board there. You would have already had clusters of land, the race to get bigger and bigger projects. So we're talking around the 500 MW scale. You've got to build a main transmission substation, probably some transmission network as well. Those cost a lot of money to take a lot of time. So opening up new areas requires that which needs bigger projects and then those bigger projects can supply a portfolio of clients. And then of course on the site itself, let's say if you're trying to build behind the meter and you know, some problematic clients come to mind. So let's say it's a mine, for example, all your workers that have to enter into the mine and they'll have to abide by mining health and safety, not the traditional object which you would do for other industrial sites or commercial sites. And then there is a certain large carriage company that I was involved with previously whereby the company I worked for had installations within their facilities and they had whole lot of over above health and safety. And at that time COVID protocols which were well beyond what we thought were necessary and required. And that made EPC work and the subsequent over name work very, very difficult to do so. And then there's access. So you need to get access to your facility, which is on a rooftop within someone else's facility. How do you get access over weekend or after hours to sort something out? So these kinds of barriers come into play and just make operations of the facility a lot more complicated. All these edits are removed when you're dealing with Passenger. Speaker 2 So I've interestingly see a happy synergy between Epcs and this for once again for us Lehman EPC is centering procurements and construction and something refers to start a company, little company still sort of panels on your roof or on grandma's system and touch your property. So I see you happy synergy between Epcs and IPS, mainly because of the way that large scale batteries for energy arbitrage are becoming much more attractive and I've seen this the last year for businesses. And so explain what this looks like. We look at the peak demand tariff that is currently increasing every year. You're on your wisdom. What they're doing is in order to, in my opinion, conserve their revenue collection and increase their revenue, they're aware of the top .74% increase by those of this year. But when you look at the reflex in the Mayflex tariffs, what they've done in the peak demand season, which is the winter, July to September, they've increased the peak tariff time, which is now between 5:00 PM and 8:00 PM by 28% and then 22% in other cases. And then the Standard Time, the standard tariff, they've decreases, they've decreased it by 7 or 8%, which is the daytime kWh rate. So for example, we'll go from 2 rounds during the daytime down to like one round 80, but then peak hour would go from 450 up to 6 or 12. So in order. And it seems unregulated, we're just something that is actually still approved by NERSA where it's is regulated. It's not like OHH, our new tariff is 12. There are still signs it off, but I don't see it kind of mentioned in the news or in media or I don't see it discussed or it's being highlighted anyway. But unfortunately what happens on the business side is they're seeing an overall increase of their annual energy charge increased by 2330%, whereas they're expecting a 12.74% because that's the headlines that we see in the newspapers, on the articles and on the news at 1.74% increase in their like. Again, the CFO is like financial person. He sees top myself 4% increased grades, the Budget Office imposing increasing my best, but next year for my electricity costs, ohh, that's gone up by 30%. What's going on here? And then now all of a sudden my company empowered workforce, we've been getting a whole bunch of requests for how do we bring down energy costs? And interestingly, the counter to the approach that has been taken by Esscom when the tariffs where they are bringing down the financial savings that you get from putting solar on your roof. The council that is putting that large scale battery for energy overcharge. And what this means is for that like 6 round 12 cents kWh rates in the evening between 5:00 PM APM, you put down a battery that's large enough to take care of 100% of your demand during that time in the facility. So you compute your remove your peak hour tariff cost from your pool and that's battery then recharges during your off peak time between 1:00 AM and 5:00 AM. You started slowly so you don't spike your literacy use. Then you have now your battery fully charged during the morning peak, which is from 6:00 AM to 9:00 PM and 9:00 AM. So that's a 2. Ohh. Sorry, sorry. Fourteen. 6:00 AM and 8:00 PM. Eight AM, so in summer and in winter it's between 7:00 AM and 9:00 AM. So the happy synergy that I see is if you can get large scale solar and you have that wheeled in during the day, you can then recharge your battery to full with low cost solar. And you can also then claim that a lot more of your electricity is being used that's green. So you can, there's many benefits, stacked benefits as we call it where your overall financial case for putting it down, larger scale battery and whatever recent example of this where once again you mentioned plastics. Exactly. That is plastic manufacturing facility where their roof unfortunately was very small relative to their cost relative to their full. They could only put down like A5 kilowatt system. But we were seeing actually a four MW hour battery would be really great for them for any arbitrage. And you wouldn't be able to recharge that with solar because the rest are small and you'd have to recharge during the day with sanitary, which wasn't quite making sense from an orbital projector. So we were kind of lucky we put down a four MW hour battery. It takes care of the evening peak. We charge for the morning, but never got so much evening, whereas now we started group being able to reel to that company. It's a really great synergy because I'm getting up for six MW hour battery because now we can put down really low costs electricity supply from solar, probably half discharging and then you're recharging your battery with depth. And then apart from that also the working relationship. And we're gonna come to that also like how do you integrate into the markets? How do you go to markets and business development approach. There's a nice synergy between Epcs, which we have been dealing with companies that are getting solar interested about reducing their energy, civil service and carbon footprints. They dealing with them for the last 10-50 years and the apps they are going out to the market and they're like we need some of these companies. Whereas Epcs have been talking with them already and you can tap into the client base of the Epcs when you have like a nice working relationship between the two because you've got opportunities. We're engaging with clients like we also want batteries, Great as an EPC, let's have a nice reciprocal relationship. So I'll see like a very happy synergy. Speaker 3 Happening between PCs. That's a good point. I think the challenge at the moment is that that off peak time because the tariff is quite low, it's the lowest that you get during the 24 hour cycle. It's, we can't, well we, we're not at the point yet where the cost benefit of the battery allows us to discharge power during that period because we need quite a lot of power to discharge it. As you mentioned, taking an arbitrage. So for the layman, the arbitrage means that a by power at the off peak rate of $0.79 for example. And then I discharge the battery at a time when I'd be paying nearly 7 rounds and I get the spread of power and then the saving from that spread is what I used to pay off the battery. It works in that case. But if you're buying even that one round, 80 throws off the business case of it on your standard rate. So we would need I think battery to be a lot less expensive in order for that segment to be served by a solar solution. It's difficult at the moment with wind because wind can sometimes be a little bit less consistent with solar. If we pick a decent location in the country, then we can comfortably work with the what the irradiance is going to look like throughout the year. So we can hedge against that. But I think that you make a good point in that it's time as the industry matures, that may definitely be a good option where the energy purchase because so the only works in 100% renewable energy. We don't arbitrage, but we the if an EPC is using arbitrage mechanism that the energy that they do buy could be also 100% renewable at that point in time. I have been working with ECS up until this point because that is the space that I also come from. And there's absolutely a synergy because there's a certain market segmental size that we don't specialise in, in municipal areas where the municipal standing is in question. So it's there's definitely a synergy and there has been a synergy for some time. But you do make a good point in terms of being able to look at, you know, potentially purchasing that energy at a time when the renewable energy is 100% available, which I do think will happen in the future. Speaker 1 I think just from the perspective of tariff forecasting, we have absolutely no certainty as to what happens with tariff approvals year on year. We've seen not only our tariffs increasing and that's what you'll often just see in the news is the percentage of an SCOM increase. What you won't get to see in any of those publications as what actually happened to the tariff structure. And in one breath escort will be saying, ohh, it's more time reflective. We're in reality, we're actually seeing a lot more fixed charge and visibility is also doing that. So tariffs are not becoming more time of use reflective. They're becoming more it's charge reflective to take away time of use, which works against essentially the distributed generation uptake of PV and base behind the meter as well as with Wheeling cases. That's leading to this emerging consideration of whether you know space users just go completely off grid and you save your entire pinchable as opposed to just the time of use kWh basis and sometimes the KVA element. But again, there could be completely scrapped from one year to the next. Speaker 2 Yeah, it's a very interesting points about that. We've recently heard chatting with the person that's working on the Wheeling implementation in the Western Cape government that constitutionally there's an approach from the government saying that, you know, actually able to deploy a facility like a factory without having SCOM connection coming to your property because. And the reasoning is that electricity is constitutional rights according to the South African Constitution. And so there is the responsibility from the government side provide you with the constitutional rights including water as well. So you will still be paying those fixed charges even if you don't tap into that connection point that comes to your property and you completely building offers facility very difficult to go completely off grid as APC we get past kind of standards from clients. Please take us off grid. Well I give this comparison. If you want to go take care of 80% of electricity people with solar, it will cost X say, but if you wanna go complete your grid, it will be like 30 million in terms of your deployment, 3 * a month because your battery needs to be 3 times larger. And so does your solar because you need to accommodate for whatever this cloud cover for. And so it's not recommended actually to go completely off grid. If you're currently connected to the grid, yes, it makes sense. If you're developing a green facility that's far away from any connection points and you need like an MV medium voltage transmission line to be both to your plants to your eco lodge, then yeah, it makes sense that you need to still have the generator. So off grids in terms of actual viability, it's not really that viable. And they should deploy something that's like an ego village. SOLA Group's Strategy for Business Development and Market Engagement Great. So knowledge, Jason. Interestingly, the the space that I love talking about business development, We've both connected to being former colleagues in this space. It was very impressed when I met you about your knowledge and technical capability prepared with business development skills and soft skills. So you can talk through how does select group go about access the market, informing the market about the benefits of going inside the group and the approach of business development group takes. Speaker 3 I think everybody has quite a different approach, at least within the business development department and has more of like this bilateral system as opposed to strict hierarchy in terms of how things have to happen. And I think that lends itself really well to facilitating or getting like the most out of people in terms of their like natural talents and everything like that, right? So we have very big organic reach. We get, we reach our market a lot like that. We get a lot of education because first of all, it's not obviously it's not super clear what Wheeling is, and it's especially not clear what virtual Wheeling is because it's brand new. So we do a lot of education and some of my colleagues have very good relationships with certain entities, art in the space. I have a sort of unique approach. I developed a business development script that I run that does prospecting for me based on parameters that I'm looking for to reach and that is informed by the processes that I've followed in the past and who it is that I want to reach and to just a lot of word of mouth and a lot of expansion on some of our existing clients. A lot of our clients are always looking to procure more power when it becomes available. And we've established ourselves in that space like that. So I don't think there's anything super unique about what it is that we do, but we do have used our organic reach to our advantage and very much pioneer what we can't or what we do in the space. For example, like our being the first IP to implement virtual Wheeling alongside Vodacom, you know, that helps us really kind of establish ourselves in this space and continue to be the household name when it comes to Wheeling energy in particular. So yeah, we've got a lot of very talented people in the organization. My colleague Brian, Tim, she's the business development manager. She's also been instrumental in implementing the virtual Wheeling mechanism within solar. And she can just do anything. She can do virtual Wheeling, she could do business establishment, she business development, Yeah. So there's just a lot of very talented people who've been doing it for a very long time and know what it is that they need to do in order to move things out of the line. Speaker 1 Yeah, just an anecdote from my side. A good many years ago there was a conference held at City of Cape Towns Auditorium in Belleville. And remember we were having a coffee break and walking to the elevator controversy. It was crystal Don Willis to the Co founders of soda and my awesome Ohh, you attending this this thing. This is where Ppas and things like this were first being spoken about and exporting power from rooftop into the grid. And the response was know what's this thing about? I know this is city of Cape Town talking about how to get all this thing going. What are you guys doing here? I don't know. We're busy signing on next agreement upstairs and it's like they were light years ahead of everybody else. And that was quite interesting to just see again, it came down to relationships. Everything that I ever saw was patients explaining, I guess, he said. Educating the offtaker and patience to repeat yourself over and over and over again. And that I think was very much a success factor. And then also some of the other lessons learned that I've observed was a lot of the Ec's trying to go into IPS think, okay, cool, let's build some projects and got the IPP route. And you start off by your first project being the ones that you're trying to sell power through and then they underperform and then your whole thing just falls flat on its face. Whereas one of the key recipes for success at Solar Head is existing projects that were selling, they're performing well and then they could put those into a portfolio, which then was refinanced AIM and Nedbank and then that was the vehicle that essentially set them up and led to subsequent financing and so on. So the lesson learned there for those Epcs trying to go this IP route is do not start with just some projects and expect those to be your app once, get them operating, prove that the credibility is there and then build over that. And again, that's going to take time and patience. Speaker 2 Interestingly, we have been developing large solar farm in that same kind of strategy of like we're going to deploy a loss of form. It's going to be Wheeling. Then we learned a lot of lessons about all of the different permits and good access and how everything kind of works. It's almost like a large 3D puzzle with 60 plus permits that all need to come together and each one kind of has a year long duration that they're in place for. So they are going to need to come to get the same time. And we also learned about the grid access capacity rules and how we needed to get businesses to sign up, they notified maximum demand and have that allocated to the cell phone to prove that they would actually be overtaken for the solar farm. And then we would be able to get to finally our budget quote phase EQ. Meanwhile, we had our costs for lecture in place. We're like, wow, this is very complex process. That's Jason. You said been able to navigate very well and effectively to deliver results. So now you've got some nice projects coming down and some exciting things going forward. And you mentioned there was an aspect of what's unique. So in my view, what's unique about from the outside looking in from the markets and want to be able to pick up through looking at some group is that not a lot of Idps have actual energy available now or in next year. And from the other Rtps I've been speaking to, they're saying we've got like 20 times more demand for electricity than what you actually have available. Companies are seeing we need to get reeling power. It's gonna have many stacked benefits apart from just financial. We've got next year phase two of the carbon TaxAct coming. No one quite understands really how exactly that's going to roll out, but I see there that's okay. I'm really reporting on my trip to missions all Jesse, this company is after provided in their standards reporting as part of the integrated reporting and they see that okay, in phase two of the common tax acts, we are going to be liable for scope divisions. How's it going to work? Are we gonna pay SARS money for the electricity we use from SCOM? Because scope 2 is The Dirty electricity reform SCOM and they just know that we need to reduce our carbon footprint. So that's a massive benefit they'll get. So they're like please give us renewed. We need it and the lack of who has it knowing, but so the group does. The Next Five Years: Industry Outlook and Key Developments So on that note, what can we look forward to? Speaker 1 Well, I think key thing looking to the future of what is going to happen is a lot of credit capacity has already been taken up in the key areas. So solar, northern, cave, wind east and Western Cape. So we're going to be seeing solar emerging in parts of the country which traditionally haven't been. So we're seeing them perform from Malango, which is also good because those are traditionally where coal plants have been and we need employment within those provinces. So that's good to see. And again, with increasing tariffs, it just makes solar projects on the scale more and more realistic. And then the key thing is going to be this municipal debt situation and what happens there. Perhaps it's a good thing that Eskom is able to step in now directly and take control of these municipal grids. I just think there needs to be some oversight. So it can't just be SCOM seizing control and taking over forever. Hopefully there's some kind of sunset clause to this and some upskilling and problem solving within those municipalities to bring them up to the level of competence and capability that they would need to in order to get the grid operating where it needs to. And then another key limit there is going to be how the metering the skater, as we discussed previously on the skater, is going to interface with these projects and measure the impact of embedded generation on the grid. And then how this is all going to be essentially plugged into this essentially an accounting problem of who owes who and how that's all going to work. So that's a bit of a conundrum that we need to figure out. But again, markets elsewhere in the world have done this. So we don't have to learn the lessons the hard way. We just need to look to those markets, understand how they've done it. And then a key element for me on the battery energy storage front is going to be what happens with the emergence of an industry services market. So what we haven't spoken about before is renewables essentially it's just a kWh basis of supply. It's just energy put into the grid and you don't really worry, provided it has to comply with the grid code. We don't really care about what's happening with reactive power harmonics, frequency control and these kinds of things. And really what best, as we turned battery energy storage for short is essentially developed for when it really comes into play is helping a grid operator maintain grid stability. And we've seen some recent scenarios in the world where wind farms struck, for example, large wind farms in the UK and battery energy storage actually saved the grid from total blackout. And so that fast response from distributed deep penetration of battery energy storage within the grid network helps to prevent those kinds of crises from spreading further. And for that to happen, we need an ancillary service market framework that we don't have one, the only way that bears can be deployed on a large scale at the moment is through the best IPP program, which will now hopefully be launched again given that the IRP has been visited. But until such a time, it's only really perhaps the energy trading market that you'll see the large scale deployment of bars around the country to help augment their profiles that they'll aggregating as part of their model. But hopefully that gets unlocked. And it is certainly something I've been speaking to a lot of people on the supply side and on the demand side about who's actually going to be approaching, no Sir, with a model of how an ancillary service markets could operate. And then we get also going to see the emergence of virtual power plants. And I think this is going to be emerging with Multitex. And we've seen growth point, for example, recently also starting to include things like hydro power in their portfolios to supplement what they're really getting from battery energy storage and PV, which is very interesting to see. And so I think in the last element is going to be expansion to include the Southern African power pool. Recently we've seen the newly formed NTSA speaking with the South African Power Pool about how they're going to start looking at including the rest of Southern Africa within this generation and demand pool that is already existing but hasn't until this point allowed trading of power from a private sector perspective cross-border. Speaker 2 Next five years from my perspective is going to be focused on what is happening with the grid in terms of backups and what is becoming available. And we've got the plan from the NTSA in terms of this capacity is going to become available at this point in time. But in terms of whether that will actually be developed, we remain hopeful because there's a lot of focus, a lot of capital have been provided, a lot of plans and attentions on it. From my 11 years in Esscom, we unfortunately had this trend that was evident when I was there. That kind of was unspoken rule that any projects that any large scale projects and 2nd victim would take double the time and double the amount of money to actually complete. And Christina and Ruby's case, it was double the amount of time and triple the amount of money unfortunately. So I remain hopeful that the timelines of 2028 and 29 when the capacity comes available will be stuck through and that's when it does become available that it is put out to the market in a fair manner. So they say is truly independence in the way it allocates that capacity. And we already unfortunately have seen one aspect where the high voltage yards of the power stations that are coming offline, something about commodity where I worked in the sort of my career with the first two years multipass station as an example of this, but they have some other stations that are coming offline in the next. Four years, that's high voltage yard capacity has already been located automatically through second generation and it's gone green for renewable projects and battery projects to be deployed there. And it was kind of just assumed that regard to them. And so that's where I come back to my hope that I previously mentioned. My hope is that there's a fair approach by the NTSA in terms of grid allocation to the Idps to keep this energy sector transition through D democratised and fair and free rockets and the free rockets format. So from Jason, your side, I would like to hear a kind of your closing remarks on what does it look like for the next 5 years from your perspective group and the IPS and audio looking forward to the next five years from your role in in. Final Thoughts: Patience, Relationships, and a Promising Future Well, I think you make an interesting point. If we look at how the industry has changed not just in the last 10 years, leaving in the last five years, even in the last three years, the development of the RFP process, the integration of that into the energy infrastructure and the energy economy. And the move now towards the potential introduction of a type of independent private sector business that would assist in the transmission infrastructure. And then potentially even the introduction of private entity that would integrate then into the actual management of energy thereof, which is a topic that you mentioned previously. That is, in my opinion, a just shows how positive and optimistic the actual development in this space has been. And I think that it will just continue on that process because it makes sense. The government is backing it. Escom is actively working to integrate these changes as best as they can, as fast as they can. They work with us on a regular basis to ensure that that happens. So I'm very optimistic in terms of what it would look like in the future. I think that's hydro power still very beneficial. You can think about hydro power as a big battery we could potentially look at, which is currently something that I think we are doing, filling out hydro power facilities using solar power and discharging that as a battery during off peak option. I think in terms of solar, we will just continue to develop facilities so that Bias can access that power and make it as available as possible as the industry changes. So yeah, we're always working on new mechanisms within the space. It's looking at introducing the Solheim as an option, which is also something that I'm sure we would take part in. So yeah, lots of very good mechanisms going forward and very keen to see how the space will continue to develop. Speaker 2 As it has. Speaker 3 Because it seems to be on a snowball, which is very exciting. And yeah, I think it's great to be in South Africa. Like you said, we, like Lee said, you know, we have a lot of learnings from the developed world. So it's not like we have to do all of these things for the first time. We can see how they've been successfully implemented and do our best to replicate that as far as possible, still considering the unique challenges that we have here in South Africa in particular. So yeah, I'm very optimistic and it's absolutely a great place to be at the moment. Speaker 2 It's been great having you on this Sir. Looking forward to having you come and join us again and a bit of time hopefully by then we've got our video camera set up. It's more of a kind of face start podcast. But yeah, it's kind of like a combination full circles kind of story for me to have you here and it's great to have your input. Looking forward to all the things that cello group will be doing in the country for everyone they would like to contact. Jason from an interesting things you spoken about is very easy to access. Just got LinkedIn, look for Jason Delaney be able to contact him there. Appreciate your time and your insights. Really great to have you as a guest not showing. Speaker 3 Thank. Speaker 1 So a lot covered within this episode, lots to unpack, but I think the key take away is that there is a very promising market. Key thing is patience, relationships and really paying close attention to market developments so that the policy tariffs and overtaker dynamics. Then key recipes to success include things like track record and making sure that your portfolios are filled with healthy projects and not just full of junk. And again, it can look easy. You can think that a lot of others have been there and done that. It must be a simple game to follow and it isn't. As we've said previously, I've been involved in this industry for about 15 years now and nothing is easy. Every project is just as challenging as the one before. There's always new things emerging and so you've got to be prepared for anything and be prepared to update your playbook as you go. So from my side, Lee Smith, I'll be sunny off. Speaker 2 For my 3 careers, thanks for joining us. Speaker 3 Had the opportunity to challenge the podcast and hopefully see you guys. Speaker 2 Soon. Awesome. See you soon. Thanks everyone. Speaker 1 Cheers.