Sun Exchange ditches crowdfunding for corporate funders

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 14 Feb 2024
Sun Exchange says institutional and corporate funders are able to fund entire projects at once in a defined amount of time.
Sun Exchange says institutional and corporate funders are able to fund entire projects at once in a defined amount of time.

Local renewable energy firm Sun Exchange, which started as a peer-to-peer solar leasing platform, is scrapping its crowdfunding business model in favour of corporate and institutional investors.

Through its online platform, members could purchase solar photovoltaic (PV) cells for approximately $10 per cell and lease them to be installed in solar projects for businesses, hospitals, schools and other organisations in Southern Africa, the Middle East and other sunny developing regions.

The start-up was using blockchain technology, where solar cell owners received lease rental payments, paid optionally in fiat currency or crypto-currency, while the solar electricity consumers have clean energy.

However, Sun Exchange is now changing its business model, citing challenges it faced with crowdsales – an online event where participants can purchase tokens in a crypto-currency.

Other companies that have a similar model include Momint via its SunCash crowdfunding offering, which aims to help ease SA’s energy crisis by allowing anyone to invest in solar power and resell it to institutions.

In a statement, Sun Exchange says: “Today, we’re announcing a new strategic phase for Sun Exchange, honing in on the expertise and reputation we’ve built offering comprehensive, world-class solar power and energy storage solutions to organisations across sectors in South Africa over the last nine years.”

New leadership

According to the company, under the leadership of new CEO Saul Wainwright, Sun Exchange is shifting its focus entirely to full-service commercial solar power and energy storage project development, with all the projects funded via a growing global network of trusted corporate and institutional funders.

“This enables us to continue serving our core sectors of high-impact organisations, including schools, retirement homes, NPOs and agriculture, while expanding into larger commercial and industrial projects as well.

“The incredible momentum we’ve seen since launching our corporate and institutional funder programme, clearly signals this is the best path forward for Sun Exchange to continue making an impact with solar power.”

Investors which have pumped money into Sun Exchange include business mogul Patrice Motsepe’s Africa Renewable Power Fund. In 2020, the company invested $3 million in Sun Exchange, as the start-up became a recognised technology and solar finance innovation leader across Africa. It added another $2.5 million the following year.

Sun Exchange adds that as with most moments of change and growth, this pivot also comes with challenges and mixed emotions.

“The most difficult part of this transition is that we’re moving away from the original crowdsale-based model, which has been core to Sun Exchange since its founding.

“It’s what allowed us to build a global community of solar power supporters and what established Sun Exchange as an innovative industry leader. The crowdsale model is, unfortunately, no longer a viable business model for Sun Exchange.”

According to the company, last year was its biggest so far. It explains that despite the slower traction of crowdsales, it funded projects to the tune of R92 million, of which R76 million (82%) came from corporate and institutional funders. That’s 114% year-on-year growth compared to 2022, it notes.

In December, the firm announced the completion of what it said was the largest school solar project in the Western Cape: the 470kW solar plus 700kWh storage HTS Drostdy solar project in Worcester.

“Now, we’re in the process of installing our largest project across all sectors: a 544kW solar plus 1 415kWh storage project powering Vaandrigsdrift, a commercial dairy farm in Swellendam.

“Since introducing our institutional funder programme at the end of 2022, we’ve partnered with Absa, Allotrope Partners,, CVE, Energea, Hannover Re and Jaltech to fund solar projects, and that list continues to grow.

“However, the growth in funding from institutions stands in stark contrast to the decline in crowdsale demand over the last two years, which we believe is due to a complex confluence of internal and external factors.”

Powering through

Simultaneously, it adds, the unprecedented levels of load-shedding in South Africa since mid-2021 have led to a spike in demand for battery-integrated solar projects from end-users.

Compared to the standalone solar PV projects Sun Exchange focused on in the early years, storage-integrated projects require significantly higher capital expenditure, and are difficult and slow to fund via crowdsales, leading to disruptions in development timelines and increased costs, it explains.

It points out that institutional and corporate funders, on the other hand, are able to fund entire projects at once in a defined amount of time.

“We have always thought of Sun Exchange as a collective and that hasn’t changed. What we’ve achieved to date has only been possible through the collaborative efforts of an inspired community coming together to pursue a shared vision of a future powered by sustainable energy.

“That includes our staff, solar cell owners, solar customers, development and installation partners, investors and, most recently, institutional funders.

“Our utmost priority at this time is to ensure the sustainability of Sun Exchange and the best possible outcome for all stakeholders.”

Says CEO Wainwright: “Sun Exchange is a recognised and trusted solar leader, having deployed solar and storage projects for more than 90 organisations across sectors – one of the largest fleets of commercial projects in South Africa.”

He comments that this track record underscores the firm’s project development capabilities, funder network and commitment to ensuring a seamless solar power journey for customers.

“With a sharp focus on connecting a growing network of trusted funders with promising solar and storage project opportunities, we’re poised to continue growing our impact well into the future.

“We’re deeply grateful for the global community who have believed in Sun Exchange from the start. We wouldn’t be where we are without you. We look forward to the next chapter on our journey to empower South Africa’s future with clean, reliable energy,” concludes Wainwright.