Hohm Energy, a South African solar solutions company that raised $8 million in a seed round earlier this year, is facing severe financial difficulties, halting operations due to cash flow constraints and debt obligations. The company has entered a formal business rescue process aimed at reorganizing its operations and settling with creditors.Under South African law, the business rescue process spans three months, during which a practitioner investigates the company’s financial health, engages with creditors, and presents a recovery plan. During this period, Hohm Energy has also laid off an unspecified number of employees.
Leadership Shake-Up and Controversy
Recent leadership changes have further complicated Hohm Energy’s situation. CEO Tim Ohlsen resigned last week, and Managing Director Ryan Steytler subsequently took charge, initiating the business rescue process. Franc Gray, CEO of Spark Energy, Hohm’s parent company, alleged that Steytler acted unilaterally, contrary to shareholder recommendations.Founded in 2021, Hohm Energy’s core offering includes a digital platform enabling customers to design and finance rooftop solar installations. Solar installers also used the platform to manage and finance their projects. This innovation gained traction during South Africa’s peak load-shedding periods, with the company reportedly generating over 17,000 solar designs worth $190 million and securing $90 million in financing applications by February 2024.
Operational Struggles
Despite early success and projected profitability by the end of 2024, Hohm Energy’s rapid expansion strained its financial stability. The company significantly increased its headcount in anticipation of sustained demand for solar solutions, which slowed as South Africa’s electricity grid improved.“Hohm had high fixed costs and could not adapt quickly enough when revenue growth tapered off,” Gray explained.Additionally, governance challenges contributed to the company’s predicament. Hohm only established a formal board in early 2024, shortly before its seed funding round, which may have impacted its operational efficiency.
Gray also highlighted concerns about inadequate financial reporting from Hohm’s management, which may have delayed critical interventions from Spark Energy. Despite these challenges, Spark plans to inject further capital into Hohm Energy post-restructuring, with a revamped business model and leadership team.“Our goal is to achieve the best possible outcome for all stakeholders in this less-than-ideal situation,” an investor commented.Hohm Energy’s challenges underscore the volatility in South Africa’s renewable energy market, where companies must navigate fluctuating demand and governance issues to sustain growth.
