Shell acquires Nigeria’s Daystar Power to expand renewable energy assets

UK-based Shell, has bought a Nigerian solar energy solutions provider, Daystar Power, marking its first acquisition of a renewable energy provider in Africa, according to a statement yesterday.

The acquisition, which is subject to regulatory approvals, is in efforts to cut its greenhouse gas (GHG) emissions and focus on renewables, as it looks for new sources of growth amid climate change and the gradual phasing out of fossil fuels.

The deal value was not disclosed, but Shell’s Executive Vice-President for Renewable Generation, Thomas Brostrøm, was quoted as saying: “This deal marks our first power acquisition in Africa and a fundamental step for Shell in growing our presence in emerging power markets.

“We have had a long and established presence in West Africa and with Daystar Power; we are taking our first steps into the renewable power space,”

“As we do this, we’re helping to address a critical energy gap for many who currently rely on diesel generators for backup power. Daystar Power has a loyal customer base and a promising growth outlook, and by combining our efforts and expertise, I believe we can make a real difference in the energy transition for West Africa and beyond.”

… by combining our efforts and expertise, I believe we can make a real difference in the energy transition for West Africa and beyond.

Similarly, the Chief Executive Officer of Daystar, Jasper Graf von Hardenberg, said his company needed to raise more money to meet growing demand but opted to sell to Shell due to the company’s strong balance sheet and long history in Africa.

He added that Shell’s acquisition will help Daystar increase its installed solar capacity to 400 megawatts (MW) by 2025 from 32MW in a bid to supply the growing energy needs of commercial and industrial businesses, and also expand services beyond Nigeria to East and Southern Africa where it is also seeing increasing demand.

Hardenberg said: “We have seen booming demand for solar energy in the African markets where we operate. That has been reflected in our growth: we are on-track to increase our installed solar capacity by 135% in 2022.

“As part of Shell, we will be able to execute our mission even faster to deliver carbon emission reductions and power cost savings to businesses across Africa.”

Daystar, established in 2017, started talking with Shell on a potential deal in 2019, and has raised $97 million through multiple rounds of equity and debt financing. In July 2021, Daystar said it raised a $20 million facility from the World Bank’s private sector arm, the International Finance Corporation (IFC), following on from a $38 million series-B fundraising in January 2021.

Headquartered in Lagos, Daystar provides off-grid power to commercial and industrial clients across West Africa. With networks in Ghana, Nigeria, Senegal and Togo, the company offers solar and hybrid power solutions with battery storage.

“Companies need their own power solutions to drive down costs, compared to expensive grids or diesel generators,” it said.

Shell maintains a significant presence in Africa, with interests in Algeria, Mauritania, Namibia, São Tomé and Príncipe, South Africa and Tunisia.

It was the first company to begin oil exploration in Nigeria more than 66 years ago, and through its joint venture (JV) partnerships with Nigeria’s state oil company, has helped Nigeria develop into one of the world’s largest oil producing countries and Africa’s largest economy.

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