Ahead of his keynote to the BizNews Conference in London, GoSolr CEO and co-founder Andrew Middleton shares some unappreciated good news on South Africa’s energy front. With 75MW in rooftop solar of its initial target 500MW already installed, GoSolr is part of a surge in private sector electricity provision. Middleton agrees with money manager John Biccard who reckons the worst of SA’s load-shedding is behind us – a view which has huge implications for JSE-listed stock prices which continue to discount the very worst on this front. He spoke to Alec Hogg of BizNews.
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Highlights from the interview
In an interview with Alec Hogg, Andrew Middleton, CEO of Gosolr, discussed the growth and potential of solar power in South Africa. Middleton highlighted the challenges faced by the solar industry, including the need for investment in grid and distribution infrastructure. Despite these challenges, Middleton expressed confidence in the industry’s future, citing global trends and the role of solar power in addressing energy needs and supporting electric vehicle adoption.
Middleton emphasized the decentralized nature of rooftop solar and its benefits in reducing reliance on traditional infrastructure. He noted that while South Africa has relatively low rooftop solar penetration compared to other countries, there is significant untapped potential, especially in middle-affluent markets.
The interview touched on Gosolr’s target of installing 500MW of rooftop solar in South Africa, highlighting progress made and future plans. Middleton also addressed comparisons with SolarCity in the US, clarifying Gosolr’s focus on enabling electric vehicle adoption through home solar and charging solutions.
Overall, the interview underscored the transformative potential of solar power in South Africa and the ongoing efforts to drive its adoption and integration into the country’s energy landscape.
Extended transcript of the interview ___STEADY_PAYWALL___
00:00:08:13 – 00:00:35:02
Alec Hogg: Well, we’re gearing up for a BizNews conference, one off conference in London, which will be held on Wednesday the 15th of May, exactly two weeks before South Africa goes to the polls. And one of our keynote speakers is Andrew Middleton, part of the electricity revolution that is happening in South Africa. And I say that with not much tongue in cheek; it does appear to be going in the right direction.
00:00:35:02 – 00:01:12:03
Alec Hogg: And I’ll just explain to you why we’ve got a premium BizNews premium WhatsApp group on energy, which is extremely vibrant. There’s lots of information that is shared. The, doctor Kelvin Kemm, who’s a nuclear specialist, gives a good contribution. But one of our biggest contributors is Wietze Post. And, Mr. Post wrote a very strong argument recently for the fact that he believes the investment thesis of John Biccard which is buy South African shares because the load loadshedding is not going to be so bad anymore is on the money.
00:01:12:05 – 00:01:54:13
Alec Hogg: And he says the reason for that is because of the explosion in the provision of solar energy into South Africa. Now, Andrew Middleton is the CEO of GoSolr, one of the founders of that company. And, he’s been a big part of this revolution. And, Andrew, I’m hoping you’re going to be telling the people in London about this because when you’re sitting outside of South Africa’s borders, it’s almost impossible to believe that this Eskom that was in such a dire state is now being bailed out to a degree by the private sector, which, according to Wietze anyway, is giving Eskom the runway to get in and do maintenance so
00:01:54:13 – 00:02:10:06
Alec Hogg: that its plants won’t be breaking down quite so often and so on. But maybe, maybe let’s just, reflect on what he had to say and if you can tell us what your reading of the situation is in South Africa. Yeah.
00:02:10:06 – 00:02:31:00
Andrew Middleton: No, absolutely. Alec, thanks again, always for having me. But, I completely agree. I think we’ve recently published some statistics that come right out of Eskom that show that about 2.6GW of solar energy was built last year alone. And so that’s between 2 and 3 stages of load shedding on that date time.
00:02:31:02 – 00:02:50:21
Andrew Middleton: And I think what we would be dealing with right now is 40 days of uninterrupted load shedding, which is absolutely fantastic. But even before that, we were not sitting at the dire stages 4 to 6 because usually at this stage is 2 to 4. And that really amounts to to turn off gigawatts of solar energy branch of the grid is really that is really that the difference in the gap.
00:02:50:21 – 00:03:11:07
Andrew Middleton: And it’s given Eskom the ability to do maintenance, but also to keep the emergency reserves for the evening peak and not the daytime. At this time last year, they had to run those emergency reserves all day. So the solar industry is no doubt had a profound impact and will continue to do so. It’s very positive and very pleased to be part of that.
00:03:11:09 – 00:03:25:10
Alec Hogg: And much of the narrative is, yes, the ANC is gearing up for an election. Are they running the turbines at full tilt? They’re spending lots of money on diesel. From what you’re saying, that narrative is wrong.
00:03:25:12 – 00:03:51:00
Andrew Middleton: It’s difficult. Yeah, it’s difficult for me to speculate on that. All we can do is look at the data. So the Eskom data this year is shown a very marginal improvement in the energy availability sector to the first three months of the year when we had quite a lot of load shedding still, but at lower stages, the availability of Eskom’s fleet was not materially different to this time last year.
00:03:51:06 – 00:04:12:16
Andrew Middleton: So no doubt the difference was the private power that has been put onto the grid. And that was largely due to the solar industry. I think the minister recently put out data to show that they are burning less diesel in this time last year. So the data would suggest it’s really the solar industry that is part of the solution.
00:04:12:18 – 00:04:16:18
Andrew Middleton: I wouldn’t be able to speculate on whether the nation’s got anything to do with it.
00:04:16:19 – 00:04:42:21
Alec Hogg: But this is very important because from an investment point of view, all South African stocks, John Biccard who’s one of the great value investors in South Africa, has said that the cornerstone of his thesis is that load shedding is being beaten and that after the election, we’re not going to see load shedding shooting up again. And I think that’s really the big question.
00:04:42:23 – 00:04:51:07
Alec Hogg: Is John over? Is he overoptimistic, which is not what value investors ever are? from the way that you’re reading things.
Read more: Solar breakthrough: power already cheaper than Joburg, CT – gap widening
00:04:51:10 – 00:05:10:01
Andrew Middleton: So I hope he’s right. Firstly, I think our expectation is that, you know, at the moment the grid is still very fragile. So yes, there’s been a lot of work done by the private sector to put new generation on. We need a lot more. So the system is very fragile, and it’s great that we’ve had the 40 days of uninterrupted load shedding.
00:05:10:06 – 00:05:40:06
Andrew Middleton: I think even Eskom’s own view is that there’s likely to be some load shedding this winter, but probably sitting at the stages, stage two, stage three. I think they indicated potentially worst-case scenario, stage five. So we think the days of the stage six and the threats of these stage eights and blackouts are hopefully behind us. we do expect some load shedding for the rest of the year, but hopefully a lot less as we continue to as GoSolr and other companies continue to build.
00:05:40:06 – 00:06:05:18
Andrew Middleton: So the solar, the adoption of solar is not abating, especially in the commission and industrial space that these new projects that are coming online. So I think phase one is really just making sure we catch up the supply-demand deficit that we’ve got. We also need to grow the economy. I think we often just talk about getting parity between supply and demand, but we need to revive this economy and we need to grow it and reindustrialize it.
00:06:05:19 – 00:06:21:21
Andrew Middleton: So we need a lot more power. So I think this is just really the beginning of the renewable energy drive in South Africa. But, I hope John’s right. but I do expect there will be some, some load shedding throughout the year, but hopefully. And yes.
00:06:21:23 – 00:06:44:23
Alec Hogg: Well, that does put it into perspective. And it also would encourage those who have been picking up the opportunity of the tax incentive 12 B allowance. In other words, invest in these special solar projects and you right back 125% of your tax. it is something that, other partners in this field and at Jaltech have been very aggressive on.
00:06:44:23 – 00:07:03:13
Alec Hogg: And I know they’ve been a lot of business, tribe members who’ve been putting money into that because it makes a lot of sense. But I guess from what you’re saying now, first of all, it’s worked. But secondly, it’s worked so well that maybe government wouldn’t have to repeat it next year.
00:07:03:15 – 00:07:24:00
Andrew Middleton: Well, I hope they do continue it. Section 12 B and section 12 B a, which was the additional 25%, there isn’t clarity yet on whether that’s going to be renewed; that expires at the next budget speech. We hope that the incentive for business remains. As I mentioned, we need a lot more power generation.
00:07:24:00 – 00:07:49:04
Andrew Middleton: So we need to continue to push for more incentives. I was quite disappointed that the household incentive for solar panels, that rebate was taken away. I think it was a good start from Treasury last year, but it was very limited. So I think a lot more can be done to incentivize not just businesses, as 12 B and 12 BA are designed for businesses.
00:07:49:04 – 00:08:10:08
Andrew Middleton: And of course, the other funds that make it available for retail investors. But we also don’t have any incentives for households to do it themselves, either via subscription or outright purchase. So I think we need to continue to incentivize private power generation because we’re not out of the woods yet. There’s been some huge progress, but the system remains very fragile.
00:08:10:10 – 00:08:33:01
Alec Hogg: But if you’re an investor, take advantage of what you’ve got on the table right now and hope it continues. Let’s move on to GoSolr itself. You guys were in the news last week. You, in fact, hit the Bloomberg terminals all around the world with a 10 billion rand investment that you intend to make in the solar area, even on a global scale.
00:08:33:01 – 00:08:52:16
Alec Hogg: That’s a big number. There was maybe a little bit of misunderstanding somewhere along the line. Can you just explain to us exactly what’s going on? Have you got that 10 billion? Is it money in the bank? Is it your target? Is it your intention? Just let us understand exactly where GoSolr is and where it’s going.
00:08:52:22 – 00:09:13:20
Andrew Middleton: Sure. So the target remains the same. When we first started chatting sometime last year, our mission was to build, in the short to medium term, 500MW of rooftop solar in South Africa. I mentioned that itself is half the stage of load shedding. If one company can take off the state of load shedding, then together we can solve this crisis. So 500MW at the current cost of installation and components is going to cost 10 billion rand of debt and equity. We’ve made significant progress on that, but we still need to raise a substantial portion of that money.
00:09:13:20 – 00:09:39:07
Andrew Middleton: So, the target remains the same. We need to continue to push for more incentives. I was quite disappointed that the household incentive for solar panels, that rebate was taken away. I think it was a good start from Treasury last year, but it was very limited. So I think a lot more can be done to incentivize not just businesses, as 12 B and 12 BA are designed for businesses.
00:09:39:12 – 00:09:47:17
Alec Hogg: Okay. And then the involvement of Patrice Motsepe and Standard Bank, which was quoted as well in the headlines on that story.
00:09:47:19 – 00:10:12:07
Andrew Middleton: Yeah. So we have African Rainbow Capital, one of our shareholders, and they are very supportive. Mr. Motsepe is a director of that business and a material shareholder indirectly in that business. So that’s where the article came from. African Rainbow Capital was one of our shareholders, one of our minority shareholders, but one of the most supportive backers that we’ve got.
00:10:12:07 – 00:10:42:17
Andrew Middleton: We’ve got lots of great funders and shareholders, and our capital-raising process is going really well. Our target of solving half a stage of load shedding is on track. We’ve done about 75MW. So we’re about to 20% of that target. We’re confident we’re going to get there. The solar industry is just starting to take off.
00:10:42:17 – 00:10:44:02
Andrew Middleton: And we continue to do so.
00:10:44:04 – 00:10:57:04
Alec Hogg: These are big numbers, Andrew. How is the control situation at the company with yourself and your co-founders? Have you managed to retain control? Is that interest important to you?
00:10:57:06 – 00:11:22:00
Andrew Middleton: We are still the largest shareholders, the founders, but we’ve had to give up a substantial part of our business. That was important to make sure that we hit our mission. Holding onto control of the business was never the primary goal. When you start a business, it’s nice to hold on sentimentally for a while, but attracting capital and great shareholders is essential. We wouldn’t be where we are today without them.
00:11:22:00 – 00:11:39:04
Andrew Middleton: We still have material investors in the business, and we are very bullish on the long-term prospects. Control was never something that we got too stuck on.
00:11:39:10 – 00:11:49:23
Andrew Middleton: We are very bullish on the long-term prospects. But control was never really something that we got too stuck on.
00:11:50:00 – 00:12:00:19
Alec Hogg: So that target of 500MW or half a stage of load shedding in South Africa, how far towards that target have you progressed?
00:12:00:21 – 00:12:21:03
Andrew Middleton: We’ve done about 75MW, just under the 20% mark of that target. The first year was about scaling up, and this year started off very well. We’re confident we’ll get there. The solar industry is just starting to take off.
00:12:21:03 – 00:12:39:09
Andrew Middleton: We’ve made great progress on the capital raising front as well. We’re confident we’re going to get there. The timeline will be what it will be, but we think the solar industry is really just started to take off.
00:12:39:11 – 00:12:48:05
Alec Hogg: 75MW. Just give us a sense of how many rooftops or how many homes are involved in generating that much electricity.
00:12:48:07 – 00:13:00:16
Andrew Middleton: We like to keep that one a little bit to ourselves from a commercial perspective. But it’s significant. Nationwide, it’s many thousands.
00:13:00:18 – 00:13:05:08
Alec Hogg: And you are getting more, or the momentum is growing on that front.
00:13:05:10 – 00:13:29:17
Andrew Middleton: We’ve got a very stable run rate at the moment. We used to be very load shedding dependent. But now more households are deciding to go with solar because of the financial benefits and sustainability. It’s becoming essential for households to live a sustainable, affordable, and always-on lifestyle.
00:13:29:19 – 00:13:52:15
Andrew Middleton: Load shedding was how the solar industry really started, or at least residential started to accelerate. Now it’s essential for households to live a sustainable, affordable, and always-on lifestyle.
00:13:52:15 – 00:14:11:22
Andrew Middleton: I think load shedding was how the solar industry really started or at least residential started to be born and accelerate. Now it’s really going to become essential for households to live a sustainable, affordable, and always-on lifestyle.
00:14:12:00 – 00:14:41:05
Alec Hogg: It’s interesting to know when there are breakdowns in certain areas. Some of our cities are having severe maintenance challenges, Johannesburg being an obvious example. Does that tend to spark demand for products like yours in isolated areas?
Read more: When Eskom wobbles, demand for Gosolr surges – and SA’s home-solar leader gets a new convert
00:14:41:07 – 00:15:07:23
Andrew Middleton: Absolutely. It does. And I think that is another challenge that the electricity minister highlighted. The benefit that the solar industry has brought to generation is currently solving the generation problem together as an industry. But the grid and last-mile distribution infrastructure need a huge investment.
00:15:08:01 – 00:15:31:08
Andrew Middleton: And I think that’s also been quoted. Those numbers are eye-watering. One of the benefits that often doesn’t get spoken about with rooftop solar is it’s decentralized. You consume your power on-site; of course, you can export it, but you’re less reliant on that last-mile infrastructure and the transmission infrastructure in South Africa, which is in desperate need of investment at a municipal and national level.
00:15:31:13 – 00:15:43:23
Alec Hogg: So it doesn’t look like there’s going to be any slowing down of your business in the near future, or certainly the installation of solar power on rooftops.
00:15:44:01 – 00:16:01:07
Andrew Middleton: We don’t expect the industry to slow down. We think it is going to have ebbs and flows. The first last year was an exceptional year where I think the entire industry really just had exponential growth. Now it’s starting to mature, and we’ll have ebbs and flows.
00:16:01:09 – 00:16:29:01
Andrew Middleton: But this is a global technology that is soaring. Rooftop solar is prevalent in most markets globally. We track peers so that we can get best practices from Australia, Southeast Asia, Europe, South America, and the US. It’s a movement that’s taking off, and those are markets that do not have rolling blackouts. Households and businesses will continue to choose solar in the long run.
00:16:29:01 – 00:16:44:02
Andrew Middleton: There are many other catalysts that are going to come that will drive that, such as electric vehicles. So long term, we’re very positive on the industry and will continue to invest in it. We want to invest that 10 billion rand into the South African economy.
00:16:44:04 – 00:17:11:08
Alec Hogg: You mentioned electric vehicles in the United States. I remember following SolarCity, which was Elon Musk’s cousins, Peter Reeve and Linden, I think, is the other Reeve. They, together with Elon Musk, had this company. It’s now being absorbed into Tesla. Is there any parallel between those South Africans and what they’re doing over in the United States and what you guys are doing here?
00:17:11:08 – 00:17:34:21
Andrew Middleton: I’m not sure we can quite make those exact parallels. SolarCity and, you know, is something that we know historically we would have looked at. I think SolarCity would have had some parallels to Gosolr. Tesla is very much a manufacturer of other vehicles or batteries or those products, which is not what we do, and that’s not what we’re going to be looking to do.
00:17:34:22 – 00:17:55:07
Andrew Middleton: We want to be enabling electric vehicle adoption in South Africa via home solar and charging. I think that’s going to be the next step when electric vehicles do come on scale. And I do believe they will; households are going to need more electricity to charge those either at home or on their various routes.
00:17:55:09 – 00:18:10:18
Andrew Middleton: That’s why the country is going to need more power in the future, not just for electric vehicles but for growth. We need more power generation. We need more clean, renewable energy. It’s not just solar; we need all of the various mixes in the energy stack, such as wind.
00:18:10:22 – 00:18:26:17
Alec Hogg: It’s interesting that you’ve got the South Africans doing great things on solar power in the US in the retail space, and yourselves over here. Maybe just to close off, what is the potential, how much potential is there still in South Africa to put solar onto roofs?
00:18:26:19 – 00:18:53:10
Andrew Middleton: So we’ve put out a white paper which is up on our website. The data from various industry bodies shows very little penetration, especially in the residential market. We think in more affluent markets, there is higher penetration, but overall, in the middle-affluent market, we believe the penetration is about 5 to 6% of rooftop solar.
00:18:53:12 – 00:19:15:05
Andrew Middleton: Households as a whole in South Africa, which there are nearly 18 million of them, have less than 1% penetration. Rooftop solar, which we believe is the future, is still very under-penetrated because it’s seen as a load shedding product and an expensive one.
00:19:15:07 – 00:19:38:14
Andrew Middleton: That doesn’t mean that households haven’t got some form of backup solution, whether it be a standby inverter, one of the portable devices that you can get, or a diesel generator. But rooftop solar, which we believe is the future, is still very under-penetrated because it’s seen as a load shedding product and an expensive one.
00:19:38:16 – 00:19:43:10
Alec Hogg: And compared with other countries under 1%, how does that rate?
00:19:43:12 – 00:20:06:14
Andrew Middleton: The UK is probably sitting at three to 4% with no sun. Places like Australia and parts of Australia are over 50%, and South Australia, the US probably under 5%, but higher than us. But we’ve got a top-five solar resource right here. So I’m pretty sure we’ve got to make sure we’ve got more solar panels than the UK surely.
00:20:06:14 – 00:20:10:18
Andrew Middleton: But we’ve got to make sure we’ve got more solar panels than the UK, surely.
00:20:10:19 – 00:20:32:00
Alec Hogg: At the very least, look forward to being honest with you. Andrew Middleton, and he is the chief executive of Gosolr. It’s a very important, quite a few important points that Andrew made there, not least the support of what John Biccard says about South African stocks. So I guess now you’ve got to go back and see what Biccard said again and then look at your portfolio in South Africa and say, “Hmm, maybe we should be bumping up our holdings,” ahead of the end or if not the end of load or the end of crazy load shedding. They might still be load shedding, but at least it’s not going to be as destructive on the economy as we’ve seen in the past.
00:20:32:00 – 00:20:51:08
Alec Hogg: I’m Alec Hogg from BizNews.com.
Read also:
- Power struggle: Eskom takes Joburg’s City Power to court over R1bn owed
- Motsepe-backed GoSolr plans ambitious R10bn expansion to fight SA’s load-shedding crisis
- Using the DA’s economic reform agenda to challenge ANC policy: Katzenellenbogen
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