Revelation about major solar company shut down in South Africa

Spark Energy Services CEO Franc Gray says the company is investigating claims that Hohm Energy didn’t pay some of its staff’s salaries as it entered financial strain.

This comes after news emerged this week that Hohm Energy had stopped trading and entered business rescue.

A source, a former Hohm Energy employee who asked to remain anonymous, told MyBroadband that expense accounts and staff salaries had not been paid for several months.

“In about March, April, they stopped paying our expense claims. We then started asking about money and when we were getting our salaries,” the source said.

“It was said that they were getting investors from overseas to invest in Hohm Energy, and in mid-July, they came back to us and said the money isn’t going to Hohm anymore.”

“They said they’re going to keep the money in Spark. Some of us, for three or four months, have not received salaries, and our expenses haven’t been paid,” they added.

The source said Hohm Energy had indicated that it was willing to pay staff until the end of June, and with the business’s future being uncertain, it said it would pay July salaries if it remained operational.

“They forced us, within a couple of hours, to sign a mutual agreement of separation. Otherwise, you wouldn’t have received your money,” they said.

“There was a timeline put on it for two to three hours.”

However, Gray says there is some misunderstanding regarding the fundraising, through which Spark Energy Services raised $8 million over two and a half years. He added that from his knowledge, no staff members remain unpaid.

Gray explained that he is the CEO of US-based Spark Energy Services, which is a 100% shareholder of Hohm Energy.

“All the capital that was raised has been raised by Spark. Spark raised $8 million, but that was really over a period of two-and-a-half years,” said Gray.

“Hohm is obviously a major benefactor of that funding, but it wasn’t the only benefactor, and the money wasn’t just raised to come into a South African entity called Hohm Energy.”

He explained that the important use of the funds was to develop software to enable the solar marketplace, and a large portion of the funding went into developing it.

“That platform is owned by Spark. All the code and everything has always been in the hands of Spark,” said Gray.

“Software in isolation doesn’t really mean anything. It needs to be operationalised. So, the Hohm brand was developed to operationalise that software.”

“It had a really good start at doing that, and the one thing that’s been proven is how well the software actually worked and how well that product going to market worked,” he added.

Gray said that Spark Energy Services views the experiment around the software as a success.

He said it’s no secret that Hohm Energy ran into trouble. The company had geared up for the surge of demand for solar products resulting from intense load-shedding in recent years.

However, the reductions in load-shedding towards the end of 2023 and in 2024 caused demand to dwindle.

“It was effectively like a gold rush last year. With the complete height of load-shedding last year, a lot of capacity was built, and really what happened with Hohm is it had too many sticky costs, and when revenue dropped, it ran into trouble from a cash perspective,” said Gray.

He explained that while Hohm Energy was a major player in the space, it was still technically a start-up, having launched in 2021.

“The big challenge that start-ups always have is they don’t have any legacy revenue or profit to fall back on if the market does turn,” he added.

Gray said that the claims that some staff haven’t received salaries for three to four months aren’t 100% accurate. However, he also said that he was only recently appointed to Hohm Energy.

“A lot of that happened before my time. We are looking at what has happened. From the initial view, I think most of what they’ve said is probably a little bit off,” he said.

“What I can say is, from the information that I’ve got, is that all individuals in the business have been paid up-to-date, so there’s no outstanding payments.”

“When people got paid, and how they got paid historically, we need to look into that to understand,” added Gray.

He confirmed that staff were allowed to sign a mutual separation agreement. However, they weren’t forced to do so.

“No one has had a gun put to their head. It was a mutual agreement. I can see just from our records that some folks signed it on the day they got it, while others took up to 10 days,” said Gray.