In another innovative first, Discovery CEO Adrian Gore yesterday unveiled Discovery Green, a renewable energy platform, which opened for business yesterday, that will unlock an investment of roughly R20 billion to R25bn in South Africa’s energy infrastructure.
The platform, developed with the support of RMB, Discovery’s investment banking partner, connects businesses across South Africa to affordable, renewable power generated by utility-scale renewable plants.
However, for companies joining Discovery Green, there is a two-year waiting period to be connected up with renewable energy, with it expects to come online in 2026.
“A number of years ago, we started to think about could we apply the Vitality science to how people think about climate? Could we change behaviour in the context of climate and it turns out is very similar at the individual level, ” said Gore.
He said as Discovery went along that journey, it developed a great deal of science and technology, and it became clear the consumption of electricity was at the core of that.
The team began to focus on how corporations consumed energy and how Discovery could reduce their carbon footprint.
“And that’s really the basis of Discovery Green, a platform in the middle of the market, creating a real market between buyers and sellers,” Gore said.
The platform will operate through energy wheeling. Energy is generated at the most efficient locations in the country and “wheeled” to a business through the existing national grid, allowing businesses to run on more affordable, renewable energy.
“By procuring between 400MW and 1GW of wind and solar energy from a curated list of leading local and international Independent Power Producers (IPP), the platform will stimulate an investment of about R20-R25bn in the energy infrastructure of the country (enough to establish 2700 rugby fields of solar farms or 200-250 wind turbines),” Discovery said.
Andre Nepgen, head of Discovery Green said they had already gone out to tender, most bidders were local with a few international companies.
At this point they could not say how many jobs the investment would generate.
The firm was on track to begin construction early next year. Following this, it would take roughly around 18 to 22 months for solar construction and around 24 for wind construction.
In its initial phase, the platform will be open to businesses who are medium to large consumers of electricity connected to Eskom distribution.
The first businesses enrolled to the service include a network of large Discovery corporate partners, and over time the platform will expand to other clients in South Africa as Virtual Wheeling and new wheeling frameworks through municipalities become available.
Discovery Green will also enable companies to significantly reduce emissions and help to address the national shortfall in electricity.
“The impact of 1GW in renewable energy generation represents a saving of 2.75 million tons of CO2/annum, equivalent of 100 times the emissions of a business the size of Discovery Limited,” the group said.
Nepgen said Discovery Green was built with the group’s goal of being carbon neutral by 2025 in mind.
“It addresses a fundamental issue of renewable energy – that energy is only generated when the sun shines or the wind blows, yet businesses consume based on their individual needs. With the benefit of aggregation, modelling and diversification, Discovery Green is able to offer products that are completely different to the market’s share-of-plant approach,” he said.
For most non-industrial or mining businesses, the primary source of emissions was from electricity generation – on average, electricity accounts for 80% of Scope 1&2 emissions combined.
While businesses are setting emission reduction goals as part of their ESG strategies, achieving a reduction in emissions is challenging because on-site generation such as rooftop solar only has minimal gains.
Discovery said it had developed two products aimed at addressing the potential needs of any business:
Firstly, the Green Saver product was for companies who wished to maximise both the amount of renewable energy they consumed and the financial savings they received from more affordable renewable energy. Approximately 70% of the consumption would be renewable.
Nepgen said the discount that they were providing were up to 20% of the current generation costs.
“This is an enormous saving on an electricity bill for no upfront costs or investment whatsoever. We’re also able to give price certainty and a CPI link to these products,” he added.
Secondly, the Green Guarantee product was aimed at companies with 100% renewable energy each month, but the product was limited in its availability and aimed at companies with a strong environmental commitment.
“We are able to deliver it, depending on your term, for as low as 0% premium, basically the same price as what you would have paid for your electricity today. It’s also linked to CPI, with savings over time,” Nepgen said.
Nepgen said Discovery Green already had a one-third uptake of the initial 400MW phase.
It had also partnered with Rubicon, specialists on energy analysis to start companies on the renewable journey in the short-term, which would come to clients free as an interim solution to reduce electricity costs, during the two-year waiting period.
When asked what would happen to the business model, if Eskom solved its power shortages, Nepgen said Eskom would be split into a Transmission and Generation firm. Discovery Green was basically a different generation company and would form part of the supply chain.