Water tap - [http://balticreports.com/wp-content/uploads/2009/11/Faucet.jpg]

There are increasingly audible murmurings that bold investment company PSG Group is backing Bellville-based Energy Partners to the hilt. PSG owns 63% of Energy Partners and has already pumped considerable capital into the business, which specialises in commercial and residential energy saving solutions.

At a recent AGM in Stellenbosch, PSG CEO Piet Mouton indicated that the group’s cash holdings of R1.75bn could be deployed in the next few months with Energy Partners likely to be a large recipient.

There has also been an interesting twist at Energy Partners that was hinted at during the PSG AGM: the desalination of seawater…an offering that would feed into Cape Town’s on going water crisis. The shift into desalination follows recent diversification deals by Energy Partners – namely markedly increasing its stake in refrigeration specialist Refsols and buying 100% of combustion products and services company Dryden.

CBN presumes the tilt at desalination is a fairly new development as Energy Partners website does not reflect such an operational division yet. But Mouton told the AGM that PSG believed Energy Partners had the solution that could solve the Western Cape’s water crisis through desalination and reverse osmosis technologies.

The success of Energy Partner’s ‘water business’ will, of course, depend on convincing politicians and bureaucrats of the longer term benefits of the desalination process. PSG has not added too much more detail around Energy Partners water endeavours, which might mean negotiations have already reached a fairly advanced stage. The nature of the water crisis is of such, that CBN reckons Energy Partners should receive a decision sooner rather later.

In April website News24 reported that power utility Eskom has plans to install a desalination plant at the Koeberg nuclear power station. In the meantime, the body language from PSG executives around Energy Partners core business is bristling with confidence.

Mouton pointed out that South Africa’s installed electricity capacity was around 45 gigawatts, and that the cost of the Medupi and Kusile power stations was effectively R30bn per gigawatt.

He said this implied an electricity generation market of around R1.5 trillion, and that adding in energy conversion pushed the market size to well over R2 trillion. “If we obtain a mere 1% market share, we will have R20bn in assets at Energy Partners.”