Licensed electricity trader Energy Exchange of Southern Africa (EXSA) describes its recently concluded 15-year power purchase agreement (PPA) with Seriti Green as a major milestone in positioning the company as a sizeable “pure-play” trader ahead of South Africa’s transition towards a more competitive market.

The R5-billion Mpumalanga project reached financial close in August on the back of the PPA, through which EXSA will buy all of the 525 GWh of electricity that the wind farm is expected to produce yearly once in full production. The 155 MW project, which will incorporate 25 wind turbines, is expected to begin generating electricity in October 2027.

The PPA is underpinned by the conclusion of firm offtake agreements between EXSA and several large corporate and industrial customers, whose signatures have been crucial for advancing the project to “bankability”.

The local funders of the project received further comfort from the fact that the project is a second phase of the first wind farm developed by Seriti Green in Mpumalanga. Both projects form part of the larger 900 MW Ummbila Emoyeni complex, which will be built in phases and will also include solar PV and battery storage components.

EXSA CEO Wayne Cowie confirms with Engineering News that some of the initial offtakers are blue-chip entities owned by Remgro. Remgro holds 75% of EXSA, which was founded in 2017 and licensed by the National Energy Regulator of South Africa (Nersa) in 2022, while RMB owns the 25% balance.

Cowie says that, while a critical mass of offtakers have been secured for bankability, EXSA is now pursuing additional customers to ensure that the electricity is fully subscribed by the time the wind project enters into commercial operation.

“Reaching financial close on this project is a big step in our scaling up of EXSA,” Cowie says, indicating that it has raised from 39 MW to 194 MW the capacity of renewable generation it has contracted to buy to date.

The initial projects include various solar PV projects in the Western Cape, as well as 4 MW of generation capacity from bagasse, a form of renewable energy produced as a sugarcane byproduct. Prior to the Seriti Green contract EXSA had offtake contracts with Woolworths, Wispeco, Siqalo Foods, Delaire Graaf, and Old Mutual amongst others and Cowie says the business has gained vital experience while trading at a relatively small scale.

“We will now take a little pause to digest this large Seriti Green project and focus on customers before returning to our pipeline of solar PV and wind opportunities,” he reports, adding that it intends employing additional people in the coming months to ensure that the business’ human resources are aligned to its expanded size. EXSA currently has eight employees but expects to expand the team significantly in the coming year.

As a pure-play trader, EXSA does not invest directly in the projects, which Cowie argues offers it the flexibility to partner with multiple generators while focusing on its core trading function. It also allows it to target partnerships with both wind and solar PV generators, which have complementary supply profiles in the South African context.

Chief technology officer Shailin Moodley says EXSA’s trading focus also means that it can dedicate time and resources to understanding how the market is likely to change once the South African Wholesale Electricity Market, or SAWEM, is launched next year.

EXSA has participated in consultations on the Market Code and has also sent staff members to the pilot SAWEM School run by the National Transmission Company South Africa and has employees registered for the upcoming three-day school to be hosted at the University of Cape Town.

Moodley believes there will be an important role for traders, especially those with operational experience, once the SAWEM platform is launched and as the South African electricity market becomes increasingly competitive.

EXSA is monitoring developments around the SAWEM closely including its stipulations around so-called balancing responsibilities to ensure equilibrium between supply and demand and may even consider investing directly in battery energy storage in future should it make sense to do so.

EXSA, meanwhile, is not overly concerned about the current resistance to the licensing of traders in the absence of trading rules, arguing that all will benefit from greater clarification of the rules.

However, Moodley would like EXSA’s voice to be heard in the finalisation of those rules so that the benefits of trading are made clear and so that a fair and balanced model emerges.

Cowie is hopeful that Nersa will be able to meet the new November deadline set by Electricity and Energy Minister Dr Kgosientsho Ramokgopa for the finalisation of the rules, but notes that the regulator also has a number of other important issues to finalise if the goal of launching SAWEM in April next year is to be met.

On why traders such as EXSA will benefit rather than disrupt the electricity supply industry, Cowie responds: “We are indirectly enhancing generation in the country by enabling new generators to sell their power to someone other than Eskom or to single offtakers, which helps address the supply shortages that we have. We are also looking to give customers the best options we can to help their businesses grow with low electricity costs and access to clean energy, which is particularly important for those that are exporting to markets that are imposing carbon taxes. But ultimately, we are giving the customer choices.”