February 25, 2024

Shell strikes major renewable energy deal in Africa, acquires Nigeria’s Daystar Power

Oredola Adeola

Royal Dutch Shell has made its first major energy transition move in Africa, by acquiring Daystar Power, a Nigeria-based hybrid renewable energy provider, with the intention of playing a pivotal role in providing electricity to millions of Africans.

Thomas Brostrøm, Shell’s executive vice-president for a renewable generation made this disclosure in a statement obtained by EnergyDay, which was part of the oil giant’s dramatic move to shrink its oil and gas business and further build out the global green energy business.

Daystar Power, which operates in Nigeria, Ghana and three other countries across West Africa, provides solar power and battery solutions to business and industry across the region, including Nigerian Bottling Co, makers of Coca-Cola in the country.

According to Brostrøm, Shell purchased Daystar at an undisclosed sum. He said the deal was “a fundamental step for Shell in growing our presence in emerging power markets”.

EnergyDay gathered that Shell had in a similar manner, acquired the Indian group Sprng Energy in April for $1.55bn, US-based Savion in December 2021, and other renewable power businesses in other parts of the world.

 

The Daystar, majorly operating in Nigeria and Ghana, has an installed generating capacity of about 32 megawatts, compared with the 2 gigawatts operated by Sprng in India. Daystar has raised $92mn in funding since its inception in 2017, including a $20mn facility from the Washington-based International Finance Corp last year.

 

This, therefore, made the acquisition, significantly smaller than the purchase of the Indian and US renewable companies.

 

Brostrøm said Daystar represented Shell’s “first steps into the renewable power space” in Africa.

Jasper Graf von Hardenberg, Daystar Chief Executive Officer, while confirming the deal, said demand for his company’s services had grown and that meeting it would have required raising another round of capital. Instead, he said, the group continued a conversation with Shell that began in 2019 and led to the discussion of a takeover last year.

The Daystar CEO said, “It was important to find someone with a strong balance sheet to back us,” von Hardenberg told the Financial Times. “We are happy because Shell has a lot of experience in energy and they have a long history in Africa and will be the right owners to take this business forward.”

 

Shell has a long and complicated record in Nigeria. It was the first company to discover oil in the country in 1956 and has pioneered the development of the sector in the decades since. But in recent years, it has struggled to manage criminality and environmental issues at several of its projects, provoking criticism from civil society groups.

 

Last year, it announced plans to retain its offshore operations but divest its troubled onshore assets, in a process that has become mired in court cases over responsibility for past environmental damage.

EnergyDay gathered that while the deal between the two companies has been sealed, Daystar’s senior leadership, including Von Hardenberg and co-founder Christian Wessels, will continue to lead the 140-strong team.

 

Hardenberg promised that the management team will continue to expand operations across east and southern Africa with the specific target of achieving 400MW of installed capacity by 2025.