South African energy company in business rescue

Hohm Energy was placed under business rescue less than six months after raising $8 million in seed funding.

Hohm Energy connects homeowners and businesses with accredited solar installers, product suppliers, and embedded solar finance in South Africa.

The energy company started as a solar installation and engineering firm in South Africa a decade ago.

“We realised the scaling limitations of a solar engineering business, and we set out to build a scaling tool to help our business grow,” it said.

It used its knowledge of the local solar industry and paired it with software development expertise to build a solar service platform.

It generated bespoke client solar proposals and automated workflows to speed up the solar sales and deployment journey.

However, it realized there was demand for the service beyond its own clients. In 2020, it rebuilt the source code and spun out of Hohm Energy in 2021 as a climate-tech startup.

“We are now in pursuit of building a global solar network to accelerate the renewable energy transition,” it said.

The founders, Tim Ohlsen and Emir Gluhbegovic, aimed to capture a slice of the $51 billion rooftop solar market value chain.

They said Hohm Energy’s solution was built as an alternative and sustainable energy source for over 7 million addressable households connected to South Africa’s national grid.

In February, E3 Capital led an $8 million seed funding round in Hohm Energy. It equated to around R150 million at the time.

This was done at a time when South Africa was facing a worsening energy crisis and daily load-shedding.

The funding marks the largest seed round for a tech startup in South Africa, which was led by E3 Capital and 4DX Ventures.

It attracted participation from new investors, including Breega, E4E Africa, TO.org, Tekton Ventures, Sunu Capital, Musha Ventures, and Climate Capital Ventures.

The money was set to be used to accelerate the adoption of rooftop solar in the region by investing in its new climate fintech strategy.

It included bolstering its tech, product innovation, and solar installer skills development to make rooftop solar more accessible and affordable.

However, less than six months later, the company was placed into business rescue by director Ryan Steytler.

One source told Daily Investor that Steytler’s decision to place Hohm Energy into business rescue was at odds with the shareholders’ restructuring plans.

The fact that Hohm Energy started struggling over the last few months is unsurprising due to the lack of load-shedding.

On Friday, Eskom announced that it had suspended load-shedding for 135 consecutive days – the best performance since 2020.

It has produced an uninterrupted power supply since 26 March 2024, including 101 days of constant supply throughout winter.

“There has been no load-shedding since the beginning of Eskom’s current financial year, which commenced on 1 April 2024,” it said.

Eskom maintained an average Energy Availability Factor (EAF) of 68% over the past seven days, which shows its improved performance.

In July, Eskom achieved an EAF of 67.41%. The last time it achieved this performance was in July 2021.

Eskom’s improved performance provided optimism that load-shedding in South Africa may be coming to an end.

This optimism means that households which are already financially stretched are unlikely to invest in a new solar installation.

High interest rates, inflation, and slow economic growth have put tremendous pressure on households’ disposable income.

Therefore, households would spend their money on things other than solar installations, which remain expensive.