In this special podcast, Bright Light Solar director Michael Faber discusses the most important electricity-related aspects of last week’s State of the Nation Address. With the 12J company’s Prospectus closing next week (25th Feb) potential investors need clarity on whether the opening up of the market would help or hinder the Bright Light prospects. Faber explains why they are positive for the company and re-iterates that the projected 21% after tax return is supported by the most recent developments. For more information click here. – Alec Hogg
This special podcast is brought to you by Bright Light Solar. Michael Faber who is a director of Bright Light Solar joins us now. It’s just over a week to go before you guys close out your fund offering. We’ve spoken a lot about it on Biznews over the past couple of months – the 21% effective after tax return – Michael what has the reaction been like from potential investors?
It’s been quite exciting from our side and looking forward to what the final number will be next week on the closing date. We’re going to be busy for the next couple of days.
When you say next week, just take us through that process. It closes on the 25th, so anybody who wants to participate in this opportunity will have to send their money to you by that date and then they qualify for a tax rebate, or a write back against their taxes in the current tax year.
That’s correct. So the money will have to be deposited and the tax certificate will follow thereafter.
I’m sure you watched the State Of the Nation Address – like most of South Africa – after the ructions were over, there was a lot about the way that the government is wanting to approach the energy scarcity in South Africa and in particular Cyril Ramaphosa, the president said, we want to fundamentally change the trajectory of energy generation in this country by allowing more people to generate energy or electricity. Is that something that would worry you or affect your projections?
Not at all. In fact we welcome some certainty within the regulatory environment because – over a long period of time – we’ve been wanting clarity on how these approvals and registrations take place specifically with Nersa. With the SONA address, it has more of an impact on the large energy users. So for example anyone over 1 megawatt, that process has become clearer. In our particular case, most of our sites are underneath the threshold of 1 megawatt and therefore that means nothing really changes from what was announced on Thursday. Nothing really changes for us in terms of our process, all that it does is provides some clarity for the larger installations.
If you were to have a look at it from the perspective of the investors in Bright Light Solar, is there any risk of more electricity supply coming to the market?
Because we are what’s considered onsite, embedded generation and self consumption, there’s reduced risk in the sense that we are providing power directly to our particular customers and therefore – even if there was an excess capacity into the grid – our solar solution would provide electricity first, over and above what was available from the grid. So from our model being very distributed in the sense that we’ve got a number of sites with distributed generation, that I think is far less risky than one central generation solution.
So it’s not impacting at all on the projections that you’ve been giving to investors?
No, certainly not because we are providing power directly to these customers and we are also protected by the contracts that we signed with our clients. They have to for example use our electricity first before they utilise any other source of electricity.
Has there been any impact – I suppose it’s still too early – on the demand for your installations?
We saw a substantial increase in demand for our solutions towards the end of last year. I think that was spurred on by the more frequent loadshedding. It became top of mind for our customers and therefore started looking for solutions. So we’ve seen a substantial increase since October, November last year and we’ve seen that trend continue into the new year with the number of inquiries that we are receiving and processing.
Even even though there’s a lot of promises, where the takkie hits the tar, people aren’t quite buying it yet and they’re still looking for alternatives.
Yeah. Many clients are looking for an energy security solution over and above the commercial savings that solar provides, given that the loadshedding has increased. We’ve tackled it in a phased approach where we would say to clients, enjoy savings immediately with a solar solution and then we work towards an energy security solution where you mitigate the impact of loadshedding.
