Fedgroup: facilitating the flow of capital needed to address South Africa’s energy crisis

The power situation in South Africa is concerning. An unstable grid and widespread load shedding have significant implications for the country’s economy and daily life.

One of the root causes of the problem is the ageing and insufficient infrastructure of the power grid. Maintenance challenges and a lack of investment in the energy sector have only added to the grid’s instability.

Unfortunately, the impact of load shedding is far reaching. It affects businesses, causing productivity losses and hindering economic growth. The unreliable power supply also hampers the delivery of essential services such as healthcare and education.

Diversifying the energy mix

Renewable energy sources have a pivotal role to play in diversifying the energy mix and enhancing the reliability of the grid.

It’s a complex challenge, but finding sustainable solutions is essential for the well-being and development of South Africa.

Warren Winchester, GM of Ventures at Fedgroup, says that if each of the approximately 22 million registered taxpayers in South Africa owned a 550W solar panel and the conditions were optimal, the total daily energy output would be approximately 121GWh.

While this is an unrealistic expectation, there are plenty of other meaningful steps businesses and individuals can take.

Making a positive impact

Winchester says Fedgroup has a unique take on, and affinity for, tangible assets that have the power to make a positive impact on people, portfolios and the broader environment in which the company operates. “We are facilitators of deployed capital into areas in the South African economy where there’s a gap, and the need for private institutions or the private sector as a whole to get involved.”

For instance, when it comes to solar panels, Fedgroup handles the deployment, and the finance is provided by individual or institutional investor funding where they generate a return. In this way, people can invest in income-generating solar panels and have a side hustle for the foreseeable future.

He says the capital is raised either through institutional channels or retail channels while still providing market-beating returns. “In addition, our investment in smart technology means that clients can always expect reliable and predictable service levels.”

He believes that helping businesses to invest in sustainable energy solutions will enhance the overall capacity and reliability of the grid. “Renewable energy projects, like solar, can diversify the energy mix and reduce dependence on traditional power sources. These projects have a positive environmental impact and can contribute to a more sustainable and resilient energy system.”

Similarly, the private sector can implement energy-efficiency measures within their operations to reduce overall energy consumption. This not only helps in managing demand but also contributes to cost savings.”

Building energy security

Winchester says investing in innovative technologies for energy storage, smart grids and other advanced solutions can improve the efficiency and resilience of the energy infrastructure. “Our investment options are playing a pivotal role in driving technological advancements in the sector.”

Redirecting funds to where they are needed can address these challenges effectively, and by doing so, not only are problems alleviated, but investors can grow their wealth. “We have found that, often, these challenges can be solved through the provision of capital.”

He says Fedgroup aims to build ecosystems to provide energy security to its customers. “This means being involved, or having our partner companies involved, all the way from designing the system project, managing the build, commissioning or getting all the licences in place, and then getting it up and running and generating electricity.”

He says for Fedgroup, being the custodian of this capital and passing on the returns is key. “We are able to use our own internet-of-things (IoT) meters and sensors that are deployed onto rooftop installations so that at any given stage we can see what each one of these sites is producing.”

Tracking and monitoring

In addition to tracking the production, Fedgroup can monitor and report on the performance of the sites and compare the stats to the forecasted financial models in terms of savings for the business. Fedgroup can then provide dashboards to the underlying users of the power in terms of the penetration ratio, where their curtailment is taking place in terms of over-generation and suchlike.

From there, decisions can be made regarding what can be done with any excess power by facilitating a mini-grid or charging of batteries, for example.

“Because of our technology capability, we can provide all the metrics that are tied into the electricity that’s been produced and consumed as well as the job hours that’ve been created, the carbon emissions that have been saved, and more. For example, with over 200 000 solar panels installed, we’ve created 14.6 million job hours.”

A wide range of financing options

When it comes to financing options for property owners, Fedgroup offers several solutions.

  • The first of these is self-funding, where the individual or entity purchases and owns the solar panels outright. They are responsible for all aspects, including installation, maintenance and any associated costs, and the upfront cost of purchasing the solar system is borne by the owner.
  • Next is the lease-to-own (LTO) option, where the solar panels are initially owned by a third party, such as a solar leasing company. The customer enters into a lease agreement, making regular payments.
  • Finally, the rooftop rental (RTR) option involves a third party owning and installing the solar system on the customer’s rooftop. Instead of leasing the solar panels, the customer essentially leases their rooftop to the third party.

By helping businesses install solar on their rooftops, retail clients, in turn, are given access to an opportunity to earn returns from the production of these panels, making this a truly sustainable solution.

Slew of benefits

Winchester says the tangible benefits of a collective investment in solar are numerous. “They include tangible returns that are countercyclical and competitive.”

Moreover, it alleviates the burden on the national grid, ensures reliable power, and brings true cost savings and potential cost savings. “Finally, solar energy contributes to a sustainable and low-carbon future by providing a clean, renewable and abundant power source that reduces greenhouse gas emissions and mitigates environmental degradation.”

About Fedgroup
Fedgroup is a diversified financial services group offering a range of financial products across investments, long-term insurance, lending and fiduciary services, augmented with complementary non-financial products and services that add greater value to our clients and partners.

Established in 1990, Fedgroup has grown into a specialist South African financial services provider, with over R20-billion in assets under management and administration. It still subscribes to the age-old values of honesty, integrity, dignity and “people first”, while at the same time developing a technology-empowered, streamlined approach to deliver the services its clients require. Fedgroup prides itself on its strong governance framework underpinned by people, process and technology.

With more than 30 years of experience in origination and deployment, the entities within the group are able to leverage on the expertise and capabilities made available to generate shared profitability among the group of companies. Our unique approach allows us to put people and long-term sustainability ahead of short-term profit. Through Fedgroup’s Impact Farming offering, we have over seven years of experience specifically within the renewable space, multiple agricultural and impact investment sites, and tech companies at our disposal to ensure the smooth and continued operation of these projects. As innovators in the impact investing space, we have the requisite experience and expertise that not only guides investment decisions in this arena but also contributes to our ability to structure new alternative investment offerings, including our endowment portfolios. Download Fedgroup’s corporate profile here or visit Fedgroup on X, Facebook, Instagram, YouTube or LinkedIn.

  • This promoted content was paid for by the party concerned

Get the latest tech news in your inbox at 5am daily