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A f ri c a E n e rg y Y e arb ook 2019

CONTENTS 6

9

3 0 P olicy developments

Welcome from the E ditor Introduction by Amy fford

PUSHING BOUNDARIES

A number of progressive projects are seeing East Africa countries blaze a trail

Welcome from the M D EnergyNet’s Simon Gosling

3 2 P roject highlights

10 C onference gallery A look back at some of the images from last year’s forum

A DIVERSE PROJECT PIPELINE Wind, gas and hydro are dominating the landscape in East African power projects 3 4

e ional ro le

UNEVEN PROGRESS

28

orth Africa offers great conditions for renewables, but strategies differ wildly 3 6 P olicy developments 18

Interview

PLANNING FOR A SURGE IN DEMAND

VERA SONGWE

Under-Secretary General and Executive Secretary of the UN’s Economic Commission for Africa

10

22 Interview

DAVID CRABB

Sales and Distribution Manager for Caterpillar’s Large Electric Power group

12 E nergyN et

CONTINENTAL CONNECTIONS

24

Shining a spotlight on how Portugal and Africa are adapting to changing energy demands 14

E nergy and power overview

DATA SECTION

Electricity access rates across the continent and other energy-related data

Renewables, gas, nuclear and coal are all part of energy policies across North Africa 3 8

P roject highlights

GAS MEGAPROJECTS AND INNOVATIVE RENEWABLES

gypt s three massive gas-fired power station and Morocco’s innovative renewables

Interview

JOHN LEWIS

The Managing Director of Aggreko, Africa, on the company’s long-term plans 28

e ional ro le

LOOK EAST

A profile of the energy landscape of East Africa and projects in the pipeline

3 8 Africa Energy Yearbook

2019

3


C on te n ts

5 4

Interview

TAKING POWER TO THE PEOPLE

amilola gunbiyi on her efforts to encourage the private sector to invest in West African projects 5 6 P roject highlights

POWERING ONWARDS AND UPWARDS

62 4 4

4 4

Gas to the fore in West African power drive as it targets foreign investors 5 8

TOWARDS A NEW BOST

P olicy developments

BOST Managing Director George Mensah Okley explains the company’s plans

SERIOUS POWER PLANNING

Though a huge task, Southern Africa is stepping up investment in electricity projects 4 0 Interview

The Kipay Chairman discusses the vast untapped energy potential of the Democratic Republic of Congo

e ional ro le

COAL IS KING – FOR NOW

ALEXANDRE DIAS MONTEIRO

Cabo Verde’s Minister for Industry, Trade and Energy on the country’s power strategy

ERIC MONGA

The company’s CEO talks about his company’s progress on a number of projects across Africa 4 2

62 Interview

4 6 Interview

AHMED ELSEWEDY

4 8

Southern Africa is trying to shake its addiction to fossil fuel as it looks for cleaner energy

P roject highlights

REGIONAL PROGRESS IN THE SPOTLIGHT

A round-up of progress on energy-generating projects around Southern Africa 5 0

e ional ro le

COOPERATION COULD UNLEASH POWER POTENTIAL The World Bank says increased integration is needed in West Africa to maximise power generation

C ommuniq ué

64

Interview

MAMI DUFIE OFORI

Executive Secretary of Ghana’s Public Utilities Regulatory Commission 66 C ommuniq ué

AFRICA AND BEYOND

MARES keeps its customers front of mind when it comes to supplying parts and technical equipment 69 R enewables

RISING TO THE CHALLENGE

African states are seizing the opportunity to meet fast-rising power demand with clean energy

5 2 P olicy developments

CONTRASTING PRIORITIES ACROSS THE REGION

4

5 0 Africa Energy Yearbook

2019

Gas, hydro and solar are all investment targets in the West African energy landscape

7 2 C limate change

SUSTAINABILITY FOCUS

It’s not responsible for the climate change, but Africa needs to be part of the solution


I strongly believe that countries such as Zambia are becoming more open-minded when it comes to flexible financing solutions

94 7 6 Interview

R E N T I A V A N T O N D E R Head of Power, Standard Bank

91 E nergy integration

JAMIE SHEPHERD

POOLING POWER

The CEO of Altaaqa Global Energy Services on the opportunities to fill Africa s yawning energy gap 7 8

F inancing schemes

Energy integration is on the agenda, including the World Bank’s moves to support the West Africa Power Pool 94

PRIVATE PROGRESS

HUSSAIN AL NOWAIS

AMEA Power’s Chairman says this is not time for the continent to reign in its energy ambitions 8 4

F inancing

FINANCING POWER PROJECTS IN AFRICA

DFIs and commercial lenders are committed to finding finance solutions for energy projects 8 8

P ower transmission

MAKING THE CONNECTION

rogress is finally being made on improving African transmission infrastructure

PUBLISHED BY: EnergyNet Limited Fulham Green Bedford House 67-79 Fulham High Street London SW6 3JW

RENTIA VAN TONDER

inanciers are finding new ways of attracting private investors to African power projects 8 1 Interview

Interview

AFRICA ENERGY YEARBOOK – VOLUME 13, JUNE 2019

Standard Bank’s Head of Power on how the bank has become the continent’s most active funder 97

N ew technologies

SMALL IS BEAUTIFUL

Mini- and micro-grids are key elements needed to help solve Africa’s power problems 100 InO nA frica

HOW MUCH POWER IS ENOUGH?

Restructuring has helped the fortunes of some public utilities, but others remain big loss-makers 104 L ast word

A PICTURE OF PROGRESS

umming up Africa s efforts to bring electrification to the masses

2014

2017

EDITOR

Amy Offord amy.offord@energynet.co.uk +44 (0) 20 7384 8068

SUB-EDITOR Graeme Allen

ART DIRECTOR Marion Tempest

PRODUCTION MANAGER Sophie Dillon Copyright © 2019

EnergyNet Limited ISBN 978-1-9996197-0-1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of EnergyNet Limited.

www.energynet.co.uk

Africa Energy Yearbook

2019

5


A f ri c a E n e rg y Y e arb ook

Amy fford

E ditor, A f rica E nergy Y earb ook E nergyN et L td

WELCOME

D

ear friends and colleagues, welcome to the 13th edition of the A f rica E nergy Y earb ook , produced in partnership with A f rican B u s ines s magazine. The interviews with leading figures and in-depth articles in this year’s publication show Africa’s energy transformation can no longer be thought of as an abstract concept to be made flesh at some indeterminate time in the future – it is happening now. We look at how far the continent has come and what still needs to be done, as it gears up for a decade of huge change with the goal of bringing electricity to all. My thanks go to all the authors and interviewees for their contributions. I hope you find this an illuminating addition to the discussion over the challenges that must be surmounted and, above all, the opportunities that sustainable development present. Green energy is fast becoming a mainstay of the power mix across the

6

Africa Energy Yearbook

2019

continent, as Africa seeks to be part of the fight against global warming, even if it didn’t cause the problem in the first place. As Ghana President Nano Akufo-Addo told a climate conference in Accra recently: “It is in our own interest to act to salvage the economic fortunes of the continent, and, more so, to step up our collective efforts to fight decisively climate change. (See p72.) The International Renewable Energy Agency thinks Africa could meet around half of its electricity generation requirements from renewable energy by 2030 – if the investment is forthcoming. That could mean a sevenfold increase in renewables capacity by the end of the next decade, if the investment can be mobilised. If that can be achieved, not only would electricity access be improved, it would also lead to carbon-dioxide emissions reductions of up to 310 megatonnes a year. No one should underestimate the scale of the challenge. As Vera Songwe, Executive Secretary of the UN’s Economic Commission for Africa (ECA) points out on p18, without stepped-up investment to close Africa’s energy gap, the continent will by 2030 have close to 590m people

without access to electricity – the same number of people as at present. But there are signs that the investment is starting to flow faster. alling costs, improved technology and the growing interest of the private sector mean that utility-scale renewable projects are becoming much more feasible (see p69). In South Africa, the government’s Renewable Energy Independent Power Producer Procurement Programme aims to help wean the country off its heavy dependence on coal. Morocco is leading the way in North Africa, with its massive solar projects in the desert and windfarms close to its coasts. In Senegal, ground breaking took place in December 2018 at the 158.7MW Taiba N’Diaye Windfarm. But perhaps the most impactful application of renewables is taking place at the other end of the spectrum. Solar power at the household level and in mini- and micro-grids is bringing electricity to many Africans for the first time, providing light to study, work and play by, and power for mobile phones – those


crucial tools of the 21st-century rural economy. In some cases, solar power also brings access to another cultural shift satellite television, available as part of packages from private-sector solar providers for an affordable monthly payment. Countries such as Kenya and ambia are leading the way. As imon Bransfield- arth, Chief xecutive of small-scale solar provider A uri Technologies explains on p97, falling costs and a better understanding of markets means this is an area that can operate on a commercial basis. We did a few sums and figured out that you could do something good ust because people have relatively low incomes doesn t mean that you can t make a successful business, he said. While renewables are on the up, new fossil fuel plants are still seen as part of the solution, especially where African countries played host to big gas discoveries, which can be used as feedstock in cleaner, state-of-the-art power stations. rospects for the gyptian economy are being transformed by huge gas reserves, such as the ohr field, discovered by Italy s ni in the Mediterranean. The country has developed the biggest power programme completed in Africa over the past year, with iemens building three combined-cycle gas-fired plants, which collectively added 14.4 W in generating capacity see p3 .

Meanwhile, Mozambique plans to complement large li uefied natural gas export developments from its huge Rovuma Basin gas reserves, with much-needed gas supply to the local market. The same is true for enegal and Mauritania, where B is developing reserves on its maritime border. as could also play a larger than expected role in the outh African power sector, if a recent offshore discovery by Total lives up to its promise. Access to the finance needed to make all this happen has often been a challenge in Africa, but new financing techni ues and improving political risk perceptions are helping the cause. ower projects based on private financing models are now getting off the starting blocks with more regularity than before. andmark schemes, such as the Kpone independent power producer I thermal project, in hana have shown that private and public funding can be fused into a successful whole. There are also other schemes making headway in amibia, a 37MW solar I for am ower has achieved closure, showing that renewables projects are well suited to the privately funded model. This is not just about I s. Companies and institutions are also looking more closely at putting together financing packages for the off-grid space. That means firming up the case for investing in these schemes, taking advantage of decreasing technology costs. Another important trend is the emergence of local currency-denom-

inated power purchase agreements, which have the advantage of making it easier to source materials from domestic sources. onetheless, si eable obstacles remain. ome African utilities have weak financial positions, and that will continue to present a challenge to private financiers. The search for means to mitigate such risks continues and will re uire a sustained focus on forging innovative solutions for power-sector financings see p7 and p 5 . f course, multilateral development institutions continue to play an important role on the continent. The World Bank, the African evelopment Bank and others continue to underpin funding for large projects and programmes, helping to mobilise private investment. upra-national bodies are becoming increasingly innovative in their efforts to do this. The CA, for example, is working to develop an 7- ustainability Bond to fast-track secured investments for clean energy in Africa. Indeed, sustainability is the keyword for future developments on the continent the urgent need to bring the benefits of power to all Africans with the need to do it in an environmentally sustainable way. The will to achieve this complex, costly, but vital task seems to be there. This edition of the A f rica E nergy Y earb ook provides an overview of how the continent s people, governments and their partners are putting aspirations into practice. ■

Africa nergy earbook

2019

7


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ana in

irector s welco

e

Simon Gosling

anaging irector, nergy et A l e x an de r S arac i s a P artn e r i n th e B e rwi n Le i g h ton aisner o ce in u ai an d h e ads i ts A f ri c a an d M i ddl e E ast E n e rg y an d nfrastructure practice H e has advis ed governments , financial institutions, industry, and international elcome to the 2019 edition of the regional frica nergy earbook, as development banks on we gather in Lisbon for the 21st Africa Energy Forum. transactions in over As you know, for 26 years EnergyNet has focused squarely countries and has worked almost on energy and energy infrastructure. Over the past eight years, e clusively on transactions in I have enjoyed leading a business that is brimming with emerging and developing markets passionate, brilliant people who understand the market and work tirelessly to deliver forperiod the last value-adding events to support the sector. Over such a long of timeyears. there isn addition to his focus on energy and bound to be a shift in business development needs and I’m pleased to outline herein infrastructure transactions, he nergy et s profile over the coming year. regularly assists his international client base pan- frican In 2016, EnergyNet hosted 13 conferences; nine in 2017. This year, wewith are hosting operations in relation to four African conferences – this is because we believe a streamlined approach brings corporate and transactions. together the right stakeholders in easily accessible locations to better serve your e currently advises four frican business development needs: governments in energy-related matters, including ■ Africa Energy Forum (Lisbon, Portugal 2019 & Barcelona, Spain 2020) oil and gas. le ander is a erman■ Powering Africa Summit (Miami, USA) educated and ualified lawyer, ■ Regional Energy Summit East/aef Off-Grid (Addis Ababa, Ethiopia) admitted as a solicitor in ngland ■ Regional Energy Summit West/aef Off-Grid (Dakar, Senegal) and ales. e has a aster s

W S i m on G osl i n g , M an ag i n g irector ner y et ollowing an early career in film distribution, imon oined events and training company roup in . e headed the iddle ast team and was responsible for the first uatorial uinea gas conference in . e oined nergy et in and has been its anaging irector since . ner y et or anisin foru s across the world nergy et has worked in urope, the , hina, frica and atin merica for years to facilitate investment summits where international investors can build relationships with credible public-sector stakeholders.

The above portfolio will support EnergyNet’s continuing role as a responsible business and a champion of social, gender and racial equality, which includes: • Africa Energy Forum’s commitment to female moderators this year (of which 52% are African) and the broader delegate base, which will welcome more than 700 c-suite and aspirational female entrepreneurs and stakeholders • Our recent and ongoing support of the victims of Cyclone Idai – the Africa Challenge Cup • Our commitment over the past 10 years to gender and racial equality, both as a business and through our conferences • EnergyNet’s social programmes, where we have privately funded renewable energy projects for female African entrepreneurs • Our commitment to more 100 students from across the continent (EnergyNet Student Engagement Initiative) over the past six years In our LATAM Business we are using the same approach to help investors engage with stakeholders. We’re working with the International Gas Union, ARPEL and A to host the atin America and Caribbean as Conference C officially the World Gas Conference for Latin America. Our partnership with OLADE brings all 27 ministers of energy from across LATAM and the Caribbean to LGC this for he most important ingredient November in Peru, and sponsors are invited to a closed-door Ministerial Round Table with those ministers. change is a small number of people

who take responsibility and actively

I look forward to seeing you all at the Africa Energy Forum. If you have any needs trywe toare make di toerence. that EnergyNet may be able to help with, always a ready listen.

Africa Energy Yearbook

2019

9


C on f e re n c e g al l e ry 2018

10

Africa Energy Yearbook

2019


Africa Energy Yearbook

2019

11


E n e rg y N e t

CONTINENTAL CONNECTIONS

T here is f ar more that link s P ortu gal and A f rica than s imply his tory and geography.

T

he rise of renewables in Portugal and Africa has brought about an interesting synergy – one that makes the upcoming Africa Energy Forum in Lisbon one of the most intriguing yet. Portugal has fallen behind as new methods surrounding offshore and wind overtake the importance that was initially placed on onshore generation. Its leading energy player, EDP, has long urged the country to react faster to this change in direction. “The focus on the accommodation of cleaner energy presents a challenge of developing decentralised generation while surrounded by a grid that was built and based on traditionally big power plants,” introduces the company’s Executive Director, João Marques da Cruz. “This will require huge investment, not just in hardware and equipment, but also in intelligence in order to manage this decentralised generation. This transition is the biggest challenge facing everyone in Portugal right now.” This is where the alignment with Africa’s own nascent venture into clean energy and decentralised solu-

‘ I hope w hen w e s peak of this event in years to come w e’ ll look b ack at a pos itive tu rning point w hereb y leaders and companies b egan to pu s h throu gh projects rather than ju s t talk ab ou t them. ’ 12

Africa Energy Yearbook

2019

tions comes into play. However, Portugal has the advantage of being a former leader in the onshore space to leverage investment and progression. “In Portugal, particularly in decentralised solar, we already have a lot of players wanting to make investments,” said Cruz. “That is why the challenge now is to prepare the grid for this new wave of renewables based on solar. It’s also where we at EDP are most active, offering solar solutions to the market it’s also where we continue to have an influence in Africa, especially in ortuguese-speaking countries.”

A NEW WAVE OF DECENTRALISED CLEAN ENERGY

Across Angola, Mozambique and Cabo Verde in particular, EDP is joining numerous international players in mirroring domestic development with international opportunity. In Africa, Cru believes the first step is to veer away from traditional generation by promoting localised, off-grid solutions. When we think about off-grid solutions – and local grids are disconnected from the rest of the grid so are classed as off-grid it s important to accommodate local generation with improved grid management and supply skills,” he said. “This kind of ‘island’ in terms of energy management is something we believe is one of the main drivers for Africa and other places lacking a more robust central grid.”

The belief extends to an expectation that local off-grid options will generate a better quality of clean energy than the main grid can provide and is something that both Africa and Portugal need to diversify into in order to fully capitalise on the opportunities that offshore generation and solar present. More important is the idea of implementing the two strands of energy generation in tandem. “In Portugal, we have a two-step approach to first address large windfarms and then look into decentralised generation,” explains Cruz. “One thing we’ve learned from projects in Africa is that we can do these two things together without phases. My suggestion for both is – without forgetting the big windfarm projects that countries are already deadlocked into – to also look towards decentralised solar solutions simultaneously. “You can do them together and there’s no reason why this new wave of decentralised clean energy should be looked at as opposite to the big windfarms or centralised renewable projects already ongoing.”

‘NOW’ IS THE MOMENT FOR AFRICA

‘Doing things together’ ties in nicely with the forthcoming Africa Energy orum affirming that ortugal s historical ties with Africa can be brought into the present day via networking, knowledge-sharing and – hopefully, as far as Cruz is concerned – tangible investments and project-building. “This event needs to be seen as a starting point,” he said. “If it doesn’t initiate any real process of investment or collaboration then it’s not a success but I hope in this case, with the participants in attendance, that we can create a momentum of more investment in energy in African countries. “I hope when we speak of this event in years to come we’ll look back at a positive turning point whereby leaders and companies began to push through projects rather than just talk about them,” Cruz concludes. ■


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D ata se c ti on

ELECTRICITY ACCESS

ore a ordable technology and o -grid renewable energy is giving people increased access to electricity across frica

ELECTRICITY ACCESS RISING IN SUB-SAHARAN AFRICA 25

RURAL ACCESS (Source: World Bank ) 15

2016

2014

2012

2010

2008

2006

2004

2002

2000

5

1998

10

1996

Access to electricity, % of rural population

20

access to electricity rural

14

Africa Energy Yearbook

2019

URBAN ACCESS (Source: World Bank ) 70

Access to electricity, urban (% of urban population)

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

50

1992

60

1990

In rural Africa, access to electricity remains very low, although this could improve quickly if the provision of cheap household solar power units – which are already viable and popular in some African markets – can be scaled up. This is one area where the private sector is increasingly able to take a lead because low costs reduce the need for government and multilateral support.

80

Access to electricity, urban % of urban population

Thanks to the expansion of utility-scale grids and falling costs, which both help to bring small-scale, off-grid renewable energy to rural communities, more and more Africans have access to electricity. But, as these charts show, there is a long way to go before universal access can be achieved. Intermittent supply, poor ‘final mile’ connectivity and high electricity prices create problems, even in relatively urbanised areas.


GRID LOSSES REMAIN A PROBLEM 15

Electric power transmission and distribution losses (% of output)

GRID LOSSES (Source: World Bank )

12

2015

2010

2005

Electric power transmission and distribution losses (% of output)

Energy intensity – a measure of energy efficiency – has fallen across subSaharan Africa. There are many factors that influence energy intensity, but increased access to electricity and the adoption of more efficient generating and consumer technology help to push it down.

ENERGY INTENSITY 12

However, the overall figure remains high compared to other regions of the world. This is partly because the pervasive and inefficient use of biomass for cooking and heating in rural areas has pushed up the figures in some countries. Weak energy-efficiency policies also keep the figures high in some countries.

10

8

ENERGY INTENSITY (Source: World Bank )

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

6

1990

Level of primary energy (MJ/$2011 PPP GDP)

2000

1995

1990

1985

1980

6

1975

9

1970

Cash-strapped utilities in sub-Saharan Africa have struggled to staunch inefficiencies in their transmission and distribution networks. The situation is improving in some countries through moves to put struggling utilities on an even keel, both financially and organisationally, by restructuring, increasing end-user tariffs to commercially viable levels and improving payment collections. For more on what’s happening around Africa, see the power utilities article on p100.

The regional average ratio of seven in 2015 hides wide disparities from region to region and from country to country. For example, in Ghana the figure was four, in Mozambique it was 17 and in Liberia it was 26. For comparison, energy intensity in the European Union stood at 3.7 in 2015, while in the US it was 5.4.

Africa Energy Yearbook Energy intensity level of primary energy (MJ/$2011 PPP GDP)

2019

15


D ata se c ti on

ELECTRICITY ACCESS

GAS OVERTAKES COAL IN AFRICAN ELECTRICITY GENERATION Power demand in Africa is rising, reflecting the increasing demands of growing economies and fast-urbanising populations. This demand is being met largely by natural gas and renewables, with the amount of coal in the power mix changing little in absolute terms in the latter years of the time range shown. 1,000,000

800,000

This shift reflects a growing reluctance by governments, development finance institutions and commercial investors to invest in new coal capacity when gas and renewables provide cleaner, cost-competitive alternatives.

Meanwhile, the rapid expansion of the global liquefied gas trade offers not only export opportunities for African producers, but also the potential for those without it to import gas more readily. The total amount of coal capacity in Africa’s power mix can be expected to decline as older coal-fired power stations are closed – notably in South Africa – and their generating capacity is replaced by new plants using cleaner feedstocks. Hydropower has long been a mainstay of the energy mix and will continue to be so for the foreseeable future.

Gas is only likely to rise in importance over the short to medium term, as African nations seek to tap the huge reserves being discovered off the coasts of Mozambique, Egypt, Senegal, South Africa and elsewhere for domestic consumption.

600,000

GWh

GAS

400,000

200,000

COAL

POWER GENERATION BY TYPE (Source: IEA )

Electricity generation by fuel.

Tide

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

0

■ COAL ■ OIL ■ GAS ■ BIOFUELS ■ WASTE ■ NUCLEAR ■ HYDRO ■ GEOTHERMAL ■ SOLAR PV ■ SOLAR THERMAL ■ WIND ■ TIDEWind

16

Africa Energy Yearbook

2019

Solar thermal Solar PV Geothermal


SOLAR AND WIND ATTRACTIONS GROW NON-HYDRO RENEWABLE POWER CAPACITY IN AFRICA (Source: IRENA Renewable Capacity Statistics 2019 ) ■ WIND ■ SOLAR PV ■ SOLAR CSP ■ GAS ■ BIOENERGY

7 11 37

5

40

WIND

40%

Hydro dominates renewable power generating capacity in Africa, accounting for more than 70% (35.6GW), having been a major target of investment for decades. However, hydropower is notoriously unreliable in some parts of the continent, possibly more so if droughts become increasingly common as a result of climate change. Because of this, African countries are keen to diversify into increasingly cheap – and less environmentally controversial – renewables, such as wind and solar. As the pie chart shows, solar and wind power account for the lion’s share of non-hydro generation, in roughly even measures. Wind-friendly investment climates in Egypt, Morocco and South Africa are helping to drive that sector in their coastal regions, with Senegal in the vanguard of newcomers starting to develop their wind resources. Solar is the renewable energy source of choice for both on- and off-grid developments in most of sub-Saharan Africa. Concentrated solar power generation derives mainly from big projects in the Sahara, notably Morocco. Geothermal is becoming an increasingly important renewable energy source in the African Rift Valley, with Kenya taking the lead in developments there. Bioenergy is an area with growth potential, including through schemes to recycle industrial and household waste for power and biogas production. For more on the rapid evolution of Africa’s renewables and further data on the sector, Vera Songwe of the Economic Commission for Africa outlines interesting financing possibilities for the sector on p18, while we examine renewables projects and trends in articles on largeand small-scale renewables development on p69 and p97.

SOLAR

37% Africa Energy Yearbook

2019

17


I n te rv i e w

Vera Songwe

U nder- S ecretary- G eneral and E x ecu tive S ecretary, U nited N ations E conomic C ommis s ion f or A f rica (E C A )

FINANCING AFRICA’S ENERGY TRANSFORMATION P ow er projects in A f rica are b eing held b ack b y high f u nding cos ts . T he prob lem req u ires innovative s olu tions , s u ch as the propos ed S D G 7 - S u s tainab ility B ond, s ays V era S ongw e.

T

he development objectives of African countries, as embodied in various national development plans, the UN’s 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063, cannot be attained without access to modern energy forms and services. Without stepped-up action to close Africa’s energy gap, by 2030 we will have close to 590m people without access to electricity – the same number of people without access at present. In fact, urban electrification rates range from 4% in South Sudan and the Central African Republic to 100% in Cabo Verde and Mauritius, while rural electrification rates range

from 1% (Central African Republic, Chad, Democratic Republic of Congo, Djibouti, South Sudan, Burkina Faso, Guinea, Guinea-Bissau and Niger) to 71% in Ghana and Swaziland, 89% in

Cabo Verde, 99% in the Seychelles and 100% in Mauritius (Figure 1). In terms of total installed electricity capacity, the situation is dire. For example, South Africa on its own has an installed capacity equivalent to the rest of Africa (excluding North African countries) – and similar in scale to the 53GW of solar photovoltaic capacity additions made by China in just one year (2017). Furthermore, the continent’s limited energy mix is still dominated by thermal power (Figure 2a/ bw), despite its abundant renewable energy resources. Energy access shortfalls in Africa are constraining both human development and economic growth. Lack of access to electricity prevents children

1. RATE OF URBAN AND RURAL ELECTRICITY ACCESS IN AFRICA IN 2017

Algeria Libya Morocco Tunisia Cabo Verde Mauritius Egypt Seychelles Gabon Ghana Cameroon Equatorial Guinea Swaziland Senegal Comoros Côte d’Ivoire Eritrea Nigeria Ethiopia Mali Zimbabwe Kenya Namibia Togo Rwanda Sudan Sao Tome and Principe Angola Botswana Zambia Gambia Tanzania Lesotho Burkina Faso Mozambique Benin Congo Niger Djibouti Madagascar Malawi Mauritania Guinea Burundi DRC Somalia Chad Uganda Guinea-Bissau Liberia Sierra Leone Central African Republic South Sudan

(Based on data by the International Energy Agency: World Energy Outlook 2018)

■ URBAN ■ RURAL

18

Africa Energy Yearbook

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2(a).CUMULATIVE ELECTRICITY INSTALLED CAPACITY BY SOURCE TYPE (MW) 16 14 12 10 8 6 4 2

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0

■ THERMAL ■ NUCLEAR ■ HYDRO ■ BIOPOWER ■ WIND ■ GEOTHERMAL ■ SOLAR PV ■ SOLAR THERMAL ■ SOLAR CPV

from studying in the evening, which hinders educational advancement and the growth of human capital. Electricity is also crucial for the provision of health services, such as for the operation of medical equipment. In terms of economic growth, electricity is crucial to the sustainable growth of the private sector. Unreliable and/or high-cost power supplies lower the competitiveness of Africa’s tradeable goods industries, especially manufacturing and services, such as data processing. Power shortages also contribute to the lack of productive employment, which drives migration from the continent. Yet Africa has huge and widely distributed renewable energy resources that remain largely underinvested owing to a combination of factors, including the lack of appropriate policy and regulatory frameworks to signal and stimulate investments. If properly invested in, Africa’s industrialisation agenda could be powered by clean energy sources and provide quality jobs to the continent’s growing, youthful population, enhancing livelihoods, catalysing trade and responding to climate change. Notwithstanding the challenge of closing Africa s huge energy deficit,

2(b). SHARE OF TOTAL CAPACITY ONLINE OR SOON TO BE ONLINE TOTAL CAPACITY

(Compiled from GlobalData’s power plants database https://power.globaldata.com/)

1.3

0.2

2 1

10.7

23

5.6

18.1

0.5

37.2

■ BIOPOWER ■ COAL ■ DUAL FUEL ■ GAS ■ GEOTHERMAL ■ HYDRO ■ NUCLEAR ■ OIL ■ ONSHORE WIND ■ SOLAR PV ■ SOLAR THERMAL Africa Energy Yearbook

2019

19


I n te rv i e w

FINANCING AFRICA’S ENERGY TRANSFORMATION 40,000

3. CUMULATIVE ACTIVE RENEWABLE POWER INSTALLED CAPACITY IN AFRICA (MW)

35,000

30,000

25,000

20,000

15,000

10,000

0

2016

Solar Thermal

■ HYDRO ■ BIOPOWER ■ WIND ■ GEOTHERMAL ■ SOLAR PV ■ SOLAR THERMAL ■ SOLAR CPV

Solar PV

25,000

much progress has been made. Governments are taking advantage of increasingly cost-competitive new technologies and innovative financing models to review, revise and re-engage with their national energy strategies, leveraging opportunities 120,000 to unleash the continent’s abundant renewable energy resources. 100,000 As shown in Figure 3, the momentum towards the adoption of renewables on the continent has been 80,000

20,000

15,000

10,000

5,000

0

increasing since 2014, with transformative actions in Morocco, Egypt, South Africa, Ethiopia, Ghana, Kenya, Senegal and Zambia. The ECA’s analysis of announced, financed and/or under construction renewable energy projects in Africa to 2030 shows a pipeline of at least 183GW (Figure 4), dominated by projects in Democratic Republic of Congo (particularly the Inga development), Ethiopia, South Africa, Egypt, Kenya,

4. PIPELINE OF60,000 ANNOUNCED, FINANCED OR UNDER CONSTRUCTION RENEWABLE POWER 40,000 PROJECTS IN AFRICA TO 2030 (Source: ECA, compiled from GlobalData’s power plants database) 20,000 120,000

0 100,000

80,000

60,000

40,000

20,000

0

HYDRO

CAPACITY (MW) 119,110

20

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

30,000

2000

5,000

2001

35,000

Solar CPV

2017

40,000

Africa Energy Yearbook

2019

SOLAR PV 119,110

ONSHORE WIND 16,657

SOLAR THERMAL 9,177

GEO= THERMAL 8,520

Morocco and Nigeria (Figure 5). At an average of cost of $2m/MW, this pipeGeothermal line represents investments opportunity of close to $370bn. Wind There is insufficient public finance to meet the huge capital flows needed to unlock Africa’s renewable energy Biopower potential. Much of it will need to come from the private sector through public-private partnerships (PPPs). Hydro But the level of private-sector engagement in Africa’s energy sector remains very small, given the market size. The scale of investments from existing sources falls significantly short of what is needed atOffshore a time when Wind there are competing demands on public resources. African governments Ocean lack the fiscal space to finance more than a fraction of the capital investBiopower ment projects needed to close the gaps in infrastructure. Geothermal Innovative approaches are needed to mobilise the financing uired Solarre Thermal for Africa’s energy transformation. That is why the ECA is working with Onshore Wind financial institutions and the nited Nations Secretary-General’s sustainSolar PV ability council to develop a template for defining sustainable Hydro investments consistent with the Sustainable De-

BIOPOWER

OCEAN

1,358

1,250

OFFSHORE WIND 50


velopment Goals of the UN’s 2030 Agenda for Sustainable Development. Secondly, it has conceptualised and proposed the SDG7-Sustainability Bond as a key instrument for fast tracking secured investments for clean energy in Africa. The bond aims, in the first instance, to raise $5bn through the issuance of paper with a 15- to 20-year maturity. The proposed SDG7-Sustainability Bond envisages capital market entities and development finance institutions with stand-alone credit profiles of AAA issuing bonds on the Eurobond market. The proceeds of these would then be used to purchase the debt of companies investing in the power sector in Africa, especially those undertaking PPP projects in electricity generation, transmission or distribution. The debt issued by these projects will carry market rates of interest, usually with a relatively small premium, which should allow a small margin over the cost of the bonds issued by the development institutions or

Solar CPV

Solar Thermal

Solar PV

Geothermal

Wind

Biopower

Hydro

Offshore Wind Ocean Biopower

agencies. The pricing algorithm used will be sensitive to the pricing of other energy bonds being issued on the Eurobond market, the tenor and risk profiling. The stream of debt repayments from the energy projects in Africa will be used to service the bonds issued by the development institutions or agencies.

PREDETERMINED PRICES

PPPs are becoming increasingly important vehicles for financing and implementing infrastructure projects in Africa. Under a typical power-sector PPP, a private company will build a generating facility and supply power to the national grid at predetermined prices under a long-term contract. The will be financed partly by equity and partly by debt, with debt typically comprising about two-thirds of the total finance required. Normally, the debt is raised from international investors with the private-sector arms of multilateral development banks.

Geothermal

5. COUNTRIES WITH PROJECTS OF LEAST 1GW OF TOTAL CAPACITY ANNOUNCED/INTENDED TO 2030

Solar Thermal

(Source: ECA, compiled from GlobalData’s power plants database) Onshore Wind Egypt

Solar PV

Kenya Nigeria

Hydro

Angola Zambia Morocco Tanzania Mozambique Ghana Tunisia Uganda Zimbabwe Cameroon Namibia Lesotho Sudan Malawi Mali 0

2

4

6

8

10

12

Because power-sector projects are capital intensive, the cost of debt is a crucial determinant of the long-term cost of the power generated. High debt-servicing costs mean that power tariffs must be higher if the project is to be commercially viable. In turn, the cost of power generated by the project is a crucial determinant of its longterm social benefits. ower power tariffs mean that users in the business sector will be more competitive and thus more likely to expand and create employment. It also means that electric power will be more affordable for low-income consumers. Through the proposed SDG7-Sustainability Bond, capital market entities and development finance institutions can make a positive contribution to economic and social development in Africa by participating in the financing of PPPs, alongside other institutional investors. By doing so, they can help to lower the cost of debt finance. Without such contributions, all the finance would have to be raised from commercial sources and it is likely that commercial investors would demand higher premiums that are above market rates of interest to compensate for the perceived higher risks of longterm investment in Africa. That, in turn, would lower the long-term social benefits of the projects being financed. Furthermore, the participation of reputable development finance institutions sends a signal to commercial investors that the project promoters are credible, and that the project is viable in the long term. This will help to reduce the cost of finance for projects, thereby catalysing Africa’s energy transformation. With adequate access to energy, especially baseload energy, the potential of signature decisions like the Africa Continental Free Trade Area, the Single African Air Transport Market and others to deliver benefits will increase significantly, creating more jobs and enhancing livelihoods as Africa becomes more competitive and more prosperous. This will ensure no one gets left behind. ■ Africa Energy Yearbook

2019

21


C om

m

u n iq u é

David Crabb

S ales and D is trib u tion M anager f or C aterpillar’ s L arge E lectric P ow er grou p

C A T E R P I LLA R POWERS GROWTH

D avid C rab b gives his pers pective on the w ays in w hich C aterpillar and its dealer netw ork are addres s ing the rapidly evolving needs of the A f rican mark et.

H ow i s A f ri c a u n i q u e i n i ts n e e ds f or p owe r? The first thing that comes to mind is the rapidly expanding population. According to the latest estimates from the United Nations, the population of Africa will rise from about 1bn today to approximately 4bn by the end of this century. The next characteristic that makes Africa unique is the low per-capita consumption of electricity, which is about 15% of the global average, according to the Organisation for

22

Africa Energy Yearbook 2019

Economic Co-operation and Development (OECD). Starting from this low base, improved electrification in rural areas, as well as the increased affordability of electricity, will lead to a rapid increase in consumption. Finally, access to finance is a significant factor. The shift from centralised power plants to distributed generation will lead to faster decisions about investments and an increased flow of foreign investment, which will help customers improve profitability. Investments will be timed with the actual power need, reducing the upfront capital expenditure. Recent large photovoltaic (PV) projects in the region show a lower levelised cost of energy than traditional power plants. Africa has demonstrated an ability to change quickly; the transition

to mobile phone infrastructure – bypassing the use of fixed land lines – for example. Distributed renewable energy has the potential to have a greater impact on the daily lives of Africans. While the scale of change in Africa is unique, it also shares the need of the rest of the world for stable, relia-


ble and timely power as a key for economic growth, safety and security.

H ow i s C ate rp i l l ar u n i q u e l y p osi ti on e d to se rv e c u stom e rs i n th e A f ri c an m ark e t? Caterpillar has a long history in Africa, and we have grown as our African customers have grown. We have adapted our product offerings to cope with the fuel, heat, humidity, dust and other extremes. Moving forward, we face the challenge of integrating distributed generation and new technologies with traditional power grids, and it will be critical for us to ensure the delivery of reliable power for the African economy during this rapid expansion. Our broad product portfolio and global perspective, combined with the local expertise of the Cat dealer network, are key advantages for Caterpillar. We can tap our company’s collective knowledge on any particular industry application and then design the optimal solution. With a full range of diesel, gas, dual-fuel and hybrid power solutions, we can offer customers a transparent comparison of technologies. And by combining existing or new power plants with the Cat Microgrid Master controller (MMC) or Cat Energy Storage System (ESS), we support reduced fuel consumption and supply costs, grid stability, power quality and other benefits – all while ensuring reliable power.

C an y ou g i v e an e x am p l e of a sol u ti on th at u se s a m i x of p owe r te c h n ol og i e s? B2Gold Corp began operations at the Otjikoto Mine in central Namibia in 2015. Four Cat® CM32 generator sets that run on heavy fuel oil supply primary power for operations, with

standby power provided by three Cat 3516 diesel generator sets. While delivering exceptional availability, the reliance on power produced from fossil fuels makes the profitability of the mine vulnerable to fuel price fluctuations and supply interruptions. Caterpillar and Barloworld, the Cat dealer for Southern Africa, designed an integrated hybrid system that not only generates power while the sun shines but also maintains a consistent flow of power for the mine’s operations in cloudy conditions and at night. The 7MW solar facility at Otjikoto includes 62,400 Cat thin-film PVT modules mounted on single-axis trackers, 260 solar inverters, seven 1MW transformers and the Cat Microgrid Master Controller (MMC). By converting the mine’s power-producing capabilities to a solar hybrid, company officials estimate a reduction in HFO consumption of about 3.4m litres per year, which results in an annual savings of 14%16% in the cost of power generation.

H ow i s b i g data c h an g i n g th e p owe r sol u ti on s b u si n e ss? Big data and connectivity allow power plant owners to have a true, real-time picture of the performance of their assets that was not always available in the past. For customers running generators set for prime power, the aggregated data can be used to predict failure, monitor fuel consumption and reduce any unplanned downtime. Meanwhile, customers using generator sets for emergency backup can know their power plants are ready to run at a second’s notice. Today, Caterpillar has hundreds of thousands of assets connected globally through Cat Connect, which leverages technology and learning across

our construction, mining, and energy and transportation divisions. Cat Connect is available to all of our electric power customers, large and small, and can be used beyond generator sets to include renewable energy applications and energy storage. Customers can visualise data on performance and receive alerts and reports from anywhere in the world through an easy-to-use interface. I would recommend customers contact their local Caterpillar dealer for a free demonstration or webinar to fully understand the possibilities.

Tractafric Equipment delivers a Cat generator set at Parc de la Lékédi in Gabon

W

h at’ s n e x t f or C ate rp i l l ar i n A f ri c a? Caterpillar is 100% committed to our customers in Africa. We’re heavily invested in African communities, where Caterpillar and our dealers employ approximately 15,000 people. In 2016, Caterpillar, our dealers and the Caterpillar Foundation announced a plan to invest more than $1bn in countries throughout Africa over a five-year period. This investment includes enhanced parts distribution capacity, new state-of-the-art Certified Rebuild Centres, new dealer branch locations, the expansion of Caterpillar’s Technicians for Africa online skills development programme, and millions of dollars to support programmes that lift people out of poverty. Ultimately, we’re excited about the long-term investments we’re making in Africa that are helping to build, develop and power communities. ■ Africa Energy Yearbook 2019

23


I n te rv i e w

John Lewis

M anaging D irector, A f rica A ggrek o

COMPLEMENTING THE GRID A ggrek o u s ed to b e s een as a provider of s topgap or temporary pow er s olu tions – now the company is of ten in it f or the long hau l, as distributed energy takes o in frica.

A

ggreko has long been a presence in the African market, mainly as a provider of temporary power solutions that help to fill the gap between supply and demand on an increasingly energy-hungry continent. But that role is evolving, as customers seek longer term distributed energy solutions. The company operates in some 25 countries across Africa, as part of its extensive worldwide presence, and has typically provided thermal power generation, using diesel, gas and other fuels to complement grid power or compensate for its unreliability or complete absence. It is also developing biomass solutions. Many of these activities on the continent have been carried out in collaboration with national grid providers, filling in gaps in their supply, but that’s changing, according to John Lewis. “We have done a lot of work with the national power utilities in Africa, because they don’t traditionally have very well developed infrastructure. In the past 10 years or so it’s been a very strong market for us. But that part of our business is flattening out, because, as these economies are developing, they’re investing in permanent power solutions,” he said. Aggreko still has a role in this area to meet seasonal demand spikes, emergency requirements, or as a

24

Africa Energy Yearbook

2019

back-up solution. Crucially, national utilities themselves now see distributed energy, rather than extending the grid, as an intrinsic part of strategies to get power to more remote communities faster. “A lot of the African utilities are grappling with how they cost-effectively extend electrification out to rural areas and this is a good solution for that problem,” Lewis contends. Other African markets are providing stronger growth. In particular, industrial sector opportunities are expanding, ranging from small-scale temporary solutions for, say, a shopping centre, to power for a mine, a cement factory, or oil and gas applications at the other end of the scale. “In some cases, it is because our solution is cheaper than the national utility. That part of our business is growing rapidly, probably 20%-plus this year,” said Lewis. Mines and oilfields are key markets for the company, given they are often located in remote locations with no prospect of a grid connection. The modular and scalable nature of temporary power plants are also attractive, as mines typically re uire different amounts of power depending on their stage of development.

RENEWABLES IN THE MIX

Solutions for industrial customers are becoming more sophisticat-

ed, and, in some cases, tie thermal generation to renewable energy to provide much cleaner – and cheaper – power than would be possible using thermal alone. Just how much cheaper the solar-thermal combination is than pure thermal depends on local feedstock costs. “Around 80% of the cost is the fuel, so it really does depend on the fuel price and tax in the country,” said Lewis. In Eritrea, the company is building a photovoltaic (PV) and diesel hybrid system to provide micro-grid power at a gold mine. Under a 10-year rental agreement, the mine will be powered by a 22MW diesel plant and a 7.5MW solar power resource. Aggreko says this combination will reduce fuel costs by more than 10%. There is no upfront cost to the customer, with a power purchase agreement in place for the solar energy. Using solar power alone for such industrial-scale projects, which often operate on a 24/7 basis, would be impractical at the moment, as the scope of battery storage to provide night-time power remains limited and its cost high. So thermal power needs to be part of the project. However, Aggreko is looking at incorporating more battery storage in African projects. “The batteries only last for half-anhour to an hour, but they can cover slight degradations in solar activity.


‘ T he mos t important ingredient f or change is a s mall nu mb er of people w ho tak e res pons ib ility and actively try to make a di erence.

Africa Energy Yearbook

2019

25


I n te rv i e w

COMPLEMENTING THE GRID If you get some cloud cover, the efficiency of that solar plant will dip and the battery will kick in to cover that re uirement. We provide the combined solution and the control systems to manage the transition between the different sources, said ewis. The company is already working on hybrid solutions with battery components elsewhere in the world that are likely to become more regular features in Africa before long. Aggreko was contracted by mining firm old ields Australia to provide a 22MW gas-fired power station for its operations in Western Australia. Aggreko has added MW of solar power and 2MW of battery storage to the mix to reduce the environmental impact and fuel costs without affecting the stability of the local micro-grid. The solar-plus-battery element of the project, which is currently under construction, is forecast to reduce fuel consumption by 10-13 . ewis says he’s hopeful that similar solutions will be deployed by the firm in Africa soon.

LONG-TERM THINKING

As the 10-year duration of some of the new African projects indicates, providers of temporary power solutions are now well positioned to participate in the paradigm shift in the way African nations are looking at power provision. Mini- and micro-grids, and offgrid household level power provision, are now being seen more as permanent solutions rather than as stopgaps in the hope that the national grid will soon arrive – a hope that frequently fails to be fulfilled in much of Africa. ewis said it makes sense not to build out grids into remote areas, given there are now better ways to provide power there. “Distributed energy is a global trend that we re trying to harness, he said. “Even in Western Europe, you wouldn’t do the same thing again by building grid infrastructure everywhere. It s no longer the most efficient way of doing it. Certainly, some African countries are never going to achieve it.

26

Africa Energy Yearbook

2019

While renewable energy is seen playing as big a role as possible in the electrification of Africa, ewis believes thermal power will still remain an important part of the energy mix over the next 10 to 15 years. “Even in Western economies, which have a heavy share of renewable energy, they can’t yet run without thermal power. We can see thermal diminishing, but bearing in mind the significant growth in demand for power in Africa as well, we just don t see renewables being able to keep up with that demand and become the only solution, he said. The intermittency of hydropower, which forms the backbone of power supply in several African nations, is another reason why thermal generation is likely to remain in demand. Both seasonal fluctuations and longer term supply problems, such as those caused by drought, require reliable, large-scale backup generation, which thermal generation is best placed to provide at present, according to ewis. Thermal power generation should become cleaner as old stocks of diesel generators are replaced by more efficient alternatives, though this is unlikely to happen overnight. It s like any technology, it incrementally improves. But they’re not cheap bits of kit. People have to spend money on them, and they don’t replace them uickly, he said.

HARNESSING WASTE GAS

In some cases, thermal power generation provides a more environmentally friendly option than the alternative. ome of Africa s oilfields are among the world s worst offenders when it comes to flaring unwanted associated gas, injecting methane – a potent greenhouse gas – straight into the atmosphere. Policies are being put in place in major flaring nations such as Nigeria aimed at harnessing that gas for power and other uses, but putting in the infrastructure is taking time. One relatively straightforward way to use some of the gas is to provide local power for the oilfields involved. To that end, Aggreko installed 5MW

of capacity run on flared gas to power Maurel and rom s oilfield operations in abon, a solution that could have a growing market if African oil producers take their anti-flaring commitments seriously.

UTILISING HFO

Aggreko has also been diversifying the types of fuel it uses for thermal generation. We use gas if it s available because it’s cheaper, but it’s not available everywhere. But heavy fuel oil is another one that s a very cost-effective solution in some countries, said ewis. ne of those countries is Madagascar, a user of derived from the country’s heavy oil reserves. Aggreko worked with local fuel supplier ovena to replace ageing, unreliable diesel generation with a mobile, modular plant that could be installed faster than permanent power generation and thus alleviate the risk of power interruptions. The plant a 16-pack modular installation with a 2 MW capacity started operating in Ambohimanambola, central Madagascar, in early 2018. Aggreko also provided fuel and water treatment units, and installed a substation to increase the line voltage from 11kV to 63kV. “This is quite a new technology for us, said ewis. We only deployed this first one early last year and a second one is just going in. There are a few others that we re discussing. The company s second fuelled plant in Africa is in Burkina aso, where it has just installed a 50MW system to help the country cope with seasonal fluctuations. ne reason that is becoming a popular alternative to diesel is that it’s cheaper in some markets. Using in Madagascar is 20 cheaper than running a diesel plant, according to Aggreko. is also what fuels the floating power plants provided by Karpowership, the Turkish-owned firm whose plug and play rapid-deployment vessels provide power to ambia, hana, Mo ambi ue, ierra eone, udan and ambia, as well as ebanon, Indonesia and Iraq. ■


What is the cost of no power? Without electricity, factories couldn’t operate, hospitals couldn’t offer lifesaving aid and communities wouldn’t be able to power essential facilities. For more than 20 years in Africa, we’ve been delivering power to customers in the harshest and most remote environments. We continue to work at the forefront of a rapidly changing energy market and are focused on solving our customers’ challenges to provide cost-effective, flexible and greener power solutions. Together and over time, we believe our services make a massive difference.

Visit

aggreko.com

Call

AO: +244 934 454 063 CI: +225 21 27 09 75 CM: +237 678 26 56 95 KE: +254 707 000 888

NG: +234 906 265 5706 SN: +221 33 859 21 10 TZ: +255 222 773 521 ZA: +27 861 244 735


ast

frica

e ional profile

EASTERN PROMISE

T he region has s ome major plans u nder w ay. eil ord profiles the energy landscape of ast frica.

I

t s difficult to overplay the scale of ast Africa s power-sector ambitions. thiopia, Kenya, Tanania and ganda have some of the most ambitious generation expansion targets anywhere in the world, with hydro, coal, gas and renewable energy projects all scheduled for development. overnments across the region are also promoting electrification, not just because of the social, environmental and economic benefits, but also on safety grounds. or example, the 0 of gandans without access to electricity in their homes rely on kerosene and biomass. The latter causes deforestation and the former is responsible for countless domestic fires. The Kenyan government listed universal electrification as a priority in its Vision 2030 strategy to turn the country into a middle-income state by that year. According to the Ministry of nergy, the connection rate had already reached 75 by early 2019 up from 23 a decade earlier which seems to have encouraged the government to speed up the process. nder the 201 Kenya ational lectrification trategy, airobi set a target of supplying every home with electricity by 2022. Many of the households connected over the past decade have been relatively easy to reach, along the more densely populated belt from Mombasa in the east to ake Victoria in the west, via airobi. In addition to a distribution sector programme, this has been achieved by a huge investment in new generation projects. Kenya has an installed generating capacity of 2.34 W, of which 1.63 W is owned by Ken en, and the state-owned com-

28

Africa Energy Yearbook

2019

pany plans to add another 720MW by 2020. As we shall see later, the speed of this increase is creating problems of its own. In addition to investment in on-grid transmission and distribution, airobi is banking on off-grid projects to reach 650,000 homes in rural areas. The World Bank is providing financial support for the Kenya ff-grid olar Access roject, which aims to connect 1.3m people in the more sparsely populated north and northeast of the country, while the Kenya lectricity Modernisation roject hopes to supply electricity to 235,000 people. A survey by off-grid solar association ogla found that 36 of households that had recently installed an off-grid solar photovoltaic V kit increased their income by more than $35 a month a big increase in rural parts of sub- aharan Africa. Charles Keter, Cabinet ecretary to the Ministry of nergy, said that although much had been achieved a new strategy was needed to bring the entire country under electrification in an economically viable manner .

TANZANIAN AMBITION

The government of Tan ania introduced its own testing target in April to increase installed national generating capacity from 1,602MW at present to 10,000MW by 2025 by developing projects across a wide range of technologies. eputy nergy Minister ubira Mgalu said We need to have abundant and reliable power from an energy mix that includes hydropower, natural gas, solar and wind. Tan ania s gas boom is already benefiting the power sector, as almost half of all installed capacity is

gas-fired, spread over nine projects. ydro schemes dominate the rest of the generation mix, with 56 MW. ntil the development of the first gas-fired capacity in 2004, Tan ania relied on hydro schemes, but erratic rainfall has led to fre uent power rationing and the government now seems determined to put gas at the heart of its power strategy. roven natural gas reserves already stand at 57tr cubic feet, so even if a substantial li uefied natural gas plant is developed as planned in the south, there should be plenty of gas left to feed more domestic generation capacity. ast Africa s largest country is starting from a lower base than Kenya, with an electrification rate of 32.7 at the end of 201 , but it still hopes to achieve universal electrification by 2030. The Agency for International evelopment s ower Africa initiative cites poor sector governance and the lack of cost-reflective tariffs as among the biggest problems in the Tan anian power industry. There have been two main strands to Tan ania s electrification programme encouraging the development of natural gas reserves for domestic consumption and creating an attractive investment environment for off-grid solar V providers. In contrast, ganda seems content to increase its reliance on hydroelectric power production. Kampala s power-sector ambitions are even greater than those of Tan ania, with a goal of achieving


G overnments acros s the region are promoting electrification, not ust because of the social, environmental and economic benefits, but also on safety grounds. 17GW installed capacity by 2028. Meanwhile, Ethiopia is focusing on dam construction, with hydro projects accounting for 3.74GW out of national installed capacity of 4.20GW, but this proportion is set to grow further over the next few years as a string of jumbo dam schemes are completed. This is a remarkable increase given that Ethiopian generating capacity stood at just 745MW in 2006. Wind accounts for another 337MW at present and thermal power plants just 126MW. About 40% of Ethiopians currently have access to electricity, ranging from 85% in urban areas down to 29% for rural households.

OFF-GRID IN RWANDA

The East African state with perhaps the biggest off-grid aspirations is Rwanda. Kigali hopes to provide access to electricity for all households by 2024, with an incredible 48% supplied off-grid. iven the country s small size and high population density of 519 people per sq km, it might be an ideal candidate for a comprehensive national grid. It will be interesting to see whether universal electrification is achieved, in the first incidence through the acquisition of low-capacity solar PV kits, followed by grid connection in the longer term. In 2018, just 12% of rural Rwandans had access to electricity at home, rising to 72% in urban areas, so there is a huge amount of work to be done in a short time to achieve the 2024 goal, particularly as the country currently has an installed capacity of just 218MW, comprising 103 MW thermal, 98MW hydro and 12MW solar PV. ■ Africa Energy Yearbook

2019

29


E ast A f ri c a: P ol i c y de v e l op m

e n ts

PUSHING BOUNDARIES

T here has b een a remark ab le level of innovation in E as t A f rican pow er- s ector development, s ays N eil F ord in his overview of policy and inves tment in the region.

T

here have been numerous examples of progressive policy development in the region over the past year. For example, Uganda has adopted a pricing strategy for electricity from both the Isimba and Karuma hydro projects that offers low-cost electricity while enabling debt repayment. Residential tariffs on Karuma have been set at $0.497kWh for the first 10 years, followed by $0.27kWh for the next five years and $0.117kWh thereafter. Those on Isimba will be $0.416kWh for the first 15 years, followed by $0.101Kwh thereafter. It has been reported within the country that the current average cost of power is $0. -$0.9kWh, so these are very low figures indeed. owever, the Uganda Electricity Generation Company Limited still calculates that the Isimba plant will generate h150bn $41.6m a year in revenue at the lowest projected rate, which it believes will be sufficient to service the debt on the project, meet operational and maintenance costs, and generate a small profit. The government also wants to refinance outstanding debts on the Bujagali hydro scheme, which was completed in 2012. Kampala is financing the development of the transmission grid in such a way as to enable plentiful supplies in areas where it plans to develop 25 industrial parks. In addition, the grid is to carry electricity to all parts of the country as soon as possible, with 300,000 new properties connected

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every year. According to the Uganda Bureau of tatistics, the country s electrification rate currently stands at 20 . In the longer term, the government is also keen to export electricity to the rest of East Africa, including the Democratic Republic of Congo and outh udan. owever, domestic power demand is growing by 9 a year, which means that new capacity needs to be brought on stream regularly if domestic supplies are to be maintained.

THE KENYAN APPROACH

airobi s electrification success has been partly driven by wide-ranging innovation. Its decision to create a new independent regulator in 2006 – the Energy Regulatory Commission RC is often cited as a contributing factor to its success. While the Ministry of Energy focused on attracting new investors, the RC was able to concentrate on sector regulation, licensing projects and setting tariffs. Kenya has also innovated by offering lower tariffs to manufacturers that operate at night when power demand is low. The lack of access to affordable, reliable electricity is one of the main reasons why most African countries lack substantial manufacturing sectors. According to the World Bank, Nairobi approached it not for direct funding but for advice and to allow the use of its own security instruments “to attract investors, including commercial banks that had not pro-

vided support to earlier rounds of independent power producers I s , including partial risk guarantees that gave private-sector investors more confidence. A total of 13 I s now operate in the country. By contrast, the Tanzanian government went down the traditional route of securing a big loan from the World Bank s International evelopment Assistance I A in une 201 to help fund power-sector projects, comprising just over half of the $ 0m the government has sought in concessional loans in 201 and 2019. In a statement, the World Bank said The $455m credit will finance construction of critical, high-voltage transmission infrastructure that will support the electrification of the southern and northwestern regions of Tan ania. According to ower Africa, the biggest obstacles to the development of a stronger power sector in Kenya are inade uate access to project financing; uncertain land tenure for both generation and transmission projects; long procedures and inconsistency in the approval of power purchase agreements; and the lack of a clear, off-grid regulatory framework.

COAL DOUBT

The Kenyan government is under pressure to end its support for the 1 W coal-fired plant proposed for Lamu. The planned development consortium for the Amu ower project comprises GE, the Investment and ower Construction Corporation


of China, Gulf Energy and Centum. A new port is being developed in the coastal city. The government hopes it will become the hub of a new industrial area, which is why it wants power supplies in the area. The plant would be supplied with coal from South Africa and possibly Mozambique. However, opposition to the scheme has been strong because of the carbon emissions and air pollution the plant would produce. The Kenya ational lectrification Strategy, which was published in December 2018, stated that the project would not be developed soon, hinting at government doubts over the scheme. A spokesperson for the Ministry of Energy said: “A power purchasing agreement between Amu Power and Kenya Power has already been signed. The commissioning of this power plant is, however, unlikely to materialise before 2022.” There is a growing feeling that Kenya has been too successful in securing new generation projects. In January, the ERC said that power-generation capacity would soon outstrip demand, resulting in unused capacity and higher prices for consumers. This is unusual for Africa, where the reverse usually applies, but it provides added motivation for the government to cancel the Amu Power project. Given that sub-Saharan Africa – with the exception of South African coal and igerian offshore gas flaring – has made little contribution to global warming, it is unreasonable

to expect African countries to reject coal when so many other parts of the world have achieved economic development on the back of it. There are, however, sound environmental reasons to reject the project, not least the health of the people of Lamu. Kenya also intends to import electricity to top-up its own production. A 1,045km transmission line is being developed to carry Ethiopian electricity to Kenya, with 433km on the Ethiopian side of the border and 612km on Kenyan territory. It will carry electricity from up to 2GW of Ethiopian capacity to Kenya, making it perhaps the highest capacity cross-border

interconnector in Africa. The $1.2bn project is being funded by the World Bank and African Development Bank; China Electric Power Equipment and Technology is already working on the Ethiopian section of the line. ■ Africa Energy Yearbook

2019

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E ast A f ri c a: P roj e c t h i g h l i g h ts

A DIVERSE PROJECT PIPELINE

W ind, gas and hydro are dominating E as t A f rica’ s project mark et, w rites N eil F ord. NILE DEVELOPMENTS

Uganda is developing hydro schemes on the world’s longest river, but on the White Nile rather than the Blue Nile. The Isimba scheme was completed in March, adding 183MW to the grid and taking installed national capacity up to 1.17GW. China’s Exim Bank provided its now standard 85% share of the estimated $567m construction costs, leaving the government to supply the remaining 15%. The plant is located 4km upstream of Isimba Falls and was built by China International Water and Electric Corporation. Construction had been delayed, partly because of a disagreement over the level of land compensation to be paid. Harrison Mutikanga, Chief Executive of the Uganda Electricity Generation Company Limited, said: “The increased power generation capacity enhances the country’s energy security and reliability of supply, which is a key driver for Uganda’s socio-economic transformation”. In addition, the 600MW Karuma hydro scheme is scheduled for completion by the end of this year. The $1.7bn project has again been funded by Exim Bank and is being developed by Sinohydro.

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TANZANIAN GAS AND HYDRO

Tanzania has sought to reduce its reliance on hydro in recent years through a number of gas-fired plants most recently the 240MW Kinyerezi II combined-cycle project, which was completed in October 2018. It was 5 financed by the apan Bank for International Cooperation and Sumitomo Mitsui Corporation, with the latter undertaking engineering work on the project. The remainder of


KENYAN RENEWABLES

As the region’s biggest economy, Kenya, has a wide range of renewable energy resources at its disposal. For example, Mitsubishi Corporation is on course to complete the 165MW Olkaria V geothermal plant for KenGen this year. Kenya is one of the global centres of geothermal development, which means it benefits from baseload renewable energy technology that is not available to all countries. Geothermal plants in the Rift Valley account for 29% of national generating capacity, just behind fossil fuel thermal with 36%. KenGen is now advising Ethiopia on the development of its geothermal plants, including the Corbetti and Tule Moye projects. The biggest wind power project yet developed in sub-Saharan Africa came on stream in Kenya in September 2018.

the TSh798bn ($353.72m) construction costs are being met by the Tanzanian government. Several other projects are close to being completed. The expansion of the Kinyere i I gas-fired plant from 150MW to 335MW is expected to be completed by August this year. In addition, the Japan International Cooperation Agency proposes the construction of a 300MW gas-fired plant at Mtwara in the far south east. Two more plants are planned at Kinyerezi that will add another 600MW, while the 100MW Singida wind farm will be the country s first large-scale wind project. Two coalfired projects are also planned. The government estimates that the country needs to invest $46.2bn in the power sector over the next two decades to meet rapidly rising demand. Having managed to reduce the proportion of hydro in its generation mix, it is surprising that the government is seeking to develop what should be the country’s biggest generation project the 2.11 W Rufiji hydro scheme at Stiegler’s Gorge. A joint venture between Arab Contractors Compa-

The 310MW Lake Turkana Windfarm was completed in March 2018 by the main contractor, Grupo Isolux Corsan, but was unable to supply power to the grid until the connecting 428km 400kV transmission line was completed. The project is equipped with 365 Vestas V52 850kW turbines. In December 2018, Kipeto Energy announced that it had reached financial close on its 100MW wind project in Kajiado County after emerging markets specialist Actis acquired the interests in the project held by the World Bank’s International Finance Corporation and African Infrastructure Investment Managers, giving it an 88% controlling stake. Kenya’s Craftskills Wind Energy International holds the remaining equity. The project will comprise 60 GE 1.7MW-103 turbines. Kipeto Energy has a 20-year pow-

ny and Elsewedy Electric Company, construction began in March and the plant will be operated by state-owned Tanzania Electric Supply Company Limited. The government estimates project construction costs at $3bn, although some independent analysts suggest that they could be about three times as much. The dam will be 134m high, while the reservoir will be about 100km long and cover 1,350sq km. Although the project was finally sanctioned in February, there had been sizeable opposition to its development because of its location in the 50,000sq km UNESCO-designated Selous Game Reserve, one of Africa’s largest protected areas and one that has retained a great deal of wildlife thanks to its relative remoteness. The area’s population was devastated during the Maji Maji rebellion against German rule in the early 20th century and has still not entirely recovered. However, environmental groups worry that the project will have a big impact on flora and fauna in elous, as well as on the homes and land of many people living downstream.

er purchase agreement with Kenya Power and will be connected to the grid via a 17km 220kV line to Isinya substation. Kipeto Energy Chairman Kenneth Namunje praised his company’s relationship with the local community. “We have leased and secured more than 60 plots within the project area for the wind turbine footprint and the transmission line through voluntary participation of land owners, which is a first for any project of this kind in Kenya. We’re constructing new houses for the families outside the project’s 500m buffer one, so local buy-in has been a vital component,” he said. Large-scale solar schemes are now also being developed, including the 55.7MW Garissa scheme, which has been supplied with modules by JinkoSolar.

E nvironmental grou ps w orry that the project w ill have a b ig impact on the ora and fauna of elous.

GERD MOVEMENT

Scale is not a challenge for East Africa’s project sponsors. One of the region’s landmark power projects is the biggest generation scheme ever undertaken in sub-Saharan Africa: the Grand Ethiopian Renaissance Dam (GERD), which should provide 6GW of hydroelectric generating capacity. It was estimated to be two-thirds complete in April, although progress is not brisk. Originally scheduled to come on stream in 2017, this has been pushed back to 2021 because of funding issues, as well as structural and engineering difficulties. The GERD is being built on the Nile, 15km east of the Sudanese border. As well as providing electricity to Ethiopian consumers, Addis Ababa hopes that it will turn the country into the continent’s biggest power exporter. ■ Africa Energy Yearbook

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orth

frica

e ional profile

UNEVEN PROGRESS ACROSS NORTH AFRICA

he aghreb region o ers good conditions for renewable generation and rising domestic gas reserves, but strategies for power sector development across the region di er widely.

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he power sector across North Africa region is characterised by innovation and the rapid development of renewables in Morocco and Egypt, and a much slower pace of transition in the countries between them. ibya s ongoing civil conflict means that the country’s two rival governments have other priorities, while both Algeria and Tunisia have been reluctant to deregulate the power sector and encourage pri-

vate-sector investment. Their state power companies continue to rely on thermal generating capacity and struggle to maintain power supplies. Morocco is the most ambitious of the Maghreb nations in terms of boosting renewables as a proportion of overall generating capacity. According to the Ministry of Energy, Mining and Sustainable Development, renewables accounted for 35% of Moroccan power production in 2018, suggesting that the country is on track to meet the government’s target of 52% by 2030. However,

Bi-facial panels have solar cells on both sides in order to absorb the energy from sunlight

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the pace of new capacity additions will have to pick up substantially over the next 11 years for the country to cope with projected increases in population and power demand. There is also still some way to go before Morocco reaches its interim target of 42% by the end of 2020. Nevertheless, there is little doubt that these ambitious targets are a powerful motivator for developing renewable energy. Morocco had 2GW of renewable energy generating capacity by the end of last year, but Rabat forecasts that 10GW will be needed if the 52% target is to be met. This is to be achieved through 4.5GW of solar, 4.2GW of wind and 1.3GW of hydro capacity. The investment required is estimated at some $30bn over the next 11 years. Some $13bn in public and private investment is already lined up for the 2017-22 period, according to the government.

CAIRO SCALES UP

Egypt’s renewable energy targets are less ambitious in terms of share of generation, but the scope of Cairo’s overall power strategy is huge, as it seeks to meet the fast-rising demand for electricity. The country wants to capitalise on the massive gas discoveries made in the Mediterranean Sea over the past few years with the construction of new gas-fired plants, at the same time as it finally looks set to embark on the construction of its first nuclear power plants. The Egyptian government is banking on private-sector investment in a wide range of solar and wind schemes, as it hopes to increase renewables’ share of total power production to 42% by 2035. The Ministry of Electricity forecasts that 20% of all electricity will come from renewables by 2022 and has swung its support behind a wide range of technologies in order to achieve this target.

A string of solar photovoltaic (PV) projects are to be developed at Benban, near Aswan, which the government hopes will add 3-4GW in generating capacity in the longer term, of which almost 1.5GW is currently under development. A consortium of Scatec Solar KLP, Norfund and Africa50 recently announced it had connected 65MW of its 400MW tranche to the grid by April. The consortium holds a 25-year power purchase agreement for the six phases, which are expected to be connected by the end of this year, making it the biggest single solar power project on the African continent. A total of 32 solar energy companies are currently developing 1.43GW of capacity, with a combined investment of about $2bn. Scatec Solar Chief Executive Raymond Carlsen highlighted how new technology is helping of get the most out of solar power. This is our first power plant with bi-facial solar panels, capturing the sun from both sides of the panels to increase the total clean energy generation,” he said. In April, the International Finance Corporation announced that it had signed a deal with the Egyptian Electricity Transmission Company TC to provide finance for the development of another solar power complex, this time in the West Nile Province totalling 600MW. The contracts to build and operate the project will be awarded under a tender that has already been launched. Sources inside the country have revealed that bids with a maximum tariff of $0.025/kWh will be accepted, far lower than analysts had expected even a year ago and even lower than the $0.027/kWh that EETC has sanctioned for the 200MW Kom Ombo solar project.

TUNISIA STRUGGLES FOR INVESTMENT

The Tunisian power sector is still dominated by the national power

utility, Société Tunisienne de l’Électricité et du Gaz (STEG). It controls 5.31GW out of total installed generating capacity of 6.09 W, with gas-fired plants providing about three-quarters of all production. Tunisia’s own gas industry is unable to satisfy domestic demand and so imports, mainly from neighbouring Algeria, are needed to provide the required feedstock. STEG has been forced to introduce power rationing, particularly during peak demand in the summer. The need for a response to this situation – and with national demand forecast to double over the next 15 years – seems to have prompted the government to consider encouraging more competition in the sector. Legislation passed in 2017 set out the rules for power purchase agreements, but independent power producers (IPPs) were initially unable to directly target residential customers. They are permitted to sell electricity to industrial customers, with 30% of their output sold to STEG, but only at low, regulated rates. With other more liberal markets on offer internationally, this reduces the attractiveness of the Tunisian market to investors, with the 471MW Radès plant – which came on stream in 2002 – still the country’s only substantial IPP. The government has set goals of achieving 12% renewable energy-generating capacity by 2020 and 30% by 2030, but there was just 5% at the end of last year, comprising 245MW wind and 62MW hydro. ■

his is our our first power plant with bi-facial solar panels, capturing the sun from both sides of the panel to increase the total clean energy generation. Africa Energy Yearbook

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N orth A f ri c a: P ol i c y de v e l op m

e n ts

PLANNING FOR A SURGE IN DEMAND R enew ab les , gas , nu clear and coal are all part of the energy policies of cou ntries acros s N orth A f rica.

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orth African governments are bolstering plans to increase investment in power, with the demand for electricity likely to skyrocket in the coming years. Renewables feature heavily, while nuclear is under consideration in Egypt and new coal capacity has made an appearance in Morocco. Morocco’s enthusiasm for renewables is largely driven by security concerns Rabat first began promoting low-carbon technologies a decade ago in an effort to reduce its reliance on hydrocarbon imports; it is the only country in North Africa without significant oil and gas production. In 2018, hydrocarbons comprised 93% of Morocco’s overall energy (rather than generation) mix, but this was still lower than the 98% recorded in 2008. The country spent AED69bn ($7.09bn) on oil and gas imports in 2017, creating a huge drain on its foreign currency reserves. However, falling costs and greater investor interest have also played their part in the renewables revolution, as access to financing for such projects has become easier, including donor support and preferential loans from some institutions. Paddy Padmanathan, Chief Executive of Saudi-based ACWA Power, said his company’s latest Moroccan project – the Khalladi windfarm – is the first transaction in the Kingdom of Morocco which is eligible for RECS renewable energy certificate system green credits and has also secured the old tandard certification .

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However, it’s not all about renewables in Morocco. The kingdom’s concern over energy security, as much as climate change, was reflected by the completion of the 1.4 W afi coalfired plant in ecember 201 .

EFFICIENCY DRIVE NEEDED

A report on energy efficiency published in April by the Moroccan Centre for Economic Conditions concluded that rising energy demand would challenge the country’s ability to sustain power supplies and achieve its renewable energy targets. Said Mouline, Director-General of the National Agency for the Development of Renewable Energy and Energy fficiency, said that the state should encourage people to reduce their energy consumption because it was already close to the levels of countries that are more industrial and have a far higher GDP per capita. The traditional way of reducing energy consumption – and by far the most obvious – is to increase prices, but Rabat is reluctant to raise regulated power, gas and fuel prices. It has been successful in attracting private-sector investment in renewable energy projects, with the Moroccan Agency for Sustainable Energy overseeing agreements struck with independent power producers. It has already introduced low tax rates on residential and business solar energy equipment. This includes agriculture – 28,000 farms now use solar water pumps. In October 2018, the German government agreed to back a €80m project to improve ener-

gy efficiency in Morocco, including in public buildings, transport and street lighting. Research published in January by energy consultancy Wood Mackenzie calculated that electricity in Morocco is cheaper from solar photovoltaic (PV) power projects than combined-cycle, gas-fired plants, even when four hours of costly lithium-ion battery storage for the solar power is factored in. “Five years ago, you would have been called crazy to say this was on the cards for 2019, said Wood Mackenzie Analyst Rory McCarthy. The picture is different in gypt, where gas remains more economical, largely due to the availability of cheaper local gas feedstock than Morocco, which has to import its supplies. The cost of gas feedstock in Egypt is $3/m Btu, in comparison with $6.90-9.00/m Btu in Morocco. Battery storage currently increases the cost of solar power in Morocco by a massive 126%, although Wood Mackenzie forecasts that this will fall to 85% by 2023. However, it also forecasts that solar PV storage may struggle to compete with solar concentrated solar power (CSP) for long-term storage. While the former usually aims at four hours’ storage, analysts can often factor in CSP storage of up to 15 hours.

EGYPT PRIMED FOR NUCLEAR

Cairo’s decision to back nuclear power is a key component of Egyptian power policy. Several African governments, including Nigeria, have sought to


he picture is di erent in gypt, w here gas remains more economical, largely du e to the availab iltiy of cheaper local f eeds tock than M orocco, w hich has to import its s u pplies . follow South Africa in developing nuclear power plants, although little progress has been made to date. However, Egypt could buck that trend. In March, the Egyptian Nuclear Regulation and Radiological Authority gave the Nuclear Power Plants Authority (NPPA) permission to develop a nuclear power plant on the El Dabaa site on the coast, 170km west of Alexandria, after considering its application for 18 months. The application included an environmental impact assessment, design concept, site data and security analysis. The International Atomic Energy Agency also provided input. The NPPA will now seek a construction permit for the project, which will be developed by the Russian State Atomic Energy Corporation using its VVER-1200 pressurised water reactors. The four planned reactors will give a total 4.8GW of baseload generating capacity. The current schedule is for the reactors to come on stream between 2026 and 2028, but nuclear energy projects are often subject to long delays. It has been reported within Egypt that Russia will provide a $21.25bn loan to help finance the scheme, with the Egyptian government providing the remaining

$3.75bn development costs. The loan is to be repaid over 22 years at a reported annual interest rate of 3%.

TUNISIA BEEFS UP RENEWABLES

Tunis finally seems to be following Morocco’s lead by promoting renewables to reduce both its fuel import bill and trade deficit. In May 201 , the Ministry of Energy and Mines launched a tender for contracts to develop 500MW of wind and 500MW of solar capacity, but this January announced a more ambitious combined target of 1.9GW by 2022. Four small wind power projects with a combined capacity of 120MW received their licenses in January, with all output sold to state utility STEG. The country is also seeking to upgrade the grid to increase its capacity and prepare it for the more variable production of solar and wind power projects. In December, the Islamic Development Bank agreed to provide a €121m loan to help finance the construction of 210km of high voltage transmission line and upgrade 30 substations. However, either the government or STEG will have to secure more funding to finance the improvements. ■ Africa Energy Yearbook

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N orth A f ri c a: P roj e c t h i g h l i g h ts

GAS MEGAPROJECTS AND INNOVATIVE RENEWABLES E gypt is b laz ing a trail w ith the completion of three massive gas-fired power stations, w hile M orocco f ocu s es on innovative renew ab les projects .

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orth Africa is experiencing a boom in the construction of newgenerating capacity, but investment isfocused almost entirely in just two countries. With crisis-hit Libya out of the game for the time being and Algeria steadfast in its commitment to state energy companies, Morocco and Egypt are attracting foreign interest like never before. Egypt has played host to the biggest power programme completed in Africa in the past year. In July 2018, Siemens finished the construction of three combined-cycle gas-fired plants for the Egyptian Electricity Holding Company, Beni Suef, New Capital and Burullus, which collectively added 14.4GW in generating capacity. That is more than double the capacity of the Grand EthiopianRenaissance Dam hydro scheme in Ethiopia. It is hoped that the Egyptian plants will save $1bn in fuel costs by replacing ageing thermal capacity. The German firm also developed six substations so the grid can cope with the additional capacity. The project, which was undertaken with Egyptian partners Orascom Construction and Elsewedy Electric, was completed in under 28 months, including construction and grid connection. Siemens Chief Executive Joe Kaeser said the project’s rapid completion served as “a blueprint for building up power infrastructure in the Middle East and all over the world”.

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MOROCCAN WIND POWER Recent progress means that Rabat is hopeful of securing 2GW of wind power generating capacity by the end of next year. ACWA Power brought its 120MW Khalladi wind power project near Tangier on stream in July 2018. Equity shareholders ACWA (75%) and Argan Infrastructure Fund (ARIF) (25%), plus the European Bank for Reconstruction and Development (EBRD), the Clean Technology Fund and Morocco’s BMCE Bank of Africa financed the $170m scheme. ARIF was founded by a consortium that includes the European Investment Bank, the African Development Bank and the International Finance Corporation. ACWA has developed seven renewable energy projects in Morocco, with a combined generating capacity of 800MW, says Mohammad Abunayyan, Chairman of the Saudi-based company. The EBRD said that it was a landmark project because it did not

rely on government support and had been developed in a competitive environment. Abunayyan said he hoped ACWA’s achievements in Morocco would act as “a platform for the development of other energy projects in the continent as the company grows its operations into West Africa”. Morocco is a world leader in developing concentrated solar power (CSP), with two big integrated CSP-photovoltaic (PV) projects under development as public-private partnerships in the Atlas Mountains: the 580MW Noor Ouarzazate and 800MW Noor Midelt projects. PV production is used during the daytime, while the CSP elements of the two schemes allow energy to be stored for use during the evening and night. CSP uptake has lagged behind PV worldwide. While more expensive to build, it is viewed as useful because of its storage ability. The Moroccan government also wants to build a $4.5bn li uefied natural gas (LNG) import terminal at


Jorf Lasfar on the Atlantic coast. It is hoped that the plant will have a regasification capacity of 7bn cubic metres per year and that it can be completed by 2025. As ever, Rabat is trying to attract more investment in domestic oil and gas exploration but cannot depend on commercial funds. Egypt was in the vanguard of moves in the region to develop wind power resources, but early projects were donor-led, while political and economic upheaval saw Cairo fail to build on its early lead as investment became scarce. A new wave of wind developments are now under way, with donors and development-focused international financial institutions again backing many projects – but with other investors also involved this time around. For example, Lekela Power is developing a 250MW wind farm at Gabal El Zeit – where the Red Sea meets the Gulf of Suez – with funding from Germany’s KfW and the European Investment Bank.

INTERCONTINENTAL LINKS In March, the governments of Moroccan and Spain, along with Spanish grid operator Red Eléctrica de España R and Morocco s ffice ational de l’Électricité et de l’Eau Potable, signed an agreement to develop a third subsea interconnector under the Western Mediterranean by 2026. The line will have a 700MW capacity, adding to the 1.4 W capacity of the first two lines, and will mainly be used to export power from Moroccan solar power schemes to Europe. REE said that Rabat had an ambitious solar energy development plan “which consequently will reduce the marginal price of electricity in the Spanish market”. This is particularly interesting given that the direction of flow is mainly in the opposite direction, with Spain supplying about 15% of Morocco’s total electricity needs. Rabat has backed feasibility studies into the construction of other new interconnections with Europe, including a new line with Portugal. It also hopes to connect its grid to

West Africa through Mauritania – talks between Morocco and Mauritania are reported to be ongoing. Similarly, as we report on page XX (Transmission section), the governments of Italy and Tunisia have finally agreed to develop the 600MW Elmed interconnector between the Tunisian coast and Sicily. It will initially be used to export power from solar photovoltaic projects in the south of Italy to Tunisia, but could eventually be used to export North African electricity to Europe. The large-scale export of North African electricity to Southern Europe – mainly from solar power projects – has long been mooted, but rising local consumption means that this may be difficult to achieve in the foreseeable future. However, the improving economics of solar power production suggest that this trade could take off in the long term. ■

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C om

m

u n iq u é

Ahmed Elsewedy

C E O , E ls ew edy E lectric

E LS E W E D Y E LE C T R I C LEADING BY EXAMPLE lsewedy lectric operates in five sectors industry construction technology investment and development. and President hmed lsewedy talks about his company s plans in frica and beyond. private sector, such as land allocation contracts, taxes and tariffs, subsidies and investment programmes.

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i th th e de v e l op m e n t of n e w c i ti e s i n th e c ou n try an d n e w i n du stri al z on e s, wh at op p ortu n i ti e s are th e re f or y ou r c om p an y ?

ELSEWEDY ELECTRIC IN EGYPT

Progress on the government’s ambitious plans to establish new cities and industrial zones is steady, and is reinforced by a productive investment framework. The availability of energy sources – especially electricity and renewable energy – is positioning Egypt as an attractive destination for industrial investors The above, coupled with Elsewedy Electric Industrial Development’s (EID) successful business model, positions us as a market leader when it comes to developing and maintaining integrated industrial cities and zones. EID has the largest industrial land bank in Egypt, with more than 25m sqm across the country. Around 70% of our total land bank has already been sold – a clear indication of the competitive offering available at EID.

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h at h re f orm ag e th e i n v e st i

av e g ov e rn m e n t s don e to e n c ou rp ri v ate se c tor to n e n e rg y p roj e c ts?

Ongoing reforms involving regulatory framework and subsidies have created opportunities for the private sector following the end of the government monopoly on the electricity. There are many investment opportunities in the electricity and renewable energy sector, and the government is working to provide incentives to attract private investors. For example, GOE has several mechanisms, including a feed-in tariff system for solar photovoltaic and wind projects of less than 50MW, and a competitive bidding scheme for build-own-operate contracts, as well as independent power producer systems. There are also investment schemes that cover key challenges facing the

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h at i s th e e n e rg y ou tl ook f or E g y p t c on si de ri n g i t wan ts to start e x p orti n g e n e rg y i n th e ne t fi e years or so? Egypt intends to supply 20% of gener-

ated electricity from renewable sources by 2022 – 12% from wind, 5.8% from hydropower and 2.2 % from solar. It plays a key role in regional and global energy markets because of its geographical proximity at the crossroads of international trade. Thus, Egypt can be the main feeding market for electricity to surrounding countries in the Gulf and Africa. There are active projects to supply electricity to these countries, such as the interconnection between Egypt and Saudi Arabia, which is expected to be partially operational in 2019, as well as a Sudan-Egypt interconnection project that will help other African and Nile Basin countries fulfil their electricity needs.

H as p owe r g e n e rati on i n c re ase d [ i n E g y p t] ov e r th e p ast f e w y e ars? Egypt has seen an outstanding improvement in electricity generation over the past five years, where the installed capacity reached 45.86GW in 2017, compared with 31GW in 2013. And the generation capacity reached 189.5TWH in 2017 It supports the all-out vision for integration among African countries in

he continent presents huge opportunities for investors, developers and operators across the renewable energy market.


Industry

Construction

Investment

Development

power linkage and other energy-related fields. It is also working to be the main regional supplier of electricity, whether through direct investment or regional interconnection lines. The mini-grids and stand-alone offgrid systems will play a major role in supplying rural parts of Africa that don’t have access to electricity through national grids.

structure that would allow private-sector investments in power generation assets (renewable or conventional).

H ow do we ac c e l e rate i n v e stm e n t?

ELSEWEDY ELECTRIC AND AFRICA

Provisions for the availability of foreign currency payments is essential to secure the most competitive tariffs. Using developmental financing from DFIs would reduce the cost of funding and result in lower energy costs. It is important to ensure that the tariffs are sustainable in the long run to ensure they have a positive macro-economic impact on job creation and industrial growth.

Y ou si g n e m e n t to b f rom A f re W h at are th i s l oan ?

d an ag re e orrow $ 5 00m x i m b an k . th e p l an s f or

Many countries have resorted to the World Bank Scaling Solar programme to initiate the renewable energy sector. This provides comfort to investors and lenders that the process is conducted under international corporate governance schemes in a transparent process, mitigating any future risks and guaranteeing the social impact for countries’ residents.

I s ac c e ss to c ap i tal an i ssu e i n th e p owe r se c tor an d f or p ri v ate c om p an i e s i n g e n e ral ? The most important hurdle to address in sub-Saharan Africa is the connectivity to the grid. It is still difficult for the private sector to own and operate such networks. Governments should invest in the transmission and distribution infra-

W

h at op p ortu n i ti e s do y ou se e ac ross th e c on ti n e n t? With a population exceeding 1bn and with an estimated combined economy of $1.5tr, huge opportunities lie in wait for investors, developers and operators across the renewable energy market. Countries where 80% or more of their population have access to electricity lie in the high- or upper-middle income economy, whereas nearly all countries with access ratios below 80% are low-income economies. Sub-Saharan Africa is rich in energy resources, but is starved of electricity. However, investors are cognisant of the continent’s rich endowment of energy resources. Its renewable energy resources are diverse, unevenly distributed and hold enormous potential. Solar is almost unlim-

Technology

ited (10TW) and there are abundant hydro (350GW), wind (110GW) and geothermal energy sources (15GW). In sub-Saharan Africa there are undiscovered, but technically recoverable, energy resources estimated at about 115.34bn barrels of oil and 21.05tr cubic metres of gas.

T h e re i s a tal k of c re ati n g A f ri c an c h am p i on s – b i g c om p an i e s th at are ab l e to i n v e st re g i on al l y an d tak e on l arg e , tran sf orm ati v e p roj e c ts. W h at are y ou r th ou g h ts on th i s?

Elsewedy Electric operates in five sectors: top left: industry; top centre: construction; top right: technology; bottom left: investment; bottom centre: development and bottom right Elsewedy Electric head office

Big companies have stronger governance and sustainability goals that ensure the provision of services at affordable prices. They can have a strong impact on the livelihood of residents, and at the same time minimise the negative impacts on the environment. However, there are also policies in place that provide a fair playing field where smaller companies can compete. The emphasis on SMEs in developing countries has become a global trend that supports sustainable economic goals. The way I see it, African champions should lead by example. They should set the stage for small, localised businesses to support their operations in their vast regional footprint. They should not shy away from competition; on the contrary they should always be aiming to provide the best service at the lowest price. ■ Africa Energy Yearbook 2019

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IN SOUTHERN AFRICA, COAL REMAINS KING – FOR NOW

T he region is trying to s hak e its addiction to f os s il f u el, w rites N eil F ord.

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he Southern African energy landscape is dominated by South Africa – the epicentre of power demand and production – which lies at the heart of the Southern African Power Pool (SAPP) – the continent’s most developed regional power network. lectrification rates are improving across this diverse region, but consumers inability to pay energy tariffs that are high enough to encourage either domestic or foreign investment in new power projects is constraining the expansion of power generation. Sub-Saharan Africa’s power generation mix typically comprises a large chunk of hydropower, along with gas, oil and diesel, while in the south coal is the dominant fuel, thanks to both South Africa’s huge reserves and consumer demand. This may change as the region looks for cleaner energy to

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meet rising demand. Production from Mo ambi ue s large offshore gas reserves, along with gas field discoveries off of outh Africa itself, could also affect the region s fuel mix. But for now, coal remains king.

ESKOM ON THE ROPES

State-owned South Africa power company Eskom is the dominant force in the sector, though it has struggled in recent years after becoming embroiled in the country’s wide-reaching corruption scandals and racking up debts of R420bn ($29bn) by the end of 2018 – equivalent to about 15% of all state debt. Meanwhile, its inability to maintain power supplies to one of sub-Saharan Africa’s most developed economies continues to make headlines. South Africa has power rationing, due in part to a lack of infrastructure and a failure to increase its generating capacity. While the situation has improved in recent years, this was as

much down to stagnating demand in an ailing South African economy as it was to improved supply. And the problems remain – rolling four-hour residential power cuts were employed by Eskom in March this year as part of the company’s load-shedding strategy and it has had to rely on expensive diesel back-up plants to prevent the situation becoming even worse. The reliability of South Africa s older coal-fired plants will be put to the test further from June to August, a period when power demand spikes. If they can’t stay online, further supply problems could ensue.


GAS BOOST

Pretoria is committed to reducing South Africa’s carbon emissions, but creating a low carbon power sector is easier said than done in what is one of the world’s most coal-dependent countries. The construction of 3.5GW of gasfired capacity along the coast has helped, given gas plants typically produce around half the emissions of similar-sized coal plants. South Africa is also in the process of developing some of Africa’s largest wind and solar power capacity, even if Eskom has downgraded its plans for concentrated solar power (CSP). However, coal still accounts for around 80% of the country’s generating capacity, albeit an improvement from a decade ago, when it was closer to 95%. And more coal capacity is being built in the shape of the huge Kusile and Medupi projects, each adding 4.8GW of output, although both have been subject to delays and cost overruns. Such projects do little to support government pledges to tackle the country’s carbon emissions, but successive ANC administrations have been loath to withdraw support for

the coal sector, given its central role in the economy and as an employer. There is little chance of newly built coal plants being shut down for years, but the government and Eskom do now have some weighty decision to make. Coal-fired plants that account for 27% of Eskom’s generating stock are scheduled to close over the next decade because they are deemed too inefficient or polluting to remain open. But new generating capacity must be developed to eliminate the need for blackouts and keep pace with the rising demand for power. The government aims to boost the national electrification rate to 95 of the population by 2030.

INVESTMENT CHALLENGES

skom s problems affect the entire region, given its core role in the SAPP, which allows the 16 countries of the Southern African Development Community (SADC) to trade electricity. The lack of a reliable supply from Eskom, on which the SAPP is heavily reliant, is encouraging other countries to develop more of their own generating capacity. However, many Southern African countries still struggle to attract investment from the independent power producers that could provide a cost-effective model for ramping up power production. Resistance from state power firms has played its part in their reluctance to invest, while state control over

tariffs makes it difficult to persuade them that they will have adequate revenue streams. In March, the Zimbabwe Power Company (ZPC) cancelled the contract awarded to India’s Jaguar Overseas to revive the ageing Munyati coal-fired power plant because the latter has been unable to secure project finance over the past four years. The ZPC is now expected to discuss the project with other companies that bid for the original contract in 2015. Two months earlier, in January 201 , the Botswanan government halted talks with Posco Energy and Marubeni Corporation over a 300MW expansion of another coal-fired plant, Morupule B, because of differences over the investment terms. The government said it had failed to agree with Marubeni and Posco Energy on various issues, including an $800m state-backed guarantee to protect their investments. An indication of the private sector’s current attitude to Botswana will be the level of interest shown in the development of coalbed methane projects in the southeast of the country. The economics of these will be shaped as much by power tariffs in bordering South Africa as on the terms of investment from Gaborone, as the associated power plants are likely to supply far more South African consumers than they are Botswanan consumers. Tlou Energy said that it was making “excellent progress” on its drilling programme, which is designed to provide feedstock for a gas-to-power project. ■

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S ou th e rn A f ri c a: P ol i c y de v e l op m

e n ts

SOUTHERN AFRICA GETS SERIOUS ON POWER PLANNING

T he tas k is hu ge, b u t the region’ s governments are increas ing inves tment in electricity projects , w rites N eil F ord.

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he South African government’s plans for Eskom are crucial, not just for the country itself but for power consumers across Southern Africa because the company is the lynchpin of the Southern African Power Pool. Pretoria’s attitude towards Eskom over the years has been changeable. At times, the ANC government has appeared determined to defend the parastatal’s dominant position in the industry as a national power company. At other times, it has been keen to create a more competitive sector that would require Eskom’s position to be eroded. President Cyril Ramaphosa told the South African parliament in February that electricity shortages due to load shedding that had taken place that week were “a hugely damaging reality check”. “There is no single solution to the problems at Eskom – neither restructuring, nor refinancing, nor cost cutting, nor tariff increases, nor better plant maintenance on their own will have the necessary effect. We need to pursue all of these measures and more, simultaneously,” he said. (For more on the options for the reform of Eskom see p100.) Eskom is by far the biggest player in African power provision at all levels with 45 W of generating capacity, but there are a growing number of independent power producers, par-

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ticularly those with gas-fired capacity and in the renewables sector. It looks to be a matter of when, rather than if, the country accelerates its move away from coal towards cleaner energy. Apart from the need to cut carbon emissions, coal-fired plants are responsible for dangerous levels of air pollution, particularly in Mpumalanga Province, where the majority of the country’s coal plants are located.

FALLING COSTS

A steady fall in the cost of construction, operation and maintenance for wind and solar power projects, coupled with rising efficiency levels, makes renewables increasingly attractive. Moreover, results from a survey published in March by UK think-tank E3G showed that 80% of South Africans want foreign investors in the country’s power sector to focus on renewables rather than coal. The main reasons given were the economic benefits, the role of renewables in tackling climate change, job creation, and lower air and water pollution. Eskom’s long and entrenched position in the coal sector, aligned with its limited experience in developing renewables, may be another reason why the population hopes new investors target the renewables sector, say industry observers. Renewable energy currently accounts for about 5 W of outh Africa’s generating capacity and

the government hopes to boost this figure to 19 W by 2030 see p69 . But there are concerns that Pretoria is not putting enough effort into ensuring grid stability and a reliable power supply from elsewhere to balance out the fluctuating output typical of solar and wind power projects. How South Africa will provide all this new capacity remains to be seen. The government estimates that it will cost R1tr ($71bn) to build and that even more will be needed in the following decade when another tranche of coal-fired capacity needs to be replaced. Former President Jacob Zuma claims that nuclear energy is the answer to the problem, but it would take at least a decade to build new reactors and it is certainly not a lowcost solution.

ELECTRIFICATION TARGETS

or the first few decades after gaining their independence, some African governments promised to increase the number of people who had access to electricity, but little progress was made in most countries. However, connection rates have finally begun to increase and electrification plans are now being given more credence. The Angolan government has set a target of boosting the national electrification rate to 50 by 2022 up from 42 at present under its


ational lectricity ector evelopment lan. This represents a substantial increase, but not as big as might be expected given that national installed generating capacity is to rise to 7.5 W by 2022, representing a fourfold increase in just seven years. This may be because the expansion of the wider distribution network will take more time to complete, with the electrification programme over the next four years focused on urban areas. Mo ambi ue s government has set an even more ambitious goal of achieving universal electrification by 2030. This represents a substantial challenge, given that only 24 of the population had access to electricity in 2016, according to data from the World Bank. ational irector of nergy ascoal Bacelar said in ovember 201 that the $5bn-plus electricity programme would be implemented by the publicly owned electricity company M and the government s nergy und. The World Bank, the uropean nion, weden and orway are expected to jointly provide about $223m in funding during the first three years of the programme, though it remains to be seen where the rest of the money will come from.

ZIMBABWE SEEKS TO RESTORE FINANCES

ational power company imbabwe lectricity upply Authority A

wants to increase electricity tariffs in an effort to finance improvements to its infrastructure. It applied to the imbabwe nergy Regulatory Authority in March to be allowed to increase tariffs by an average of 30 . Two decades of economic crisis have left most imbabweans unable to pay higher rates, and tariffs have been fro en since 2012, with a main residential rate of $9. 3/kWh. owever, A has warned that it may have to impose rationing and that some power lines could collapse if it cannot generate more revenue. It needs to finance work on the 920MW wange coal-fired power plant, which is undergoing a 600MW expansion. Another key power source is the Kariba outh hydro scheme, which has a nameplate capacity of 1,050MW. Imports from outh Africa and Mo ambi ue provide most of the remainder of the country s power. The potential for shortfalls in imbabwe would be reduced if the Batoka orge hydro scheme were developed, as planned, in partnership with ambia. roject development costs are estimated at $4.5bn, with generating capacity expected to be in the range 1.6-2.4 W, depending on the design chosen. It has been suggested that could build and operate the project on a build-operate-transfer basis. owever, even if work began this year the plant would not generate any electricity output for at least six years. ■

‘ T here is no s ingle s olu tion to the prob lems as E s k om – neither res tru ctu ring, nor refinancing, nor cost-cutting, nor b etter plant maintenance. ’ Africa Energy Yearbook

2019

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I n te rv i e w

Eric Monga

C hairman, K ipay, and D irector at the F é dé ration des E ntrepris es du C ongo

THE RIVER OF POSSIBILITIES T he P rovincial C hairman of the K atanga C hamb er of C ommerce on the pow er- produ cing potential of the C ongo.

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he Congo, Africa’s second-longest river, is at the heart of Central Africa’s sleeping giant – the Democratic Republic of Congo (DRC), which covers an area the size of Western Europe. Bubbling out of the highlands and mountains of the East African Rift, as well as Lake Tanganyika and Lake Meru, the river cuts through large swathes of dense forest in the Équateur and Orientale provinces before passing through the capital, Kinshasa, and spitting out into the Atlantic Ocean. In the area where the Congo is pinched between neighbouring Angola and the Republic of Congo, the energy contained within the river’s powerful waterfalls and rapids is choked off by a set of solid concrete walls, known collectively as the Grand Inga Dam. With as much as 40GW in potential, almost 20 times more than the DRC’s current installed capacity of 2.5GW, the project has long been touted as a powerhouse for the entire Southern African region. Yet amid constant wrangling and the estimated cost of more than $100bn, the dam’s critics believe it is no more than a pipe dream and completion remains elusive. As the project trundles on, running

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the risk of becoming a white elephant, Eric Monga, Chairman of Kipay, a Congolese renewable energy firm with a focus on hydro, believes there is much more that can be done in the meantime.

OPPORTUNITY ELSEWHERE

“The Inga project is good for everybody, but it is only around 40% of the DRC’s capacity,” he comments from Kinshasa. “The DRC is very large and we have a lot of opportunities here for smalland medium-sized enterprises.” In the DRC, only 1% of rural households have access to electricity, rising to 19% in the cities. With a population of 85m, this leaves opportunities for firms looking to generate on- or off-grid capacity. Monga reveals that the DRC has good prospects for solar in its eastern and southern regions; gas in Lake Kivu, coal in Katanga Province and biomass all over. “We can even do nuclear,” he half-jokes.

The sheer power of the Congo also means that although hydroelectric provides the bulk of the DRC’s energy mix, the potential will only be tapped once 100GW of electricity has been drawn. Besides the obvious difficulties of doing business in the DRC – poor energy infrastructure, areas of insecurity, lack of finance, public-sector risk and fiscal challenges projects are under way and the energy sector has become “very dynamic”, according to Monga. Bringing 150MW online last year, the Zongo 2 hydroelectric plant in the Central Kongo Province took six years to complete and was carried out by Chinese energy firm hinohydro. The dam was fully financed by Exim Bank of China (China’s stateowned foreign trade bank) for a total of $360m, which was offered as a loan to the DRC government. The dam itself is expected to generate $47m annually. Elsewhere, the government of India is partnering with their Congolese counterparts to bring a total of 74.5MW of hydro online in two projects: one in Kwilu Province and one in Kivu. The projects are majority funded by the Exim Bank of India, alongside the Indian government, with smaller contributions coming from the DRC.


VIBRANT PRIVATE SECTOR

Apart from large bilateral initiatives – a Chinese and Spanish consortium won last year’s bid to tackle the Inga dam – Monga says a vibrant private-energy sector is emerging in the DRC, characterised by smaller projects. “The good news is that we can see there are a lot of initiatives taking place in the private sector,” he said. “The demand is very high so it’s very easy to sell the energy. We can sell it to the industrial and mining sector, and to the social sectors.” The DRC’s utility, the Société Nationale d’Électricité (SNEL), currently accounts for around 2.3GW of the country’s total output. Monga says that the combined efforts of a number of companies operating in the domestic market are quickly catching up with the utility’s capacity, and should boast 1.2GW when all projects come online. Mauritius-based Tembo Power, for example – an energy and transmission company with a presence in East and Central Africa – is working to produce 150MW of hydroelectric. Great Lakes Energy, a US-based power firm, is contributing 900MW from a project on the outskirts of Kinshasa. Perenco, an Anglo-French oil and gas company, is hoping to

add 200MW from offshore gas along the DRC’s minute coastline. Monga’s own firm, Kipay, will produce 150MW from the Sombwe dam project near Lubumbashi and the Zambian border at a cost of $432m. Financed by local companies and banks, Monga says that the energy will eventually be sold to a host of mining companies operating in the Katanga region, as well as the local populace. In terms of financing these types of projects, Kipay’s chairman argues that while “there is a lot of liquidity” in the local market, collateral is a major problem. After sourcing talent from around the world, Monga’s team was able to secure the support it needed, but still has to pay high interest rates on loans from the banks.

GOVERNMENT EFFECT

Along with access to capital, effective collaboration between the public and private sectors is also key to unlocking the Congo’s energy sector. With the tone of Félix Tshisekedi’s incoming government yet to be felt – the new president has only just appointed a prime minister after almost six months of wrestling for authority with outgoing Joseph Kabila – Monga hopes for continuity from the point of view of the private sector.

In 2014, the previous government passed fresh energy and electricity legislation that sought to liberalise the sector and pave the way for independent power producers and public-private partnerships. Kipay was born out of this new legislation and established itself as a company a year later. Along with liberalisation, the government also provided fiscal incentives for companies looking to tackle the energy deficit, said Monga. “Continuity, if not improvement” is his plea to the new government. Indeed, the DRC’s energy sector faces serious problems, with very little changing over the past decade relative to the growing demand. The sector acts as a catalyst to the DRC’s overall economic growth and any obstruction will hamstring the country for years to come. Considering that power is the key to unlocking the DRC’s vast mineral wealth, Monga believes the sector should be an urgent area of focus. “The DRC will loose more than $19bn in the next six years if we don’t put money into the energy sector,” he said. “We cannot reach our maximum capacity for producing cobalt, among other things, if we do not have energy.” ■ Africa Energy Yearbook

2019

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S ou th e rn A f ri c a: P roj e c t h i g h l i g h ts

REGIONAL PROGRESS IN THE SPOTLIGHT A rou nd- u p of progres s on energy- generating projects arou nd S ou thern A f rica, w ith u pdates of s chemes that are either in the pipeline or have b een given the green light.

ANGOLA GOES FOR HYDRO AND GAS

Angola is also pursuing low-carbon power generation, although from a source that is becoming increasingly contentious. While hydro projects produce much lower carbon emissions than fossil fuels, they are environmentally destructive and their performance is at the mercy of rainfall fluctuations, which global warming could make more extreme. While Angola has a patchy record on infrastructure investment, despite its oil revenues, it has sanctioned several large hydro projects, the largest of which is the Laúca plant on the Kwanza River. When all six units are brought on stream they will generate 2,070MW, which is on a par with the biggest hydro scheme in Southern Africa – Cahora Bassa in Mozambi ue. a ca s final two turbines should be operational by the end of

this year, seven years after work began on the project. Bra ilian firm debrecht is leading the development of the $4.3bn venture. Work on the associated 750km transmission infrastructure was held up when funding from the Brazilian evelopment Bank was affected by the country’s recent corruption scandal. Aurecon is now developing the required interconnectors. debrecht is developing two other projects on the same river: the 960MW Cambambe scheme and the 520MW Capanda scheme. Angola is also investing in gas to support its economic growth plans. The Ministry of Energy and Water has sanctioned a 750MW expansion of the oyo combined-cycle gas-fired plant by AEnergy and GE, which is due to be completed by 2022.

BOTSWANA’S SOLAR DRIVE Botswana is among the latest wave of African countries to embrace solar technology. In March, the Botswana Power Corporation (BPC) closed a tender for the financing, development and operation of a dozen photovoltaic (PV) projects to operate as independent power producers, as the BPC seeks to achieve universal electrification over the next decade. Technical details have yet to be revealed. The BPC has

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to import 71% of its electricity from South Africa, with the remainder coming from its own 600MW Morupule B coal-fired plant. According to US Department of Energy research, Botswana could source 30% of its power from solar PV by 2030.

30% According to US Department of Energy research, Botswana could source 30% of its power from solar PV by 2030


ZAMBIA’S SCALING SOLAR PROGRAMME

Zambia wants to establish 600MW of solar capacity over the next three years to diversify its energy mix, with multiple projects backed by the World Bank now moving forward. Enel Green Power – a unit of Italy’s Enel – started operations at the 34MW Ngonye solar photovoltaic plant near Lusaka in April. In June 201 , nel signed a $34m financing

agreement with Zambia’s Industrial Development Corporation to build the plant, which comprised senior loans of up to $10m from the International Financing Corporation, up to $12m from the IFC-Canada Climate Change Program and up to $11.75m from the European Investment Bank. Earlier in the year, France’s Neoen and firm irst olar said they had

completed the first of the country s Scaling Solar projects, a 54MW solar farm costing $60m at Bangweulu. The farm was completed in under a year, following the 2016 auction that launched the programme. Neoen and First Solar’s winning bid of $6.02/kWh was the lowest seen in Africa at that point, according to industry observers.

MOZAMBIQUE’S MIXED STRATEGY

Mozambique is advancing its power capacity expansion on multiple fronts. It has awarded contracts for the rehabilitation of the Cahora Bassa hydro project – which was built in the 1970s – to companies such as Brazil’s Intertechne Consultores and Sweco of Sweden. The plant exports electricity to Zambia, Botswana and South Africa. In March 2019, the Mozambican government also launched a tender for the contract to provide consultancy services on the long-awaited Mphanda Nkuwa hydro scheme, estimated to cost $2.3bn. Located 60km downstream from Cahora Bassa, the 1,350MW project will receive financial support from China’s Exim Bank. The Ministry of Mineral Resources said: “The company to be selected will also have to provide the necessary assistance to enable the updating of the technical studies identified as critical, and for the selection of the strategic partner to join the state-owned power utility Electricidade de Moçambique

SOUTH AFRICA’S DELAYED COAL PROJECTS Renewable energy may be a central plank of South Africa’s medium-term policy for the sector, but in the short term it’s hard to look beyond the massive Medupi and Kusile coal-fired projects – two of the world’s largest coal plants and the largest dry-cooled coal-fired facilities anywhere. When comple, each plant will generate

4. W, though the final units are still not online. Completion has been delayed and construction costs have soared to $20bn. Eskom Chief Executive Phakamani Hadebe says that an additional R18bn ($1.25bn) is needed to complete the project.

and the Cahora Bassa Hydroelectric Plant in the development of project infrastructure.” Mozambique also wants to build new thermal power plants. In January, Kibo Energy announced plans to complete a feasibility study into the Benga coal-fired independent power provider this year. The plant, which is to be developed with Termoelectrica de Mozambique de Benga, is expected to have a generating capacity of 150300MW. Maputo has encouraged the construction of coal-fired generation capacity since international mining companies began developing the Tete Province’s huge coal reserves. Kibo is in talks with prospective offtakers over long-term power purchase agreements, as well as coal suppliers. Kibo Chief Executive Louis Coetzee said: “The fact that we are already discussing commercial power offtake and being able to progressively integrate the outcomes with the technical work of the DFS, allows us to align the power station design accurately with offtakers re uirements. The company is also considering developing solar power capacity, perhaps in order to improve environmental attitudes towards the project. “The integration of renewable technologies is an exciting add-on to the project. We are confident that this, combined with Kibo’s focus on clean-burning, coal-fired power generation, will put the company at the forefront of development in this regard,” said Coetzee. ■ Africa Energy Yearbook

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REGIONAL COOPERATION COULD UNLEASH WEST AFRICA’S POWER POTENTIAL

T he W orld B ank s ays increas ed integration is needed

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here are vast energy resources in West Africa: plentiful natural gas, hydropower and huge solar resources. However, maximising power generation in the region has been hampered by a lack of cooperation between the region’s countries. rogress in electrification is gradually being made. Some 52% of West Africans have access to electricity, the World Bank reported in 2018. But it remains expensive, averaging $0.25/ kWh, around twice the global average. The World Bank says the region could solve part of its power supply problems through increased integration. It calculates that $5bn to $8bn a year would be saved by making greater use of cross-border trade in electricity. Some steps have already been taken. The World Bank’s International Development Association has invested $750m in developing the West African Power Pool and about 7% of the region’s electricity is now traded between countries. (For more on the progress with power integration, see the transmission article on p88.) Nigeria has the region’s largest economy by some distance, but ascertaining exactly how much installed and functioning generating capacity it has is not straightforward. Some of the country s gas-fired capacity

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has erratic supply and is not counted in some surveys, while parts of the grid are unable to handle all installed capacity. The official total figure is 12,522MW, including 10,142MW thermal and 2,3 0MW hydro, but usable capacity is usually much less, sometimes as low as 4 W. The difference between urban and rural electrification rates in Nigeria is less marked than most other parts of sub-Saharan Africa without universal access to electricity: 55% of urban Nigerians have homes connected to the grid, while the figure for rural areas is 36%. The debate continues over the wisdom of unbundling the National Electric Power Authority (NEPA) in a process started in 2005 and the subsequent privatisation of many of its successor companies continues. When NEPA dominated power generation, transmission and distribution, Nigerians routinely experienced power shortages. There was too little generating capacity, planned new plants were delayed, cancelled or regularly had insufficient gas feedstock because of low regulated prices and militant attacks on pipelines. At the same time, the grid had a limited geographical reach and suffered even more from underinvestment than the generation sector. Those Nigerians with the money to do so bought their own generators

to provide electricity to their homes and businesses, although diesel-fired generators are usually expensive to run and require unpredictable levels of maintenance. Nigerians dubbed NEPA ‘Never Expect Power Again’ and many hoped that the situation would improve after the parastatal first became the ower Holding Company of Nigeria (PHCN) and was subsequently unbundled into 18 successor companies: six in generation, one in transmission and 11 in distribution. Successive federal governments hoped that the presence of six former PHCN subsidiaries and various independent power producers (IPPs) would foster a competitive market that would see prices driven down and more investment in capacity. There are four thermal generation companies: Afam Power, Egbin Power, Sapele Power and Ughelli Power, and two hydro generators: Kainji/ Jebba Hydro Electric and Shiroro Hydro Electric. Following approaches by the government, oil companies in the country using their own gas production set up some IPPs, including Shell’s Afam VI plant and Agip’s Okpai. The unitary Transmission Company of Nigeria (TCN) acts as the glue that keeps the whole sector together, although the purchase and resale of electricity is the responsibility of state-


owned Nigerian Bulk Electricity Trading. It is the latter that signs power purchase agreements with generation and distribution companies. The Nigerian Electricity Regulatory Commission acts as the independent sector regulator and is tasked with enabling competition, licensing operators and monitoring market operation. espite these efforts to restructure the sector and some periodic improvements, the same old problems plague the industry. A fitful gas supply is perhaps the biggest problem. For example, last June a ruptured gas pipeline caused a big fall in supplies and caused six power plants to be shut down.

CÔTE D’IVOIRE AND GHANA PROGRESS

Côte d’Ivoire currently has generating capacity of 2.17 W, divided roughly 60:40 between thermal and hydro projects, but the government hopes that this will top 4 W by the end of 2020, as new projects are developed. A key recent project is the 275MW

Soubre hydro scheme, which was financed with a $500m concessional loan from China s xim Bank and built by Sinohydro, which was completed last March on the assandra River. The government has announced that most new capacity from now on will be provided by IPPs. Power consumption is growing strongly as Côte d’Ivoire recovers from years of civil war and political uncertainty. stimates of the country s electrification rate vary widely, from about 62 up to 90 , but this could reflect the difference between the proportion of homes that have nearby distribution lines and those that have actually been connected, as connection costs for consumers are considered high. In addition, the ower Africa initiative argues that despite the government introducing its Electricity for All programme, the scope of off-grid policies and incentives are too limited. At 3 , hana has a similarly high electrification rate, although the rural figure is much lower at 50 . The

country has installed generating capacity of 4.39 W, including 2.79 W of thermal and 1.5 W of hydro, but the effective capacity is often less because of low water levels at the nation s dam and difficulties in supplying gas. The latter should be overcome as associated offshore gas reserves come on stream. In the meantime, alternative sources of gas have been secured. The 400MW Bridge ower combined-cycle plant in the port city of Tema is the first li uefied petroleum gas-fired plant to be developed in Africa and the biggest in the world, although it could be converted to run on natural gas at a later date. ■

AZURA EDO: Progress in electrification is gradually being made. Some 52% of West Africans have access to electricity

T he deb ate continu es over the w is dom of u nb u ndling the N ational E lectric P ow er A u thority in a proces s s tarted in 2 0 0 5 and the s u b s eq u ent privatis ation of many of its s u cces or companies . Africa nergy earbook

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P ol i c y de v e l op m

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CONTRASTING POLICY PRIORITIES ACROSS THE REGION

G as , hydro and s olar are all inves tment targets .

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hile Nigeria and Ghana hope to attract substantial foreign and private investment to ramp up their power sectors, some of the poorer West African countries are looking at more modest improvements centred on solar projects. A large part of Nigeria’s recent power-sector strategy has focused on securing Chinese investment for hydro projects and the private-sector development of gas-fired capacity. But putting this into practice has not been a smooth process, with delays in bringing Beijing on board. Abuja’s energy policy is being undermined by the impact of the debt held by Nigerian power companies. The Nigerian National Petroleum Corporation (NNPC) revealed at the end of 201 that it and partner Black Rhino had delayed the construction of the planned 540MW Qua Iboe gasfired plant in Akwa Ibom state because igerian Bulk lectricity Trading B T was reluctant to commit to buying electricity from new projects because it would increase its liabilities.


“The continued delay relates to the current cash flow challenges at B T, as highlighted by the Azura project,” an C official told Reuters. The 460MW Azura-Edo plant was the first privately financed independent power producer (IPP) facility to come on stream since the power companies were privatised in 2013, with financing backed by World Bank partial risk guarantees. It was intended to be a blueprint for future Nigerian I s, but has experienced difficulties in securing payments for its power from B T. The World Bank only promised to give partial risk guarantees to the Qua Iboe project if the Nigerian government implements agreed power-sector reforms, which may take some time.

HYDRO CHALLENGES

Despite massive Chinese investment in African power projects, the involvement of Chinese firms does not guarantee financing. For example, Abuja is still struggling to get the Mambilla hydro scheme in Taraba State, eastern Nigeria, built. It would be the country’s biggest power plant, with generating capacity of 3.05GW and involve the construction of four dams on the Donga River. The project has been under discussion since 1982. The China Civil Engineering Construction Corporation was selected as the main contractor on the $5.8bn venture in 2017 and the Nigerian government said that China’s Exim Bank would provide 5 of the required funding, with the Nigerian federal government supplying the remaining 15 . But progress has stalled, apparently due to Nigeria’s failure to secure its share of the investment costs, although it is possible that Exim Bank s participation is not yet guaranteed. Chinese state organisations involved are giving few details of their position, while the Nigerian government is still assessing its involvement.

Ghana has revised its hydro strategy, with some projects being developed that might not be viable for power production alone. For example, in April the Volta River Authority began work in the north of the country on the Pwalugu Dam, which will not only provide 60MW of generation capacity but enough water to irrigate 20,000 hectares of agricultural land. It remains to be seen which purpose – power production or irrigation – takes priority when water levels are low. The project also has a third purpose averting flooding in downstream areas.

THE SAHEL GOES FOR SOLAR

The countries of the Sahel do not have Nigeria’s bountiful hydrocarbon resources, but the governments there have decided to join the universal electrification bandwagon by committing more fully to developing solar energy. The generation capacities and electrification rates of these states are low, but steadily falling solar photovoltaic costs offer hope of improvement. Burkina aso, for example, had a connection rate of just 20 in 2016, with installed capacity running at 300MW, mostly comprising small diesel plants. Under the National Plan for Economic and Social Development, it hopes to boost these figures to 95 and 2 W by 2025, although a lack of domestic energy resources could hamper this effort. Burkina aso, in common with other Sahelian states, has no oil, gas or coal reserves and limited wind resources, forcing it to import much of its power needs from Côte d’Ivoire. Its landlocked location makes the import of coal, oil and gas expensive, but solar power could be a viable option. The 33MW Zagtouli solar power plant on the edge of Ouagadougou was completed in 2017, with funding from the European Union and l’Agence Française de Développement. In April, it was reported that the Burkinabe government had signed

agreements with private-sector companies to develop six more solar power plants with a combined generating capacity of 155MW. Sonabel, the state power company, has offered 25-year power purchase agreements (PPAs) at a rate of CFA50/kWh ($0.09/kWh). Sonabel has also concluded tenders for two further solar projects: a 20MW facility in Boulkiemd and a 10MW plant in Sanmatenga, and is currently assessing the bids. While other African governments have generally set shorter-term goals for achieving universal electrification, Niger has opted for a more distant target of 2035, although this may still prove ambitious, given progress so far. The current electrification rate is 11.2 and just 0.4 in rural areas, one of the lowest rural rates in the world. These figures are low even by Sahelian standards, with neighbouring Mali achieving a national electrification rate of 35 last year, including a rural rate of 1 . Mali s rural electrification campaign has been boosted by the development of 70MW of off-grid capacity, out of total national installed capacity of 380MW.

RURAL POWER IN NIGERIA

Even given its hydro and gas priorities, the Nigerian government is also looking to small-scale solar projects to drive rural electrification. The Rural lectrification Agency was set up to manage the federal government’s activities in this area, including management of the Rural lectrification und. In late April, Abuja announced that it had secured $150m from the African evelopment Bank and another $50m from the Africa Grow Together Fund to finance rural electrification projects totalling 76.5MW. Much of Nigeria’s renewable energy investment is being made in microand mini-grids. ■ Africa Energy Yearbook

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Damilola Ogunbiyi

anaging irector and hief ecutive, igeria s ural lectrification gency

TAKING POWER TO THE PEOPLE D amilola O gu nb iyi talk s to J ames G avin about her e orts to support o -grid renewables and encourage the private sector to invest in the fast-growing sector.

What are your key initiatives

What is the main focus of the Rural Electrification Agency (REA)?

ur main focus is off-grid renewables. Before the new management team arrived in 2016, R A concentrated on grid extension projects to rural people, but we realised this wasn t the most effective way of fulfilling our mandate of giving power to the people. One of my roles is to encourage the private sector into the off-grid space. ew data shows that it is the most vulnerable people who pay the most for electricity. or mini-grid and solar home-system developments, and energy education, we have raised $550m. f that, $350m comes from the World Bank and $200m comes from the African evelopment Bank. rant support is re uired to really grow the off-grid sector.

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We have a programme called nergising conomies, which is all about supplying sustainable power to large markets and economic clusters. These markets are already paying a lot for power but this initiative delivers power to them at a willing buyer/ willing seller tariff. This has been a success and has told a good economic growth story. The other thing about this programme is that it encourages 100 metering. Remote metering is key people have to pay for power or they will be disconnected. We have also recently completed an universal electrification access map for igeria. This addresses how many people are currently unconnected and is where the power of data really comes in. We spend a lot of time compiling data and creating development plans to get them connected. We see solar home systems and mini-grids as a low-cost way of connecting households. The model also gives data on about 12.5m households and how we can electrify them by 2024. We have a young team and are very big on gender e uality. If you apply for any of our programmes you have to show that 30 of your workforce, even at management level, are female. I now have 24 women working for me as project managers.

Why is it so important to have accurate data?

We cannot be successful without accurate data. We carry out physical energy audits in every community we work in, which is important if we are to ade uately plan and develop the best solutions. ata provides us with a clear direction for the private-sector focused off-grid sector we re creating.

What targets do you have for mini-grid sites?

We ve set a target of 10,000 mini-grid sites by 2023. The target is based on what is needed and what the demand is. We need to be aware when we are developing our sector that the companies we want to attract need to see scalability. ur off-grid is going to be developed with both international and local developers working together.

How do you work with private-sector players?

We provide market intelligence, grants and subsidies for private-sector developers, which allows them to invest their own money into the sector.

How do you see the overall legal and regulatory landscape developing?

igeria is one of the few African countries that has mini-grid regulations.


What other initiatives are you working on?

The nergising ducation programme is my favourite, because it s about youth development. roviding dedicated power at federal universities through independent power plants will improve both education and the standard of living for the students on campus. It s also a good opportunity to promote large solar photovoltaic V plants in West Africa. They re very common in outhern Africa, but it s

hard to find large solar V projects with battery storage in igeria.

What challenges need to be overcome?

There are always challenges. There s a mindset that things just won t work when you try to educate people that this a new technology, there is a view that solar doesn t work. owever, with extensive education on solar power and energy efficiency, I m confident this will be overcome. ■

e are big on gender e uality. f you apply for any of our programmes you have to show that of your workforce, even at management level, are women. Africa Energy Yearbook

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e st A f ri c a: P roj e c t h i g h l i g h ts

POWERING ONWARDS AND UPWARDS G as to the f ore in W es t A f rican pow er drive.

N SENEGAL’S GAS PUSH

Given the size of its economy and population, Senegal has a relatively modest generating capacity of 864MW; thermal is the dominant strand in the generation mix with 733MW, but the government is keen to see additional capacity developed as soon as possible if it is to achieve its goal of achieving universal electrification by 2025. The current electrification rate is 64% nationwide, but just 43.5 in rural areas. That goal will receive a boost from the development of enegal s offshore gas reserves in the north of the country, which are being developed jointly with those of southern Mauritania as part of the reater Tortue project involving a B -led consortium. The first gas is due to be produced in 2022, but most of that will be exported as li uefied natural gas and some within Senegal argue that the government needs to increase its efforts into ensuring that more of the reserves are ring-fenced for domestic power use. ebanese firm Matelec s planned 120MW combined-cycle Melec power plant, expected to be built 5km

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ew capacity is being installed and electrification rates are rising in West Africa, as governments attract a wide range of foreign investors. Gas is becoming the dominant thermal power feedstock, not just in Nigeria but also across the entire region. Meanwhile, Central Africa continues to focus on its vast hydro potential but, as has often been the case, it remains easier to develop more modest projects rather than the jumbo schemes mooted for the main course of the Congo.

south of Dakar, would be one target for domestically produced gas. Initially designed to operate on heavy oil, it could be converted to run on gas when it becomes available. innish firm W rtsil is to provide its lexicycle technology with a 10-year maintenance contract to the independent power producer.

LNG AND CONVENTIONAL GAS FOR NIGERIAN PLANTS

In April, innish firm W rtsil signed a contract to develop a liquefied -fuelled power plant in igeria. is normally re-gasified in the buyer’s home market to provide gas feedstock, but it can now also be used directly in power stations. The Bua roup has commissioned W rtsil to develop a 4 MW off-grid plant to provide power to its new cement production line in Sokoto, which will result in a much lower environmental impact than the existing heavy fuel oil generation being used at the site. The plant is expected to become operational by the middle of next year. Moroccan energy utility eo Themis said in April that it had signed a contract to develop the 550MW combined-cycle, gas-fired Kingline power plant at Ondo State Industrial ark, which lies 200km northeast of agos, at a cost of $600m. eo Themis Chief xecutive Tas Anvaripour said Kingline offered competitive pricing and benefited


CAMEROON DOES EDF DEAL

Continuing the trend of hydro development, lectricit de rance signed a deal in ovember 201 with the government of Cameroon to build and operate the 420MW achtigal hydro scheme on the anaga River. Marianne Laigneau, Group Senior Executive Vice President of the international division at EDF, said: “It’s the first of its kind for to have all these industrial roles together: to design, negotiate, pilot the project, building, operating and maintenance... We are completely convinced there is a large hydro potential in Africa. We are looking for opportunities with partners.

from the availability of peripheral gas and transmission infrastructure, a short timing to operation and technical flexibility. inancial closure is expected next year, with the first power coming online in 2022. unding is expected to be provided by a consortium of multilateral and private-sector institutions led by enham Capital.

DRC HYDRO PROJECTS MOOTED

While most African counties are making substantial progress on electrification, connection rates in the emocratic Republic of Congo RC remain very low. ust 9 of the population lives in homes connected to the national grid, ranging from 19 in urban areas to 1 in rural districts. There are many reasons for this, ranging from a lack of investment, national cohesion and poor security. In common with many other forms of infrastructure, such as the road network, the national grid does not extend into many parts of the country. RC has installed generating capacity of 2.67 W, of which only 135MW is thermal and the remainder hydro. Despite the current poor situation, the country has vast hydro potential. Technical and economic feasibility studies have already identified at least 100 W of untapped hydro potential in the Congo basin. Two hydro schemes have long operated at Inga Falls in the far west of the country. Inga I, which was completed in 1972, has a generating capacity of 351MW, while Inga II was completed a decade later with

1.42 W, but they only tap relatively minor parts of the Congo s flow at that point. Various incarnations of the proposed Inga III site have been promoted over the past 20 years, ranging from 4GW up to 11GW, but would require massive investment in transmission infrastructure to make them viable. Meanwhile, the Grand Inga proposal, which would involve building a dam across one of the main flows of the Congo, would provide generating capacity in the order of 40 W, making it by far the biggest generation project of any kind in the world. China s 22.5 W Three orges am is the current holder of that title. The most obvious market for either proposed project would be South Africa and several attempts have been made to finance Inga III or Grand Inga and a massive transmission network serving outh Africa. The financial risk would be enormous and there is also a security risk. However, either project could provide huge amounts of low-carbon electricity and generate export revenue for RC, while a steadily increasing proportion of the power produced could be used to electrify the host country. Two Chinese firms inohydro and Three orges plus AC of pain, are keen to develop Inga III and have been keen to emphasise that RC itself will not be re uired to finance any part of the project, nor take on any debt. Their vision for Inga III would have an 11GW generating capacity and cost $14bn, with an additional $4bn investment in transmission lines. South Africa has already committed to taking 2.5 W and outh African nergy Minister eff Radebe has suggested doubling that figure. iven the 11GW capacity, it seems likely that the investors would require South Africa to take at least 5 W as they seek to sign up other offtakers. ■ Africa Energy Yearbook

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George Mensah Okley M anaging D irector, B O S T

TOWARDS A NEW B O S T

T he B u lk O il S torage and T rans portation C ompany L imited (B O S T ) w as incorporated in D ecemb er 1 9 9 3 as a private limited liab ility company w ith the G hanaian government as its s ole s hareholder. H ere, G eorge M ens ah O k ley ex plains the company’ s plans .

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h at i s B O S T ’ s m an date ?

To develop a network of storage tanks, pipelines and other bulk transportation infrastructure throughout the country. We keep strategic reserve stocks for Ghana and manage the ‘zonalization’ policy of the National Petroleum Authority (NPA).

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h at do y ou wan t to ac h i e v e f or B O S T as i ts n e w M an ag i n g D i re c tor? I want to set up a world-class trading department and form a strategic partnership with GO Energy and the Ghana Oil Company to ensure a stable and long-term price outlook at the pump. We also want co-operation with the private sector. We want to leverage our current strength and infrastructure to ensure the cost of doing business in the downstream will be as low as practicable.

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h at i s y ou r p osi ti on on b u i l di n g strate g i c stoc k s? BOST must build strategic reserve stocks to meet a minimum of six weeks of national consumption in the short and medium term, increasing to 12 weeks in the long term. Due to the fact that petroleum products have a limited shelf life, BOST is required to dispose stored products as and when needed, and replenish the stocks to ensure their viability. This is the reason why the mandate of strategic stock-keeping to meet national demand over the stated period cannot be clearly separated from active trading in petroleum products.

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TOWARDS THE DREAM

h at ab ou t th e p i p e l i n e n e twork ?

■ Depot upgrading

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BOST has about 354km of petroleum pipelines of varying sizes throughout the country. It has storage infrastructure located in six of Ghana’s 16 regions. The largest depot is located at the Accra Plains, with a capacity of 210,500m3 for both gasoil and gasoline. Kumasi has the second-largest depot, with a total capacity of 87,000m3 of gasoil, gasoline and kerosene.

■ Takeover of depot management from TSL ■ Deepening pipeline transport ■ Refurbishment of river barges for fuel transport ■ Construction of BRV Parks: Kumasi, Buipe and Bolgatanga ■ Cancellation of unfavourable service contracts ■ Acquisition of storage tanks in western Ghana ■ Corporate restructuring

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h at p l an n e d p roj e c ts doe s B O S T h av e ? H ow doe s th e B O S T n e twork op e rate ? Finished petroleum products (gasoil and gasoline) enter the BOST network from either the Conventional Buoy Mooring (CBM) at Tema and/or from the Tema Oil Refinery (TOR). Petroleum products are transported between BOST’s coastal and regional depots using a combination of pipelines, river barges and Bulk Road Vehicles (BRVs). There is a twin 6” pipeline that connects TOR to Accra Plains Depot (APD). APD is also connected to the Mami Water Depot via another 63km 6” multiple products pipeline, which continues to the Akosombo Depot. From the Akosombo Depot, petroleum products are loaded onto river barges and transported to Buipe via the Volta Lake. The Buipe depot is connected to the Bolgatanga depot via a 261km 8” multiple products pipeline.

BOST intends to construct 30,000MT capacity LPG storage facilities at four locations in Ghana: Tema, Takoradi, Kumasi and Buipe. This will provide BOST with about four weeks of national consumption in line with the BOST objective of providing up to 12 weeks of national consumption. As part of the evolution of a proper operating structure, the BOST depot upgrade project is planned as a full integration of systems, hardware and controls through depot automations, equipment upgrades and safety enhancements across all six BOST terminals to deliver efficiency to depot operations, and improve the standard of operations and maintenance of BOST’s facilities. The project’s principal deliverable is the increase in flow rates by up to 70%. The BOST depots in Accra, Kumasi, Bolgatanga, Buipe, Akosombo and Mami Water will be upgraded, where relevant, to accommodate the pipeline size increase to 4” in support of


the planned throughput increase, as well as pipeline measurement and flow reporting. The upgrade also includes Terminal Automation, Tank Gauging, Access Control, CCTV, and Fire and Gas. On completion, it is expected that there will be a 100% system and automation delivered, including Loading/Unloading throughput, plus pipeline and flow metering, Akosombo barge Loading/Unloading. The complete automation of the terminals will ensure the online real-time management and monitoring of product receipt, inventory and dispatch of product through BRVs and barges. BOST is hoping for project financing and for partnerships to raise

long-term capital to restructure. We are targeting pension funds. That is our long-term goal. There is a grace period before that happens, so we are hoping for business and want to create infrastructure for all petroleum products that are used in Ghana.

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h at n e w p i p e l i n e p roj e c ts are u n de r way ? As part of the expansion drive undertaken by BOST, a new 12� 70km pipeline is to be constructed within the TAPP corridor to connect APD to AKD. The total volume of the new pipeline is approximately 5m litres. The pipeline delivery rate from APD to AKD is 250m3/hr.

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h at ab ou t c on stru c ti on of b arg e s an d tu g b oats? Additional marine assets will be required by BOST in order to efficiently transport products from APD to Buipe Depot. These include fuel tank barges and pusher boats that will transport products from Akosombo to Debre and Buipe. There will be different barges for gasoline and gasoil. Each of the proposed barges will have a capacity of 1.5m litres. To ensure that products are moved expeditiously to meet the demand in the Sahelian markets (including Burkina Faso, Mali and Niger) there will be at least nine barges. There will be three Africa Energy Yearbook

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pusher boats, each with an engine power rating of 2x750kW. There will be a Calm Buoy Mooring (CBM) system to support offshore loading. Each of the proposed barges will have a capacity of 1.5m litres. Additional river barges and tugboats are required to enhance the petroleum transmission system of BOST to efficiently carry out its mandate. At the present pricing and related circumstances, it is economically and financially viable to invest in both facilities. Three more pusher boats and nine river barges are needed to meet the petroleum demand in the three northern regions of Ghana and export to other land-locked countries. However, BOST is looking forward to putting back on the lake four barges with a combined capacity of 3m litres for fuel transportation to the Buipe Depot to serve the northern regions of Ghana and the Sahelian market by the end of the year.

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h at p l an s are th e re f or th e D e b re tran si t de p ot an d th e D e b re to B u i p e p i p e l i n e ? BOST presently has a port facility at Debre, about 32km from Buipe in the Northern Region. During the dry season, when water levels are low and barge access to Buipe may be restricted, Debre is accessible by barges all year and the Debre depot is installed to receive diesel and gasoline from the barges, and export to Buipe via a new pipeline. The Debre Transit Depot will comprise of two 20,000m3 gasoline tanks and two 20,000m3 gasoil tanks. Additionally, a 16” 30km pipeline will be

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constructed from Debre Transit Depot to Mpaha Junction to connect the existing Buipe to Bolgatanga pipeline.

BOST’S KEY AIMS

How will you finance these projects?

■ Possible forward integration into the petroleum upstream

Financing will include a private placement with private-sector participants for an ownership interest in the specific projects. There will also be a conversion of outstanding debts with other SOEs for functional assets to deepen operations. BOST will partner with existing service providers to raise capital for projects affecting their areas of activity. The target is to use these methods to bring BOST up as a profitable SOE paying dividends to the government and generating appropriate returns for the various investors. The conventional model of borrowing at a cost to implement such projects and pay back through time is not the best way of project financing in an industry in the petroleum downstream. By bringing the various stakeholders onboard to raise the needed funding for projects, their lost benefits from the existing models get compensated through their gains in the new projects executed.

■ Competition in the fuel market ■ Operational efficiency

■ Possible backward integration in the petroleum downstream

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i l l n atu ral g as p l ay a b i g g e r p art on th e e n e rg y landscape of Ghana? That is the reason they set up Ghana Gas. Natural gas is the transition between the high-carbon-density fossil fuel to renewables. For now, it will play a key role in power generation. Depending on the volumes that we have, we will export to neighbouring countries. That is why we have the West African Gas Pipeline. It should go beyond Takoradi to the Côte d’Ivoire. We have to bring our strategy to Senegal and monetise Senegalese natural gas in Ghana. At BOST, however, we want to be focused. We do not want it to be a distraction. When we finish building our empire on the liquid side, then we can tackle diversification. ■


BULK OIL STORAGE AND TRANSPORTATION COMPANY LIMITED Expression of Interest for the Provision of Feasibility, Front End Engineering Design (FEED), Detailed Design, Build –Operate – Transfer (BOT) Services for LPG Terminals at Tema, Takoradi, Kumasi, and Buipe, Ghana.

EXPRESSION OF INTEREST INTERNATIONAL COMPETITIVE TENDERING (ICT) Bulk Oil Storage and Transportation Company Limited is a 100% Government of Ghana owned Company with a mandate to develop and maintain a national network of facilities for bulk storage, transportation and distribution of petroleum products to meet a minimum of 12 weeks national consumption. BOST therefore, intends to apply part of its budgetary allocation for payment under the contract for the provision of Feasibility, Front End Engineering Design (FEED), Detailed Design, Build-Operate-Transfer (BOT) services for LPG storage Terminals totalling 30,000MT BOST now invites interested and competent entities, applicants or consultants to state their expression of interest to participate in the tender process for this Project. Interested applicants must provide the following information, amongst others; in their statement of interest: i. Details of applicant’s specific experience in the execution of similar facilities within the last decade or more; ii. Summary of Financial Statements of the entity (ies) for the last two fiscal years indicating the annual turnover and/or value of the relevant investments completed or financed and/or committed successfully within the decade. iii. Organisational structure indicating management structure and general staffing levels. This includes the summary of qualifications and relevant experiences of the key personnel within the

company structure; iv. A letter of undertaking to BOST, indicating that the information presented is true and accurate and may be verified at the sole direction of BOST, and also that the entity (ies) intend to cooperate throughout the procurement process. Additional information • It should be noted that BOST is not bound to accept any application and reserves the sole right to reject any or all applications without giving any reasons whatsoever to any or all applicants regarding selection, rejection or cancellation; • Interested entities may obtain clarification at the address below by email between the hours of 9:00 GMT and 16:00 GMT from Monday to Friday excluding public holidays; Expression of Interest should be delivered to the address stated below on or before 10:00 GMT of Monday 8th July 2019 and clearly labelled “Expression of Interest for the Provision of Feasibility, Front End Engineering Design (FEED), Detailed Design, Build – Operate –Transfer (BOT) Services for LPG Terminals at Tema, Takoradi, Kumasi, and Buipe“. Address to: The Managing Director Bulk Oil Storage & Transportation Company Limited Plot No. 12, First Dzorwulu Crescent West Airport Residential Area, Accra P. O. Box MB 499 Accra – Ghana

Email for clarification: To: Vkally@bost.com.gh awilson@bost.com.gh jattah@bost.com.gh pkavianu@bost.com.gh Only shortlisted applicants will be invited to submit full proposals for further consideration and evaluation. This invitation is issued in accordance with the procedures set out in the Public Procurement Authority Guidelines and successful tenderers will be selected in accordance within the said guidelines. GEORGE MENSAH OKLEY MANAGING DIRECTOR, BOST

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Alexandre Dias Monteiro

M inis ter f or Indu s try, T rade and E nergy, C ab o V erde

GREEN BY NAME, GREEN BY NATURE

A lex andre D ias M onteiro ou tlines his cou ntry’ s amb itiou s s trategy to jettis on f os s il f u els in f avou r of reneab le energy to P au l M elly.

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ith a population of just 6 0 0 , 0 0 0 spread across its nine islands, Cabo Verde faces unique chal-lenges. But the Atlantic location gives it the chance to build an energy future based on renewable power. Monteiro has ambitions for the island. “Our 2018-2040 energy plan is designed to put the sector on a secure and sustainable basis, and free us from relying on fossil fuels. ur fi rst target is to produce 30% of our electricity from renewable sources by 2025, and then 50% by 2030,” he says. “At present, 18% of our power comes from wind generation, while only 2% is generated from solar installations. But we plan to develop 250MW of additional capacity by 2030, of which solar will contribute 160MW and wind 90MW.” But because wind energy is reliant on the weather, while solar power can only be generated during the hours of daylight, this was an obstacle to developing a power strategy based solely on renewables. But Monteiro explains that Cabo Verde now plans to take advantage of the new technologies that are being developed. “A pump-storage project – where water held in a reservoir at altitude is used to generate hydro-power during

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the hours of darkness – will be built on the largest island, Santiago,” he says. “Such projects are not viable on the eight smaller islands, where we will install battery storage plants. Altogether, we plan to develop 640MWh in storage capacity.” Storage technology – an area where important advances are being made – will be the crucial third leg of Cabo Verde’s plan to achieve 100% reliance on renewable power by 2040. In the long term, some power may also be generated through wave technology, Monteiro explains. “We already have a small test project, linked to a water desalination plant, but we think that there is scope for this technology to become a competitive option.” Indeed, economic competitiveness is an important dimension of the entire renewable energy programme. “Our aim is to achieve the maximum possible reliance on renewable power sources, but at the lowest possible cost.” Monteiro believes this is achievable. The government is trying to mobilise private investment for independent power providers’ wind and solar projects through a tender process; it recently embarked on the first stage of a tender process for potential project developers. The government also decided to privatise the national power utility. It

has set up a working group and is preparing to select ‘transition advisors’ to help it in this process, which will result in a new structure for the electrical power sector. We specified that all proposals must commit to produce power at the same cost as our current installations, or at a lower price. No bids proposing an increased tariff will be considered, he explains. “Even so, we have had many expressions of interest from private-sector investors.” Cabo Verde’s distinctive location offers clear potential for renewable power. But Monteiro believes that the country’s record of political and economic stability will also prove attractive to potential investors. This matters, because wind power investors will be legally required to commit to a 20-year project life, while solar project developers must commit to a 25-year investment. But what will happen to existing thermal power plants? “We need them as a backup and for grid stabilisation,” says Monteiro. “The thermal power capacity and the introduction of the storage capacity will make up for the intermittent nature of the renewable production. Even so, the direction of travel is clear. “Last year our thermal power output fell by 3%, while our renewable energy output rose by 20%.” ■


e speciďŹ ed that all proposals must commit to produce power at the same cost as our current installations, or at a lower price. o bids proposing an increased tari will be considered.

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Mami ufie fori

ecutive ecretary, Public tilities egulatory ommission

“THESE ARE EXCITING TIMES FOR REGULATORS” ami ufie fori tells ames avin about hana s e orts to develop its energy sector and encourage investment into renewables.

The Public Utilities Regulatory Commission (PURC) has developed a long-term energy policy. How did this happen?

The PURC was borne out of an energy crisis that Ghana experienced from 1995-96. Under the country’s economic reform programme the PURC – the economic regulator – and the Energy Commission – the technical regulator – were created. Between 1997 and 2010, regulations were put in place to direct the performance of the utilities. We developed a guideline to let the public know how we would set our rates. In our part of the world, it’s important that you get people to support you, especially when you are preparing to increase tariffs, to ensure that the utilities were finan-

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cially viable. We also established offices nationwide so that people could have access to us, as phone coverage is very low. It has enabled us to access information and, at the same time, become a referee between the utilities and the people, enhancing the collaboration between them. We then used our experience to help put in place the National Energy Policy in 2010. This ensured that we had the legal, physical and regulatory environment to attract investment, especially in the renewable energy sector.

What are your policies on renewable energy?

The PURC’s key contribution was the establishment of a feed-in tariff mechanism to encourage people to invest in renewables, so that they can feed into the grid. People have set up solar systems to feed into the system. ur current target for renewables is to achieve 10% in the generation mix percentage by 2020. That may be overambitious as currently renewables make up just 1%, so it may take us a bit longer to reach it.

What about encouraging private-sector participation?

Because the PURC was set up as an independent regulator, the tariffs we established have given investors the confidence to put money into power

generation. In fact, in 1997 we had just one independent power producer. Now we have more than 10, which tells you how rapid the investment has been. In fact, electricity coverage in Ghana stands at 82%, one of the highest on the continent. We have encouraged a wide energy mix. Initially, those coming in were just thermal systems and hydro, but then gas was introduced after offshore oil and gas reserves were discovered. That has impacted positively on the price of power generation, as gas is cheaper than other sources. We now don’t even encourage single-cycle systems – we want dual or combined systems where we can use both gas and crude. This gives us options. Private-sector participation is something we have opened up to. At the PURC we advise the government on what the realistic proposals are in terms of pricing for the various power purchase agreements. That has been very beneficial to the government, enabling it to identify costs that are too high, or giving it leverage to negotiate a better deal.

Why are investors interested in Ghana’s power sector?

The government has entered into a very aggressive programme for electrification expansion called elf elp lectrification rogramme), where it wants to connect

Akosombo power station supplies energy to almost the whole of Ghana and half of Togo, West Africa


more and more customers. This means investors reap the benefits of economies of scale through a wide customer base. With economic growth you also get cash cows, which are the industries, the mines and others. That is one of the things that we encourage. ur regulations are designed to support growth and are not just for regulation’s sake. Which is why we set prices for investors to come into a particular sector – especially the industrial and commercial sectors – and small- to medium-scale enterprises.

What are the PURC’s future plans?

These are exciting times because we are setting up a wholesale electricity market. We will also encourage investors into the sector. At PURC, we’re

moving through a phase of stability, growth and consolidation. We are still growing. We’ve had many investors come in and have expanded the base of customers, but now the challenge is to ensure it is sustainable. Because what happens if customers don t pay their bills or the tariffs that they should? The PURC is launching programmes to encourage the productive utilisation of the power to enable customers to pay realistic tariffs. We are developing regulations that will foster competition and boost economic growth. This means policies will have to include both consumer and market protections. Getting that balance right isn’t easy, especially when income levels aren’t high. It’s exciting for us as regulators. For the first time in the life of the Commis-

hese are e citing times because we are setting up a wholesale electricity market. e will also encourage investment into the sector. e re moving through a phase of stability, growth and consolidation.

sion, we have published on our website the decision details of our 2018 tariff, which promotes transparency and enhances confidence from both investors and consumers. We will continue to improve on this transparency path, especially now that we have private-sector participation in the distribution sector. ■ Africa Energy Yearbook

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u n iq u é

M

A R E S : SUPPLYING INDUSTRY IN AFRICA AND BEYOND

F ou nded in 1 9 7 5 , M A R E S is an ow ner- managed company that o ers spare parts and technical e uipment for ships and industrial plants.

MARES’ warehouse stock in Hamburg, Germany

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Our MDs, Eckehardt Bauer (left) and Claus Witt


T

he Hamburg-based company employs about 70 people from diverse backgrounds and cultures. More than a quarter of all employees have at least one parent who is not of German descent, and about one-third are women. The average age of employees is 35. They can serve their customers in more than 10 different languages, supplying more than 400,000 spare parts from numerous engine brand manufacturers to approximately 800 customers in more than 75 countries. A high focus on customers, as well as transparency in dealing with all their suppliers, remains front of mind. MARES is always looking for the highest quality and an outstanding cost-benefit ratio for its customers.

Aerial view of MARES’ neighborhood

The more established markets are Germany, the US, Singapore, the Netherlands, China, Great Britain and France, with the African continent quickly becoming the new focus area for the German-based team. Over the past few years, MARES has expanded its reach from primarily focusing on the shipping industry to include other areas, such as the mining sector and power plants. Its goal is to expand these markets continuously with the collaboration of alliance partners who often are based in-country. MARES has also reached an agreement with QuantiParts – a wholly owned Wärtsilä company – to become its official distributor in East and Southern Africa for a number of its in-house brands. As a one-stop supplier, MARES’ spectrum of spare parts ranges from diesel engines, compressors, separa-

View from MARES’ building towards Speicherstadt district

tors, pumps, plate heat exchangers to water treatment plants. Its network of manufacturers and suppliers has grown significantly and its scalability to move volume has provided further discounts from a range of suppliers, which is passed on to all MARES customers. This is one of the reasons why its slogan reads: ‘Quality pays off’. These principles are very much part of its DNA and would address companies with increased cost concerns that operate in tough economic conditions, but do not want to compromise on quality. In a nutshell, MARES, with its highly experienced technical and logistic teams, excellent stockholding of critical spares, a database comprising several hundred thousand articles and an agile team that is fully dedicated to offer quick turnaround times for all customers, has positioned itself to be the go-to partners for all your spare part requirements. ■

sales@mares.de | www.mares.de

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R e n e wab l e s

GRID-SCALE RENEWABLES: RISING TO THE CHALLENGE

A f rican s tates are s eiz ing the opportu nity to meet f as t- ris ing pow er demand w ith clean energy, w rites Ian L ew is .

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he scale of the challenge for the African energy sector is well known. The World Bank estimates that in rural areas around one in three Africans have no access to electricity – that compares to 13% for the world as a whole. Even where communities do have access to grid electricity, the supply may be unreliable or unaffordable. It is now generally accepted that renewable energy will play a major role in solving the energy access challenge – national energy policies across the continent are increasingly prioritising the need to develop solar and wind projects to replace fossil fuels and reduce the reliance on erratic hydropower. This has encouraged ambitious propositions for increased renewable energy use in Africa, which while challenging, don’t look as far-fetched as they once were. The International Renewable Energy Agency (IRENA) believes Africa could meet around half of its electricity generation requirements from renewable energy by 2030 if the investment is forthcoming. There is the potential for renewable energy capacity totalling 310GW to be in place by the end of the next

decade, seven times the 42GW capacity available in 2017, the agency says. If that could be achieved, not only would electricity access improve, it would also result in carbon-dioxide emissions reductions of up to 310 megatonnes a year. The economic and health benefits would be significant, says IR A in its January 2019 report, Scaling Up Renewable Energy Deployment in Africa. The renewable energy sector already employs 10.3m people globally, so millions more jobs could be created in Africa. Increased access to electricity, especially in more remote areas, would improve productivity and spur economic growth. Health would improve through the improvements in healthcare services that power would bring, and because of the reduced exposure to polluting fuels, such as diesel from generators and kerosene used in lamps.

MOBILISING INVESTMENT

Assessments of the solar and wind potential available in Africa confirm that the resources are there, IRENA

says. But there’s a caveat – achieving such an expansion in renewable energy is estimated to require an average $70bn a year investment. The national climate change commitments and power-sector policies of governments on the continent indicate that, at best, only around half of the hoped-for 310GW of renewables could emerge if those plans were realised, the agency said in 2017. However, countries such as Ethiopia, Kenya, Nigeria and Rwanda are now taking a more positive view of the role of renewables, incorporating their development both as part of utility-scale grid power and at the off-grid level into national energy policy. Clean energy offered through miniand micro-grids is providing power to communities far from the national grid that once had little prospect of electricity access, thanks to the plummeting cost of the technology and the proliferation of companies able to offer such services affordably on a commercial basis (see p97). However, it is at the utility-scale grid level that renewables could make the most difference to the overall energy mix. As energy demand in Africa grows, the task is to ensure that most of the required increase in pow-

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GRID-SCALE RENEWABLES: RISING TO THE CHALLENGE er generation is met by sustainable, clean energy sources.

GHANA WEIGHS PRICING

While the operation and maintenance costs of solar and wind are low compared to thermal power plants, upfront costs are high. This creates a problem for countries such as Ghana, which is pushing the use of solar energy to meet the country’s commitments under the Paris climate change agreement. In 2018, the government said it wanted to boost utility-scale solar generation to 250MW by 2030 from around 22.5MW. “Renewables is an area we have been concentrating on and finding investors, said Mami ufie fori, Executive Secretary of Ghana’s Public Utilities Regulatory Commission. “Together with the Energy Commission, we are trying to identify how best we can encourage it and price it. However, the initial investment is very high, whereas operation and maintenance [cost] is very low. How do you price that so the investor will get their money back, but at the same time ensure the community isn’t paying an exorbitant cost? We have to balance that. “Technological developments are ensuring that some of these solar systems are getting cheaper and cheaper. We hope that technology can lead us to achieve affordable costs. upport from development finance institutions (DFIs) is crucial to the development of large-scale renewable energy projects in most sub-Saharan African countries. The list of projects backed by the World Bank, the African Development Bank and other multilaterals is growing fast.

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FOLLOWING WIND IN SENEGAL

In Senegal, support from the Multilateral Insurance Guarantee Agency (MIGA) has enabled construction of the country s first utility-scale windfarm to get under way. Ground-breaking on the 158.7MW Taiba N’Diaye windfarm project to the north of Dakar took place in December 2018 and developer Lekela expects it to be completed in 2020. The 46-turbine windfarm will add around 15% to Senegal’s electricity generation capacity, providing some 300,000 households with electricity, mainly in rural areas. Lekela hopes that, as the largest wind project to date in West Africa, it will act as a showcase for the technical, financial and institutional feasibility of large-scale wind projects in the region. The developer s ownership reflects the importance of combining private sector and DFI funding and knowhow at this stage in the development of the renewables sector. UK-based Lekela is 60%-owned by private equity investor Actis and 40%-owned by a group led by Mainstream Renewable Power, which includes the International Finance Corporation (IFC) and the Rockefeller Brothers Fund. In Mozambique, the IFC is backing the country s first utility-scale solar power plant, which aims to reduce reliance on hydropower and bring power to rural areas. The project, which also includes support from the Climate Investment Funds, is to deliver power to the national grid and provide energy to some 175,000 households. In Zambia, the Scaling Solar programme pools World Bank, IFC and MIGA services and instruments to support grid-connected solar photovoltaic (PV) power plants. A 48MW plant located outside the capital, Lusaka, will sell power to

Zambia’s power utility company through a 25-year power purchase agreement (PPA).

CHANGING ESKOM’S SPOTS

nce grid-scale renewable energy is established and the risks are reduced, the private sector is likely to play an increasingly important role in the sector. In the continent’s more developed economies, this is already happening. South Africa is blazing a trail in terms of its efforts to mobilise private investment in the renewables sector, as it seeks to wean its power sector off its dependence on coal, which still accounts for around 80% of electricity generation. According to 2018 Energy Ministry data, of a total installed capacity of 51.3GW, thermal (mostly coal) accounted for 46.8GW, hydroelectric for 661MW and other renewables for 3.88GW. After becoming South Africa’s President February 2018, Cyril Ramaphosa quickly sought to revamp the country’s approach to the energy sector, including the extension of an independent power producer (IPP) programme for the renewables sector. Cash-strapped state utility Eskom had previously been reluctant to sign PPAs with private renewable power providers, or indeed develop grid-scale renewables projects itself, saying they were too expensive compared to coal. And the case for solar and wind hadn’t been helped by previous President Jacob Zuma’s interest in developing nuclear power, rather than alternatives. In March 2018, Ramaphosa’s administration said Eskom would sign agreements for 27 Renewable Energy Independent Power Producer Projects (REIPPPs), intended to add some 2.3GW to the grid, while the REIPPP programme as a whole is intended to boost capacity as much as


30GW over the coming years. The tumbling cost of renewables technology has already brought down the price at which power can be sold to Eskom – by some estimates it is cheaper than coal in some areas. This could solve a number of problems, but has actually created another one. Early 20-year PPAs that Eskom signed with renewable IPPs back in 2011 and 2012 were based on the higher prices prevailing then. That has led to calls for those agreements to be renegotiated to push down the cost of electricity to match that of more recently built projects, saving debt-laden Eskom money. But pushing through the renegotiation of 20-year contracts is unlikely to bolster confidence among investors eyeing the new wave of renewable IPPs that their future cashflows are secure. Ramaphosa has gone on the offensive, telling the South African parliament in March that skom s financial and operational challenges were not caused by renewable IPPs. “With each successive round of the renewable energy IPP programme, the cost of electricity has dropped substantially. In the most recent round, for example, prices for wind were down to around $0.62/kWh, which compares favourably with Eskom’s average cost of supply,” he said. Ramaphosa will still need to tread a delicate political line if he is to keep everybody happy.

MOROCCO TAKES THE LEAD

North Africa’s leading renewables markets provide different opportuni-

ties and challenges than most of those south of the Sahara. For example, Maghreb states could harness their copious solar energy to provide power for the huge European markets via trans-Mediterranean transmission lines, and send power to each other. A lack of regional cooperation is holding back progress, but close ties with Europe and relatively developed economies mean that renewables financing can be obtained more readily than in other parts of the continent. Morocco, which has to import virtually all of its energy needs, has been in the vanguard of the clean energy drive. Renewable energy accounted for 35% of the kingdom’s generating capacity at the end of 2018, according to government data. The country already plays host to the world largest concentrated solar power complex, the multi-billion-dollar Noor project at Ouarzazate in the ahara desert. The first 160MW phase became operational in 2016. When Noor is completed in around 2020, it will have a capacity of around 580MW, providing power to more than 1m people. Backed by the World Bank and other DFIs the project, which is led by the Moroccan Agency for Sustainable Energy (MASEN), has been developed on a public-private partnership basis, successfully mobilising private investment. MASEN has also pioneered the issue of green bonds to international investors to support its renewable energy ambitions. Morocco plans to add some 10.1GW of renewable power capacity between 2016 and 2030, as it seeks to boost the renewable share of the power mix

to 52% by 2030. The government foresees 4.56GW of this coming from solar, 4.2GW from wind and 1.30GW from hydropower. It expects to meet its 2020 target of 42% share of the mix for renewables.

SUNNY SIDE UP IN EGYPT

On the other side of North Africa, Egypt has also been breaking records. The Benban solar PV park in southeastern Aswan province was inaugurated in March 2018 and will generate up to around 1.8GW from more than 30 linked farms, with completion scheduled within the next two years. That would make the $2.8bn project one of the largest PV parks in the world, with a capacity rivalling the nearby Aswan dam hydro plant, one of the long-time mainstays of Egyptian power production with a 2.1GW capacity. Benban is being built by several contractors, with the early stages supported by financing from the European Bank for Reconstruction and Development, Dutch development bank FMO and the Green Climate Fund. According to IRENA, Egypt’s installed renewables capacity totals some 3.7GW, including 2.8GW of hydro, and a total of 900MW of solar and wind power. The agency suggested in October 2018 that Egypt had the resources to raise renewable energy to more than half of the energy mix by 2030 if it raised its investment targets for the sector to $6.5bn a year from the $2.5bn/y in its prevailing policy. Egypt has been targeting a 20% share of the mix for renewables by 2022 and 42% by 2035. ■

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FOCUS ON SUSTAINABLE ENERGY POLICIES INTENSIFIES A f rica may not b e res pons ib le f or the glob al climate emergency, b u t the continent’ s energy s ector needs to b e part of the s olu tion.

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lthough Africa cannot be blamed for the man-made climate change and global environmental damage that has taken place over the past two centuries, it is nevertheless experiencing some of the worst effects of it and there is a growing realisation that the continent has to play its part in the response. Sub-Saharan Africa’s carbon dioxide emissions have climbed steadily over recent decades as the continent’s population as grown, but they still only amounted to around 2% of the world total in 2014, according to data from the World Bank. On a per capita basis, they also remain modest, amounting to just 0.8 tons per head in 2014 compared to 16.5 tons in the US or 5.0 tons for the world as a whole. While calls remain strong for the developed world to take on the majority of the work and cost of fighting global warming – and to clean up a mess largely of its own making – the voices of those saying that African states must also be part of the solution are growing louder. “It is in our own interest to act to salvage the economic fortunes of the continent, and, more so, to step up our collective efforts to fight decisively climate change,” Ghana’s President Nana Akufo-Addo told the Africa Climate Week meeting in Accra in March 2019.

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“The recent Intergovernmental Panel on Climate Change report concludes that the global community has only 12 years to stop climate change and this requires us to deal with climate change more aggressively than we have in the past,” he said. It means that countries must do more to increase the use of renewable power and reduce the burning of fossil fuels in power stations – or in the case of the least-developed African nations, to ensure that the dirtiest fossil fuels do not become the go-to feedstocks as they ramp up their fledgling power sectors to back economic growth. The key role of international development finance institutions, funded by the world’s richer countries, in backing this effort is apparent in their support for renewable energy projects of varying sizes across the continent. ome of these efforts to scale up power generation using sustainable renewable energy sources are covered elsewhere in this publication – the increased access to power permitted by village or household-scale solar power and grid-scale renewables is helping to solve Africa’s electricity access problems. And that gives countries a better chance of meeting UN sustainable development goals by providing light by which children can read books or access the internet, or power to run agricultural machinery and healthcare centres.

Africans are also benefiting from the improved efficiency and cost of technology. or example, more efficient and cheaper solar panels can power highly efficient lights for much longer than would have been possible 10 years ago.

ACTIVE STATE INTERVENTION

Many African governments have bold commitments to implement their sustainable energy-sector policies. The efforts of outh Africa are perhaps the most important, given that the country’s coal addiction means it accounted for more than half of all sub-Saharan Africa’s carbon emissions in 2014. The drive by President Cyril Ramaphosa’s government to revitalise South Africa’s Renewable Energy Independent Power Producers programme promises to drag down the share of coal in the energy mix (see renewables article pox). Meanwhile, countries such as Senegal and Mozambique are looking to develop efficient gas-fired generation, along with renewables, to expand their power capacity, based in part on gas reserves currently being developed in their waters. Although gas is a fossil fuel and therefore not as clean as renewables, governments argue that it offers a relatively cheap way to scale up power generation more rapidly, with far fewer carbon emissions and


reduced levels of local pollution compared to coal- and oil-fired plants or small diesel generators. Nigeria is also trying to get to grips with another area of climate change concern, stepping up measures to reduce gas flaring from oil fields across the iger elta region by encouraging gas demand for power and other uses. The country is the world’s sixth-largest emitter of flared gas, just behind Algeria, but has already made progress in reducing flaring. igeria flared some 7.6bn cubic metres of gas in 2017, down from 9.3bn in 2013, according to the World Bank. While power sector emissions globally may be higher overall than those from flaring, eliminating it is still important as the methane emitted from gas flaring is estimated to be around four times more potent as a greenhouse gas than carbon dioxide. The Nigerian government has set a deadline of 2020 to eliminate all its gas flaring 10 years ahead of the World Bank s target to end flaring globally. Under the Nigerian Gas Flare Commercialisation Programme, incentives are provided to use the gas

for other purposes and fines handed out offenders. And the igerian enate passed a bill that toughens up fines and ensures that new developments meet government design requirements in April. liminating flaring by next year seems unlikely, but such policies reflect a growing realisation by African states for the need to develop sustainable energy sources.

INVESTORS SHY AWAY FROM COAL

It is not just governments that are applying pressure to make the switch to cleaner, sustainable energy. International development finance institutions, on which many African power projects depend for funding, have largely severed their ties with the most obviously polluting technologies. The last time the World Bank financed a coal project anywhere in the world was in 2010, with more than $3bn of support for the Medupi power station near Johannesburg. And it’s now harder to obtain funding through capital markets too, as stakeholders encourage firms to adopt

greener investment strategies. Most of South Africa’s big commercial banks have said they won’t support anything but the most efficient coal-fired power stations. Nedbank, First Rand and, reportedly, Standard Bank, have pulled out of financing the planned 557-MW Thabametsi and 306-MW Khanyisa coal-fired power stations in outh Africa. In April 2019, Standard Bank issued a statement laying out its position: “Standard Bank is committed to doing the right business the right way,” it said. “As such, Standard Bank supports the adoption of higher efficiency, lower-emission coal-fired power plants, and carbon capture and storage technologies (where possible), to reduce the environmental and social impact of coal-fired power generation. The company said its future financing decisions for new coal-powered stations would be governed by parameters based on the Organisation for conomic Co-operation and evelopment s C guidelines for assessing the financing of coal-fired power generation based on a country’s energy poverty, technology and size of plant.

Akosombo Hydroelectric Power Station on the Volta River supplies with energy almost whole Ghana and half of Togo, West Africa

‘ T he recent Intergovernmental P anel on C limate C hange report conclu des that the glob al commu nity has only 1 2 years to s top climate change and this req u ires u s to deal w ith climate change more aggres s ively than w e have in the pas t. ’ Africa Energy Yearbook

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THE BIOMASS CHALLENGE

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ust as important as driving the power sector towards sustainable energy use is the need to tackle energy inefficiency and the health-damaging pollution caused by the extensive use of biomass for home cooking in Africa. Cooking accounts for around 80% of residential energy use in Africa, excluding North Africa. And the number of people without access to energy-efficient cooking stoves continues to rise, with around 7 0m people across the continent cooking with solid biomass, according to the 2018 Africa ustainable evelopment Report published by the Economic Commission for Africa (ECA). “This number has grown by nearly 50% since 2000, as population growth has outpaced the number of people gaining access to clean cooking. Only around 25% of the African population has access to clean cooking solutions… the use of biomass is deeply rooted in rural areas, where around 90% of the population cooks with charcoal,” the report said.

Burning wood for cooking comes with health risks and is hugely inefficient. The economic downside of relying on traditional biomass in Africa is substantial because of the productive time lost – especially by women – through inefficient means of gathering fuel and cooking, the ECA noted. However, this cannot be resolved by small-scale renewable power in the poorest rural areas, even where it exists. While the concept of cooking using power generated from solar panels has been discussed for many years, it remains a challenge – albeit one that could be revolutionary if it can be mastered for mass consumption. Mini- and micro-grids can provide power on a sustained basis due to improved panels, rechargeable batteries and e uipment efficiency. But, for now at least, powering high-consumption household equipment such as electric stoves, heaters and freezers is generally not practical, given the limited generation and storage capacity of home solar and battery systems even if rural Africans could afford the technology. ■

SOLAR ELECTRIC COOKING

Solar cookers are a low-tech alternative to burning charcoal and other biomass for cooking, but they cannot easily replicate all the uses of biomass cooking. In the short-term, liquefied petroleum gas (LPG) is still regarded as the main alternative to biomass for cooking in many parts of Africa. However, there are hopes that further falls in costs could make cooking using electricity generated from solar power more practical and that increased scarcity of wood for charcoal cooking as it gets used up could yet persuade rural families to move away from traditional cooking methods. Research into the viability of solar electric cooking carried out for the UK government by consultant Simon Bachelor in 2015 suggested that, even with relatively conservative assumptions, the lifetime cost of a solar electric cooking system could be comparable to the two main alternative fuels – charcoal and LPG – by 2020. However, the report – Solar Electric Cooking in Africa in 2020: a synthesis of the possibilities – stressed that this does not mean that solar cooking would be affordable everywhere. “Context-specific policies, market conditions, service provisions and investment strategies will all affect the feasibility of the proposition in any given location,” it said. The report also raised question marks over whether the rechargeable batteries needed to support solar electric cooking could develop fast enough to be suitable for extreme African conditions. The long-term performance of the most common lithium-ion batteries has tended to suffer in areas with high temperatures, but batteries with new technology are being tested that may yet prove suitable.

T here is a need to tack le energy ine ciency and the health-damaging pollu tion cau s ed b y the ex tens ive u s e of b iomas s f or home cook ing in A f rica.

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I n te rv i e w

Jamie Shepherd

C E O , A ltaaq a G lob al E nergy S ervices

AFRICA’S ENERGY SECTOR: FIRING THE CONTINENT’S FUTURE

N ew technology and the ris e of renew ab les are changing A f rica’ s energy s ector, creating opportu nities f or companies to capitalis e on the continent’ s pow er gaps , w rites S hos hana K edem.

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geing infrastructure and power shortages have long been an obstacle to energy projects in Africa. But these challenges, along with Africa’s growing energy demands, are driving development in global renewable energy such as li uefied natural gas (LNG) and solar micro-grids, according to Jamie Shepherd, CEO of Altaaqa Global Energy Services, the Dubai-based provider of integrated energy solutions. “Energy is an exciting place to be at the moment,” he said. “It’s changing very rapidly from a technology point of view; the market in Africa is very opportunistic. “Compared to Europe or North America, there’s huge latent demand from unconnected people and there’s lots of very clever solutions you can come up with to deliver sustainable power projects across Africa. That’s exciting. ou get to do a lot of firsts in Africa, such as the first hybrid project, so I see the continent very much as a frontier.”

MICRO-GRID REVOLUTION

Dispersed populations, gaping infrastructure gaps, and insufficient grid scale and capacity, leave swathes of the continent without access to central power grids. This is driving demand for smaller-scale, decentralised off-grid

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solutions, such as solar micro-grids. These cheap, clean energy sources will play a growing role in solving future capacity shortages, powering rural pockets and driving intercontinental connectivity, said Shepherd. “Micro-grids are really what’s going to push connectivity of Africa going forward. With government resources for infrastructure projects limited, private companies are leading the charge in bringing micro-grids and the technology they need to function to rural parts of the continent. “Turning to micro-grids is the only way the large population of unconnected people throughout the continent can become connected because governments are facing challenges in terms of funds to spend on massive infrastructure projects like that,” said Shepherd. “What’s really interesting about that model is that not only are they driving electricity, they provide Wi-Fi and crop irrigation, even chicken hatchlings that they can brood using electric bulbs and sell at market, so it almost becomes a self-sustaining economy. “The idea is to increase the economic benefit. It s not just a micro-grid, it s a micro-economy, and that will be a real driver for the significant part of Africa that’s not connected.”

CONNECTING THE CONTINENT

Micro-grids will also play a key role in connecting main power grids on the

continent from Southern Africa’s Power Pool to those of West, Central and East Africa, he said. The scramble for intercontinental connectivity is driving investment opportunities in transmission and distribution networks, said Shepherd. “Interconnection of the main grid units in Africa and the ability to move electrons around the continent are the big areas for development at the moment, areas that are going to drive real change. “In terms of connectivity rising from 54%-56% to 80%, we’re going to have to see more distributed power at micro-grids, private industry coming in to build a network and then eventually the main network will catch up and become connected to it. “Where there is excess power in one area and a deficit in the other, they can’t transmit it like they do in Europe and North America. Where there is an abundant natural resource – such as gas in Mozambique or Tanzania – they can’t deliver the electrons to other parts of Africa because there isn’t the connectivity. So I think connectivity of the grids is going to be a big play.”

TECH RISING

Technology is also leading the way in transforming Africa’s energy sector, according to Shepherd, as its emerging, developing and frontier markets are able to leapfrog old technology to adopt the latest


innovations from the outset. “Africa skipped landlines in telecoms and went straight to mobiles. African power has also skipped to much higher efficiency engines and turbine,” he explains. Many of these advances are helping to solve the massive latent demand for energy on the continent, were a significant percentage of the population live without access to a grid. For the energy sector, utilities are a “real challenge”, not only in terms of capacity, but also because they can often be a bottleneck when it comes to fast-tracking energy projects on the continent, said Shepherd. In many countries, older power plants are coming to the end of their life and there’s still a very high dependency on hydropower, which may at times be unreliable is unreliable given the changes in the environment, especially in East Africa where every two to three years the rains don’t hit, said Shepherd. Limited public resources to overhaul ageing power plants and energy infrastructure has led to an uptick in private companies being tapped to

privatise public utilities, as seen in Nigeria where Transcorp Power Consortium won a $293m bid to privatise Nigeria’s Afam gas and power plant. The move will add 1.4 W to fire the electricity-starved nation, where power generation peaked just below 4.5GW in February, with a maximum capacity of 7.65GW. South Africa, with a population a third of Nigeria’s, has a capacity of more than 47GW. “I can see that there’ll be a lot more public-private partnerships coming on and governments will look to private investors to come and run a grid,” said Shepherd.

NEW WAVE OF LNG

Africa is also on the cusp of a LNG boom, with a surge in companies trying to use LNG-to-power to solve sub-Saharan Africa’s electricity woes. Making it work is proving to be a hard nut to crack though, said Shepherd. The ability to import LNG into South Africa or Mozambique and either inject it into the network or use it to produce low-carbon, cheaper electricity will be

a “game-changer”, especially in solving the government’s widening transmission losses, he said. “No one’s cracked it [importing LNG] yet. There’s a few companies trying and they are close. If someone could bring LNG into the Eastern Cape of South Africa that would make a phenomenal difference in terms of transmission losses that Eskom has, because all its power generation is in the north and all its load sensors are in the southern and eastern parts of the country, and there’s 2,000 miles between them.” Solar technology on the grid side is becoming increasingly widespread in meeting the burgeoning consumer and technological demands of the continent. But the industry is held back by limited battery storage technology. “There’s a limit on how far you can go with solar until battery tech catches up and you can get mass battery storage,” said Shepherd. “Eskom has 6GW of wind and of solar, but on Saturday and Sunday it dumps it on the grid for free because no one wants it. It’s expensive power, but on Monday morning they’d love to have that power stored. “Battery technology is going to be a big driver to see that continue. Solar and wind will always be part of the energy mix, of course, but you still need your gas turbines and your coal-fired power stations to run the baseload in these equations.” In the coming years, energy companies will be holding their breath for breakthrough advances in battery technology, he said. “Everybody’s watching what will happen and what’s the right technology. A lot of the battery tech will be driven by what car manufacturers do. “What I think will happen is a lot of second-life batteries will come out of the automotive industry from the likes of BMW and Tesla and will go into the power generation industry as a second life solution as no one has yet figured out what to do with them.” ■ Africa Energy Yearbook

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FINANCING POWER PROJECTS IN AFRICA: FROM PIPE DREAM TO PROJECT BANKABILITY

M any energy s chemes acros s A f rica w ither b ecau s e of the absence of e ective financing structures. owever, both development finance institutions and commercial lenders are committed to finding solutions that could transform the continent s prospects. ames avin reports.

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he race is on to find new ways of catalysing finance for projects that provide electricity to all Africans. As things stand, about half of the continent s population do not have access to a reliable electricity supply. This is because too many viable energy projects fail to make the transition from pipe dream to bankability, leaving the continent lagging behind its energy access targets. The problem is not so much a lack of finance the missing key ingredient tends to be the regulatory frameworks that banks and other financial institutions require. As Mahama Kappiah, xecutive irector of the conomic Community of West African States’ Centre for Renewable nergy and nergy fficiency has noted, poor project management remains a major barrier to private investment in Africa. The money is not the problem, he told an energy access forum held

by the African evelopment Bank Af B and a number of other agencies in C te d Ivoire in March. The way that projects in the energy sector are prepared for financing is the problem. Institutional and regulatory issues in the energy sector need to be addressed so that Africa can attract more private investment, he said. e added that focusing on these issues could encourage a wider range of financiers to back energy projects.

MULTILATERALS PLAY KEY ROLE

Large multilateral institutions are primed to play a leading role in transforming the financial outlook for Africa s energy sector. The Af B has said that to achieve universal access by 2025, innovative mechanisms are re uired to mobilise an additional $30bn to $55bn annually in both domestic and international capital. This is a significant increase on the $22.5bn invested in the sector in 2015.


money where its mouth is. ince 2015, the multilateral lender has increased the renewable power share of its energy portfolio to 95 from 59 and the bank said it will continue to drive capital towards green energy projects. ast year, it closed funding on the eleen Rural lectrification roject in Burkina aso, the first stage in a planned $10bn investment to build the largest solar energy capture one in the world. The AfDB is looking to link all stock exchanges, pension and sovereign wealth funds, central banks and other financial institutions in Africa to mobilise and incentivise the shift towards a low-carbon, climate-resilient investment. The bank will launch a new facility reen Baseload to provide loans that support reliable and affordable renewable energy. To achieve this, the AfDB said that all stakeholders must take collective action to create conditions conducive to financial flows, develop bankable projects, reform utilities and enhance African countries’ absorptive capacities. The Af B said it will ramp up its investments to provide finance and guarantees, co-financing and syndication. Between 2016 and 2020, it has pledged to invest approximately $12bn and leverage about $50bn in public and private financing for investments in the energy sector. In addition, it will triple its climate finance to almost $5bn per year and leverage about $20bn in private- and public-sector investments in climate mitigation and adaptation by 2020. The bank is committed to developing innovative financing structures in tandem with the emergence of new energy sources. Renewable energy is the key to driving economic development in Africa and combating climate change, and the bank has put its

CAPITAL MARKET FOCUS

Capital market instruments are also being rolled out, including one that is denominated in ew ealand dollars. In April, the AfDB launched an 150m $100m 10-year ight p and ower Africa benchmark bond. The deal was driven by a reverseen uiry anchor order out of Asia. The Af B also administers a multi-donor trust fund the ustainable nergy und for Africa A that has a $60m commitment from the anish and governments to support small- and medium-scale renewable energy and energy efficiency projects in Africa. There are other collaborative ventures in the pipeline designed to secure financing for renewable energy schemes. In ebruary, the Board of the reen Climate und approved a €100m loan through the West-African evelopment Bank B A to finance renewable energy development

in six countries from the West African conomic and Monetary nion. The project driven by the reen Climate und and executed by B A is a climate finance facility to scale up solar energy investments in rancophone West Africa s east eveloped Countries Cs , including Benin, Burkina aso, uinea-Bissau, Mali, iger and Togo. Its aim is to create a market for investments in solar technology, and to incentivise and leverage private-sector players to scale up investment in these technologies. This will involve the creation of commercial and sustainable financing for solar investments through senior debt and standby loans, developing the technical capacity of private- and public-sector players and raise awareness about the benefits of solar technologies. In outh Africa, meanwhile, the ew evelopment Bank is to provide a project loan of $4 0m to the state utility skom for an environmental protection project for the Medupi Thermal ower lant, which is in line with the bank s focus on supporting clean energy projects. Innovative financing strategies have come to the fore in other energy schemes backed by African multilaterals. This year, the multilateral finance institution Africa inance Corporation A C announced the financial close of a bridge loan facility contracted by Ivoire ydro nergy I for the construction of the 44MW ingrobo-Ahouaty hydroelectric power project A and associated infrastructure in Côte d’Ivoire. The project aims to create electrification opportunities in the country. C te d Ivoire generates 2.2 W of electricity, making it one of the leading generators of power in West Africa, with approximately 70 of its total coming from thermal generation Africa nergy earbook

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‘ I s trongly b elieve that cou ntries s u ch as Z amb ia are b ecoming more open- minded w hen it comes to e ible financing solutions.

FINANCING POWER PROJECTS IN AFRICA: FROM PIPE DREAM TO PROJECT BANKABILITY and the remainder from renewables, mainly hydroelectric. The SAHP will increase the country’s overall power capacity, as well as reduce generation expense due to the low operating cost of hydroelectric power. The AFC has committed $197m to the project, comprising a majority equity investment of $27.64m and a bridge loan facility of $169.44m. The first disbursement of the bridge loan facility took place in December 2018.

INNOVATION TO THE FORE

The innovation in financing comes in the shape of a bridge loan that shortens the project cycle and allows the construction phase to begin. SAHP’s financing structure was designed to shorten the development phase for projects such as this from about 10 years to less than five. The aim of this approach is to accelerate the process of developing power projects in Africa, enabling more of them to come on stream. The AFC arranged the bridge loan facility to kick-start construction while it was waiting for long-term lenders to secure their final credit approvals. The AfDB is arranging the long-term debt financing, most of which already have secured approvals. Oliver Andrews, Executive Director and Chief Investment fficer at A C, said the company’s goal is to expedite the continent’s growth. “Seeing as SAHP would not have been able to continue with development and construction because it was awaiting the finalisation of its longterm lenders’ credit approval processes, we decided it was an ideal opening

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for AFC to get further involved with the project and continue with our participation in Africa’s independent power producer market,” he said. Another boost to energy bankability came with the announcement of a partnership between the International Finance Corporation (IFC) – part of the World Bank Group – and Gaia Energy, a Moroccan-based renewable energy developer. They are collaborating on a joint platform for the growth of wind energy across Africa. The funding has been provided to develop 22 pipelines across nine countries in North, West and East Africa. The pipeline, which was developed by Gaia, will then be extended to other countries. Two IFC funds will be used to implement and support the project: InfraVentures, a $150m global infrastructure development fund, and the €114m Finland-IFC Blended Finance for Climate Program.

COMMERCIAL LENDERS

If multilateral players are becoming more innovative, how are commercial banks approaching energy projects? There are a number of things that commercial lenders tend to look for when it comes to bankable schemes in Africa, say experts. “There is a strong interest in project sponsors’ track records, as well as the contractors,” said Rentia van Tonder, Head of Power at South Africa’s Standard Bank, which is active in 20 countries across African. “That is becoming more important in an environment where we may see the sovereign under pressure and unable to provide support.” This underscores the sense that payment risk remains a formidable challenge for many power projects. ne of the key concerns is finding projects where lenders are comforta-

ble with the offtaker, whether it be a corporate or a utility. “It is taking time for us to get our heads around this,” said van Tonder. “Many governments are trying to keep their utilities financially afloat, and that obviously has an impact on offtaker risk and risk mitigation. Inevitably, where there are concerns around the balance sheet and payment risk, the answer is to create structures where the utility s cash flows can be ring-fenced. “Finance considerations are not just for energy generation projects,” said van Tonder. “Many utilities are looking at system optimisation and are trying to find ways of getting more out of their current generation assets by managing the load better. While such priorities have not been a focus historically in Africa, there is now an opportunity to generate more megawatts by improving the value proposition of the entire system.” You can structure your payment risk by involving direct payments or ring-fenced cash flows from those offtakers, said van Tonder. “It’s not a unique solution and is not necessarily ideal in all circumstances, but we have already seen utilities participate in these types of structures successfully.” Given the range of funding solutions emerging from both commercial lenders and DFIs, Africa’s chances of securing finance for its energy projects looks to be improving. While challenges remain, the increase in the number of deals involving energy projects across the continent and the innovative financial techniques being employed to get projects both large and small off the ground – suggests that solutions to some of Africa’s longstanding energy generation problems are finally being found. ■


I n te rv i e w

Hussain Al Nowais

C hairman, A M E A P ow er

NO SLOWING UP, IT’S FULL SPEED AHEAD S low ing dow n energy produ ction w ill endanger A f rica’ s development, s ays H u s s ain A l N ow ais .

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e spoke to Hussain Al Nowais in L o n d o n , where he is transiting following visits to Senegal and Togo. Al Nowais is the trusted, go-to person in the United Arab Emirates when it comes to African affairs. His family own the Rotana Group, one of the country’s leading hospitality groups, but today he spends the majority of his time on his energy division, AMEA Power. With activities in both East and West Africa and more projects in the pipeline, Al Nowais explains how the African energy landscape compares with other markets, the key determinants behind AMEA Power’s investments and why those calling for Africa to slow down energy production are endangering its development. You’ve visited Senegal and T ogo, and have a presence in other A frican markets. H ow do you determine the investments you’re going to make? In assessing the African energy market we ve identified countries where there is a huge shortage of energy, and therefore a need. They may have a shortage in terms of resources or in terms of their ability to fund [these projects], while some countries lack the regulatory framework for an independent power pro-

First, we look at stability and security. We look at leadership. We look at the regulatory framework. We look at the resources available: mining, agriculture and the population. We look at a country’s history – does it respect its obligations? Has it been defaulting on its dues? We look at what experience a country has with BOTs and IPPs. All these kinds of things give us an indication. If we feel the potential is there but the risk is higher than the potential, which can happen in some cases, we try to insure that risk by going to the likes of the Multilateral Investment Guarantee Agency.

‘ W e have an ex cellent relations hip w ith D F Is . T he D F Is have the res ou rces to f u nd energy projects . ’ ducer (IPP) or build-operate-transfer (BOT) kind of investment. We like to work with development finance institutions (DFIs), which are very good when it comes to governance, structuring projects and ensuring everything is done in the right way. I believe in the potential of Africa. My government has been active in meeting many of the leaders on the continent and we have the allocated funds to support them and their various initiatives. Is there a checklist that you take before entering a market?

You said you have privileged access to capital. What do you mean by that? I didn’t say privileged access. We have our own capital, but we have an excellent relationship with DFIs. The DFIs have the resources to fund energy projects. And if the developer is serious, credible and professional, then it ticks all the boxes for them. Someone from G E who once operated in the M iddle E astsaid that in K uwait, B ahrain and A bu D habi, the time it took to get to closure would be around eight to 1 2 months because everything was standardised. T he regulatory environment was there, while in A frica it can take e, i or e en ear Africa AfricaEnergy EnergyYearbook Yearbook 2019 2019

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Hussain Al Nowais

C hairman, A M E A Power P ow er

NO SLOWING UP, FULL SPEED AHEAD He’s absolutely right and that is the biggest challenge we face today because there is a real cost to time. The longer you spend on developing a project, the more costs you incur on people, travel and advisors. The challenge we see today is that African governments are looking at lower tariffs, expecting the same rates as the Middle East and other countries. My argument is that if you can deliver on the regulatory side and we can develop projects as fast as we do in the Middle ast, then fine, you are entitled to that tariff. owever, if it takes five to six years and the costs increase, you can t expect that tariff. Secondly, funding. We are present in the Middle East and in Africa. Let me use Jordan, where we have just closed a solar project, as an example. It took two years and we were able to raise up to 80% [of the cost] through leverage [debt]. It’s a credible country with a proven track record of respecting its obligations, paying on time and moving fast. By that same standard, in an African country it has taken six years to develop one project and we have spent huge amounts on development costs, and on legal, financial and technical advisors. ou cannot expect the same tariffs when the costs and risks are greater. We need an internal rate of return to reflect this. Where is the bottleneck? Is it on the regulatory side? ou might find a lack of experience in dealing with such business models and a reluctance to make decisions because of that lack of experience, in some cases the regulatory challenges. Having said that, I am a strong believer in the potential of this continent. It’s a huge, growing market, and the key to its further growth is to develop the infrastructure and energy [markets] because without energy

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or infrastructure you cannot develop your economy. Africa has the fundamentals or potential in terms of population and resources, but without infrastructure and a regulatory framework, you cannot grow. Is there a copy and paste model you can apply to this particular sector? I don’t believe in copy and paste models. Each country has its own characteristics. Having visited more than 25 African countries and spent time with many leaders, I feel excited that some of these countries have really got their act together. Some of these leaders have a clear vision and are determined to make a change. Some have been able to bring in talented African expertise. Countries with this kind of leadership and talent will make an impact. In terms of building and operating, is that more complicated than elsewhere, or more costly than elsewhere? The skill sets available are moderate. It’s important to have these to encourage greater investment in building capacity. As much as we prefer to hire locals, some are not sufficiently committed or trained. In one country I visited recently I was shocked to learn that unemployment ran at more than 35%. I am a strong believer in human capital and building capacity. I believe in training these individuals and creating jobs, but it’s equally important that they commit their time and willingness to learn, and that’s where we support them. In terms of your business model you’re obviously looking for an offtaker, an offtaker that will be generally be in government… The offtaker has to be a utility company that is a government company, because no one will invest in this sector if there is no credible offtaker. There are people developing another

model where the offtaker is one large multinational or large company in the mining business, the cement business or the oil business. That could work if the offtaker has a credible balance sheet. Morocco has adopted a new law that allows a developer like us to talk to a cement company or an investor in a holding company. The advantage of this model is that you can move faster. T he utilities have been criticised because their businesses are unviable. What’s your view? There are always challenges with them collecting their money to pay their obligations, and in many cases they subsidise the price of electricity. The solution is to charge the right price to those who can find you a formula to support them through a mechanism that has been tried in other countries. Then try to restructure the balance sheet of these utilities to be more efficient, to be more reliable so they become credible for investors. H ow does a company like yours mitigate against foreign currency risk, which has been problematic over the past few years? We always try to insist on payment in either US dollars or euros. In some West African countries they have the C A, which is pegged to the euro. ne way to mitigate the risk is that some countries pay you in local currency and the exchange rate is set to the date of the agreement. If I don’t hedge myself against that risk I’ll go bust, and other companies have. Now, you could say out of the $1 tariff or $1 invoice I will pay 90 in dollars and 10% in local currency, but not more. A re there enough bankable projects out there? P eople say there is plenty of capital, but a lack of bankable projects.


So that’s a big issue? I think some of the focus when it comes to [overseas development assistance] should be [on distribution and transmission], yes. In some countries the Chinese are helping with the grid, improving and extending it. Some countries are looking at mini-grids and some are looking at home solar systems, but home solar systems have a limited impact. Mini-grids offer a solution but not enough, and therefore the solution is to invest and extend power and increase the coverage, so this is definitely an area where the world has to help. You see that as a concessional loan project as opposed to commercial projects? For these grid connections, yes. The IPP of the generation can be done commercially, which has been done, but the grid cannot be done commercially.

‘ Y ou cannot ex pect the s ame tari s when the costs and risks are greater. e need an internal rate of return to relect this. I cannot claim to be an expert on Africa, but in the past three or four years I’ve been spending time there the market is definitely there and there is a great need for power. Some DFIs say this continent is overpowered; I fundamentally disagree with that. I was recently in Uganda and Kenya and they say Uganda is now maybe reaching its power capacity [threshold]. I asked what the total power capacity in Uganda was told it’s less than 1,000MW. For a population of more than 40m! I come from a country of less than 10m and we have 70,000MW. South Africa has a population of 45m and it

has more than 30,000MW. So what are they talking about? If they are looking for the basics needed for a house, as in one bulb here and a mobile charger here, maybe. But if you have serious plans and you want to industrialise… Who says that some countries have reached their threshold, or that they’re overpowered? Some of the banks [DFIs]. I have heard them say: “This country, I believe, is saturated and I cannot give you loans for it.” What are the grounds for saying it is saturated? Is it due to the lack of distribution capacity? That’s one big thing – they are unable to reach out to the countries because of the cost of distribution and transmission.

You invest in both conventional sources of energy and renewables. What’s your view on the optimal energy mix and the future energy landscape? We are focused on solar, wind and gas. I believe the gas solution, in view of the prices and availability, is a better solution. It provides cleaner and stable [sources of energy]. Solar is clean, wind is clean, but you need stability of the grid; you need 24-hour power. olar gives you five or six hours wind gives you six or seven. That’s not enough. You need stability of the grid and that stability can come from fossil fuel for now. HFO, coal or diesel is no longer acceptable, or bankable for that matter. The only solution is gas. The continent is blessed with many sources of energy. It takes time and determination to see these projects through, but they will happen. ■

Africa Energy Yearbook

2019

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F i n an c i n g sc h e m

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PRIVATE PROGRESS inanciers are finding new ways of attracting private investors to frican power pro ects. ames avin takes the pulse.

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ollowing fitful progress in recent years, Africa is now seeing power projects that have private-sector funding at the heart of their financial model get off the starting blocks. There are a number bankable schemes making progress. ne is hana s Kpone independent power producer I Cenpower roject, a 350MW combined-cycle gas plant that was the first greenfield, projectfinanced I of its kind in the country. It reached financial close in ecember 2014, although it struggled to attract private-sector investors early in its gestation. InfraCo Africa, a rivate Infrastructure evelopment roup I

company, invested $11m, alongside $ 05,000 from I s TA , attracting support from the African inance Corporation A C to jointly develop the project. The project also benefited from $22m from the merging Africa Infrastructure und AI , the I company that provides big ticket, long-term debt of between $10m and $50m Cenpower will add around 13 to hana s installed power generation capacity. By delivering power to hana s national grid, the Kpone I plant will meet the power needs of more than m people. or I C hilippe Valahu, the Cenpower financing goes to the heart of its strategy to find investable energy projects in Africa. Africa Energy Yearbook

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PRIVATE PROGRESS This is likely to achieve C shortly, and we spent over 10 years developing it, said Valahu, whose company s remit is to close the gaps that have prevented infrastructure schemes from moving forward. And yet, while this landmark scheme is an example of the successful fusion of private- and public-sector dynamism, financiers and project sponsors should be expanding their hori ons, said Valahu. The uestion I have today is whether that is what we should be doing supporting that kind of I , or should we instead be doing more to develop multiple off-grid mini-grids said Valahu. There will inevitably be a role for I s, but for many of the 500m Africans who don t have access to electricity, I s are not necessarily going to be the answer.

ATTRACTING PRIVATE-SECTOR INVESTORS

I is making a concerted effort to do more in the off-grid mini-grid market. And this goes to the heart of how to attract private-sector investors to the continent s energy sector. In airobi, where I has offices, a large community of developers are looking at the electricity market. But, said Valahu, they often lack patient capital the final amount of capital needed to take them over the line. In some cases, we are talking about just $3m to $5m, said Valahu. owever, there are not many agencies designed to do that. That will be our role through InfraCo to put resources into the mini-grid sector to see where these mini-grids can be bundled so that you achieve a si e that will attract investors not necessarily just power-sector investors, but more institutional investors, if we can. InfraCo Africa is primed to play a

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Philippe Valahu, CEO of PIDG

or us, it is about de-risking and leading the way, but again, achieving some sort of scale while also coming up with innovative solutions. key role in piloting projects that banks are not going to finance on their own projects that may be too small for the development institutions but which can be done uickly and then scaled up by private players. There are not many entities that can do that and deploy that sort of cash to pilot a project, acknowledges Valahu. It s binary. If it doesn t work you could be facing a $3m loss. But because of the nature of our funding we are able to, and you will see us doing more of this across the continent. By demonstrating to the market that it is safe to invest in off-grid schemes and that a decent return is possible particularly with technology prices falling groups such as I are primed to play a catalytic role in getting projects funded. or us, it is about de-risking and leading the way, but again, achieving some sort of scale while also coming up with innovative solutions, said Valahu. Innovative solutions include a project in Kenya, where the I worked with the Ministry of nergy to devel-

op a bankable power purchase agreement A denominated in local currency for small renewable energy projects under 10MW. n the back of that, InfraCo Africa signed joint development agreements to develop two solar power projects in orth Kenya, one of which will have a A denominated in local currency a first for the country. The advantage of this is that if a project is sourcing locally, there is no reason not to have a A denominated in local currency. This could have a galvanising impact across the sector. If we allow others to understand that they could be doing more of the same thing then we can really begin to shift the needle, said Valahu. Working with potential partners such as Africa reenCo, which aims to increase private-sector investment in energy generation in sub- aharan Africa by mitigating the credit risks associated with the current lack of creditworthy offtakers, is another exemplar of the innovation under way in African infrastructure. According to Africa reenCo, the


weak financial position of utilities and limited choice of an alternative buyer in case of utility default deters private capital. An intermediary aggregator between buyers and sellers can help attract sustainable investments in the power sector on the strength of a multi-buyer model. What they are trying to be is a creditworthy intermediary offtaker and power-trading company in ambia, essentially removing the offtaker risk of the utility by assuming it themselves through having a strong balance sheet, said Valahu. They then pool that power internally, where they have access through the power pool in outhern Africa across borders. This underscores that new thinking and new initiatives make a difference. oing forward, African energy schemes will want to make greater use of institutional forms of funding.

LOCAL CURRENCY GUARANTEES

ne of I s six companies is uarantCo, a credit solution entity that includes local currency guarantees to banks and bond investors to develop local capital markets. Two years ago it set up an entity in igeria called InfraCredit igeria, which is designed to provide credit enhancement on aira-denominated issuance in igeria for infrastructure projects. This is a small project, but again in the infrastructure space it attracted for the first time ever into the infrastructure asset class 13 igerian pensions funds and three insurance companies, said Valahu. That was made possible because we set up InfraCredit igeria, which had a proper rating. ually, we provided training and capacity building to the pension funds and insurance companies that had never underwritten an infrastructure asset before, and were doing it only in igerian treasuries. Valahu points out that it was working outside of the InfraCredit model

on domestic bond issuance to infrastructure projects, such as in hana. We ve provided credit enhancement for an entity s 10-year corporate bond in local currency in hana a first in the country. said Valahu. We also achieved a dual listing of some of the bonds on the ondon tock xchange following a partnership we entered into with it. Interestingly enough, investors have a huge appetite for that kind of asset class on the . The aim is to replicate this and encourage more domestic African issuers to tap into markets such as ondon s. igeria is a sufficiently large market and, like Kenya and ganda, has a deep pool of pension funds and insurance companies. But that won t be the case in every African country, said Valahu. But while pension funds and insurance companies are ready to invest in Africa s infrastructure, uestions remain as to whether there are sufficient projects to attract them. We keep talking about a lack of bankable projects, but my concern is what we are doing collectively to ensure there is a greater pool of bankable propositions, said Valahu. In this respect, the African evelopment Bank s Africa50 initiative, in association with a number of regional governments, is a positive step. They have clearly stepped up their game, said Valahu. And with InfraCo Africa and the likes of Berkeley nergy in the private sector, there are now a handful of people out there that have the knowledge and deep pockets to develop infrastructure projects. ther future energy schemes being looked at by I include a geothermal project in thiopia. or me, the challenge is about deploying money more intelligently to develop these projects, said Valahu. I don t think you will have a problem attracting funding once you have the bankable transactions. ■

IPPS MAKE INROADS Public-private partnerships (PPPs) are now firmly on regional financiers’ agendas. Independent power projects (IPPs) such as Ghana’s Kpone facility have established that private investors will back African schemes if the structures and framework are right. There are other IPPs making headway elsewhere on the continent. South Africa’s Standard Bank closed the financing on a 37MW IPP for Namibia’s NamPower in 2018, in what was the largest IPP project in the country to date, and the first large-scale renewable project to reach financial close in the country. As one of the largest solar photovoltaic plants in Africa outside South Africa, the project is expected to increase Namibia’s generation capacity by 7%, producing 120,000MW/h per annum for more than 25 years. It is an example of the kind of funding innovation that Standard Bank’s Head of Power, Rentia van Tonder, is keen to see more of. Standard Bank effectively secured a phased risk transfer guarantee from Proparco, with a deal structure that allowed it to extend the tenor of the funding from eight to 15 years. Since the project didn’t benefit from a government guarantee, there was no political risk protection in the power purchase agreement (PPA) between NamPower and Alten Hardap, the IPP sponsor developing the plant. In response, Standard Bank partnered with Proparco to build a hybrid guarantee structure that allowed the development finance institution to extend a ZAR-based guarantee to Standard Bank, aligned with its risk appetite. Standard Bank’s strong in-country balance sheet and presence enabled Proparco to take on the credit risk in local currency, effectively reducing the bank’s own exposure from 15 to the first eight years of the project. This removed the additional cost of political risk insurance since the guarantee from Proparco extended the tenor to the client by an additional seven years. What was key to the success of the transaction was NamPower’s readiness to provide the level of PPP that private players are comfortable with, said van Tonder. “In general, private players prefer partnerships within a clear framework, depending on the private player and level of participation they are comfortable with. At this stage, we usually see a 20-30% participation depending on the government’s appetite, but that still gives you a level of private-sector support to be able to influence decisions.”

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MAKING THE CONNECTION

Progress is finally being made on frican transmission infrastructure. eil ord charts the moves under way to boost capacity.

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ower supply issues are often the result of inadequate transmission capacity in many African markets, rather than limited generation stock. Part of the problem is that newly completed power plants generally provide better photo opportunities for politicians, commercial investors and donors than the downstream infrastructure that is vital to power-sector success. However, after decades of underinvestment, progress is being made on both domestic grids and cross-border projects. Africa is advancing interconnections, which means that long-held ambitions for a wired continent are no longer just pipe dreams. The Transmission Company of Nigeria (TCN) has announced a number of substantial over the past year as it seeks to match grid capacity to generation capacity. In April this year, it announced plans to build five

new transmission substations around Abuja at a cost of $170m, following what the company called a transparent competitive tender. TCN Managing Director Usman Mohammed said the scheme was designed to solve the transmission problem in Abuja within the next 20 years. “Abuja has only two 330kV substations and we are putting in an additional two it has five 132kV substations, we are adding three,” he said. Funding is making its way into the continent, underlining the growing appetite from multilaterals for interconnection schemes. The European Investment Bank is financing a €40m smart grid technology project in Côte d’Ivoire to support electricity exports to neighbouring states. The project, which is scheduled for completion next year, is being developed by a consortium of Machinery Engineering Corporation of China, wiss firm ABB roup and rid olutions.

e are investing in digital CROSS-BORDER SALES The Ivorian power sector has gentechnology because we want a smart erated substantial revenue in recent nework for the optimum management years through cross-border sales to Benin, Burkina aso, hana, Mali of electricity e ports to neighbouring and Togo, although exports fell 26% countries and because of the constant in 2017 to 1.225 W/h. It doesn t stop there. The government hopes to add growth of local demand. iberia, uinea and ierra eone to 8 8

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its export markets. Digital technology provides more accurate information on domestic usage, allowing as much power as possible to be exported beyond its borders. As Amidou Traore, Director of power sector management agency CI-Energies, told journalists: “We are investing in digital technology because we want a smart network for the optimum management of electricity exports to neighbouring countries and because of the constant growth of local demand. There is a growing West African market for electricity. Côte d’Ivoire wants to have a major part in it.” In April this year, firm announced that it had signed a contract to upgrade three 225kV substations in Côte d’Ivoire to improve supplies in the north, the west and the centre of the country. According to Bil rard Tano , ecretary- eneral of CI- nergies, the project will improve the power capacities of Ferke, Man and Taabo substations to help mitigate total energy losses and provide the reliability needed. Transmission losses in Côte d’Ivoire are currently running at about 20%. also agreed to undertake grid improvements in Benin for Société Béninoise d’Energie Electrique, with the aim of reducing grid losses and


making the grid more efficient, including by accurately identifying faults. It will design and build an advanced distribution management system, upgrade the national distribution control centre in Cotonou and rehabilitate substations. A spokesperson for the project said that it was aligned with the government s ambition to efficiently manage the generation from power plants, micro-grids and other grid infrastructure with the aim of improving the uality, efficiency and availability of power to customers. The system will also help to manage the security and maintain control of the grid. Benin currently imports 85% of the electricity it consumes. Makhtar Diop, Vice President for Africa at the World Bank, described the creation of a robust power-trading system in West Africa as an historic opportunity for the region to significantly cut the average cost of power generation and improve access to cleaner and more reliable energy. He said the World Bank shared West Africa’s vision of a modern energy sector capable of meeting the needs of the region’s growing population

and economies, and was committed to supporting its clients in realising the promise of a regional market. About 4,000km of transmission lines are due for completion in West Africa by 2023, but regional power markets don’t just require strong infrastructure, they also need regulatory cooperation and confidence among utilities that bills will be paid. This type of relationships takes time and patience to build, as well as the support of governments.

PRIORITIES FOR ADDIS

Ethiopia’s hydro boom is driving transmission development, both within the country and between it and neighbouring states. The government announced that 500km of 200kV line will be laid this year in the centre and south of the country by Sichuan Electric Power Transmission and Transformation Construction, and Jiangsu Etern Company. The project is being

p a r t l y funded by the World Bank. The interconnectors between Ethiopia, Sudan and Djibouti are already operational. State-owned Ethiopian Electric Power Corporation earned $10.9m and $17.5m in power exports to the two countries respectively in the first three quarters of 2018. Even more revenue is likely to be generated by the construction of the 500Kv HVDC transmission line being built to carry Ethiopian hydroelectricity to Kenya, with 433km of the project in thiopia and another 611km on Kenyan soil. Funding for the project, which is scheduled for completion this year, is being provided by the two governments, the World Bank and the African Development Bank. Africa Energy Yearbook

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MAKING THE CONNECTION These projects should help to offset at least a small part of the cost of developing the 6 W rand thiopian Renaissance am R , which is the third-biggest power project currently under construction anywhere in the world. This project, along with other new hydro schemes, including the 254MW enale awa III scheme, which is due for completion imminently, could turn Ethiopia into a power supplier for a huge swathe of East Africa, as well as provide electricity for the country’s planned industrial and manufacturing boom. Addis Ababa hopes that the first two 750MW turbines at the R will come on stream by late next year.

THE SAPP

New cross-border transmission interconnectors look set to strengthen power trading within the Southern African Power Pool (SAPP) over the next few years. The SAPP, which was founded in 1995, is the most successful power pool on the continent, but even here integration has been far from complete as three continental members of the Southern African Development Community (SADC) are still not connected. However, the SAPP secretariat announced in April that Angola, Malawi and Tanzania would be connected by 2021. Angola’s participation will be welcome because of the number of large hydro projects it has under development, while the inclusion of Tanzania could be even more significant because the Tanzania-Zambia interconnector will allow trade in electricity between the SAPP and the East African Power Pool (EAPP). After sev-

o country should be isolated from trading electricity with other PP member states, either through bilateral or PP markets. 90

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eral false starts over the past decade, work has begun on developing the Kenya-Tanzania and Zambia-Tanzania interconnectors. Angola will be connected to Namibia, while funding for the Tanzania-Zambia and Malawi-Mozambique lines is already in place; the governments involved in the latter hope to appoint contractors before year end There are no plans to connect the four Indian Ocean SADC member states with the pool because of the cost involved; although it is possible that a subsea connector to Madagascar could be economically viable sometime in the future. SAPP Co-ordination Centre Manager Steven Dihwa said: “We have so far established a co-ordination set-up between our pool and the East African pool, and we are meeting quarterly to plan what it will be like when the two pools finally start sharing electricity. No country should be isolated from trading electricity with other SAPP member states, either through bilateral or SAPP markets. We are doing the best we can to make sure all of our 12 countries get to enjoy trade and share power. In the case of Angola, just like the other two countries, a lot has been done in terms of the paperwork.” The SAPP has enormous potential because of the number of generation technologies present in the region, including outh Africa s fleet of coalfired plants and the emocratic Republic of Congo’s vast hydro potential. Coal accounts for at least 60% of the A generation mix, but that figure is likely to fall as new gas-fired capacity and large hydro schemes are developed. Trade on the SAPP, which is divided between long-term contracts and spot trades, was worth $106m in 2018, a big increase on the $76m traded in the previous year. While huge projects have been proposed in the past to promote power trade across the Mediterranean Sea, it seems more likely that the trade will evolve through the development of individual interconnectors and contracts rather than via the imposition of a vast, overarching vision from above.

SMART GRIDS

rid improvements are not just a matter of capacity but also of innovation, as smart technology – including grid automation and advanced metering – can help make the most of transmission capacity. This is becoming increasingly important as intermittent generating capacity in the form of solar photovoltaic and wind power becomes more widespread. In addition, predictive maintenance, bi-directional data transmission and wide area monitoring can help to increase reliability and reduce outages. Lazarus Angbazo, President and C of Renewable nergy s rid olutions, has identified the need to move beyond simply maintaining and repairing ageing infrastructure. “To truly advance the power sector, a holistic approach needs to be adopted; one that ensures sustainability, reliability and longevity of power supply,” he said in a statement. s Advanced nergy Management System is now used by most utilities in Southern Africa to operate their networks to strengthen grid control. In May last year, the firm signed a contract with the Botswana Power Corporation (BPC) to create a single platform for grid control centres in aborone and rancistown, including the design, supply, installation, testing and commissioning of a CA A/ nergy Management system. r tefan chwar fischer, Chief Executive of BPC, said that the system would reduce downtime and improve revenue collection. All parties will be looking to see how such technologies help strengthen the Kenyan grid as it evolves to support windfarms as more are developed, particularly in more remote areas beyond the major conurbations. The 310MW Lake Turkana windfarm, which was completed last year, required the construction of a 42 km 400kV transmission line from Loiyangalani in the north to Suswa in central Kenya, allowing the Kenya Electricity Transmission Company to build up useful experience in maintaining grid stability while promoting renewable energy. ■


E n e rg y i n te g rati on

POOLING POWER nergy integration is firmly on the agenda, as intra- A f rican trade gains ground as a catalyst for economic growth and poverty reduction. ames avin reports on progress, including the orld ank s moves to support the est frica Power Pool.

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rowing demand for improved infrastructure services delivery at a regional level is acting as a boost for cross-border initiatives, backed by supra-regional ventures such as the power pools in West, East and Southern Africa. Multilateral agencies are supporting such moves. For example, a $2.5bn loan from the African Development Bank (AfDB) will see the six partner states of the East African Community (EAC) provide an additional 7.48GW of electricity by 2022. The Economic Community of West African States (ECOWAS) has created a West Africa Clean Energy Corridor (WACEC) to increase renewables’

share of the wider regional energy mix. The Southern African Power Pool (SAPP) wants to connect Malawi, Tanzania and Angola onto the regional grid by 2021, linking up to nine other Southern Africa Development Community (SADC) nations in sharing and trading surplus electricity. Work is under way to link up eastern and southern regions. Tanzania Electric Supply Company (Tanesco) and the Kenya Electricity Transmission Company (Ketraco) are working together to build a transmission line between Singida in Tanzania and Isinya in Kenya. The project is due for completion next year and is financed by the AfDB, the Japanese International Cooperation Agency and the two governments involved. It is hoped Africa Energy Yearbook

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POOLING POWER that connecting the SAPP, the Eastern Africa Power Pool (EAPP) and the Ethiopian grid will allow the countries involved to make maximum use of their hydro capacity. Power-sector integration could even be driven by new intercontinental transmission projects, which will affect orth Africa. The governments of Italy and Tunisia have agreed to develop the 600MW Elmed interconnector between Cap Bon in Tunisia and icily, a means of exporting orth African electricity to Europe, including power from proposed jumbo solar power schemes in the Sahara. In the short term, it is expected that it will be used to export electricity from solar power schemes on Sicily and in southern mainland Italy to Tunisia.

WORLD BANK SUPPORT

The World Bank estimates the economic benefits of a regional power market in West Africa at $5 to $8 billion a year. To date, it has dedicated $1.516bn in International Development Association (IDA) funding to support the regional agenda in the electricity sector of West Africa, with $1.141bn provided to the West African Power Pool (WAPP) for regional transmission projects and $375m for regional electrification access projects provided to other regional entities (ECOWAS and BOAD/ECREE). Improving electricity access and system reliability through the development of a regional energy market in West Africa requires close collaboration between neighbouring countries. The WAPP is made up of 14 countries: Benin, Burkina Faso, Côte d’Ivoire, Gambia, Ghana, Guinea, uinea-Bissau, iberia, Mali, iger, igeria, enegal, ierra eone and Togo – with 27 national electricity utilities working towards a more efficient regional power market.

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The bank acknowledges that access to energy remains a challenge in West Africa, where many countries are dependent on expensive fossil fuels and the main source of electricity generation is often located far away from its consumers. “The creation of a regional power market will improve overall reliability and make electricity more affordable, simply by allowing all countries to benefit from lower cost resources available in the region,” said Charles Cormier, Practice Manager in the Energy and Extractives Global Practice at the World Bank. “It will make power generation more sustainable by displacing baseload, oil-fired power generation and emergency diesel with cleaner sources of electricity, such as natural gas, solar, wind and hydropower.” The power system will also become more resilient by balancing unexpected energy shortages. By expanding transmission networks, a regional transmission system will allow countries to expand the access to electricity in remote areas. The sizeable market created by integrating these 14 countries will be more attractive to private-sector investment in power generation and allow the countries to benefit from cheaper electricity thanks to economies of scale. “The WAPP has made a great deal of progress and now finds itself at a critical juncture where it needs to focus on building trust in trade,” said Cormier. “Phase 1 of the West Africa Regional Market (WARM) was launched in June 2018, with limited bilateral trade arising from the first few interconnectors in the region. Within a few years, the regional power market is expected to grow as all primary interconnectors will be completed, allowing electricity trade among the 14 member countries.” As of today, with 10 of the 14 member countries interconnected, about 7% of the region’s electricity is already traded across borders. By the early

2020s, it is expected that the remaining critical interconnector projects will be completed, allowing electricity exchanges to take place among all member countries. Also by the early 2020s, the WAPP plans to launch Phase 2 of the WARM, which will involve the creation of a day-ahead wholesale power market at a regional level, allowing greater flexibility and timeliness of power exchanges, and provide stronger price signals to investors and energy planners in the region. Lastly, Phase 3 will establish a competitive energy and ancillary services market in the WAPP and short-term exchanges through the day-ahead market. The day-ahead market will take time to materialise in West Africa, given that most utilities do not have cost-reflective tariffs.

SOFT FOCUS

For the potential of the regional power market to be fully realised, Cormier, said attention must turn to the ‘soft side of building effective institutions and enforcing a sound regional regulatory and policy framework. “The completion of the regional power grid has been made possible by the vision and cooperation of African leaders, and sustained support from the World Bank and other donors to complete a multi-billion dollar cross-border infrastructure investment,” said Cormier. “However, if these investments are to yield their anticipated impacts, it is important that the right institutions, regulations and policies are put in place among member countries in a manner that is harmonised across the region.” The ECOWAS Regional Electricity Regulatory Agency (ERERA) is now in place and has started to issue important regulations such as grid-code and market rules; however, enforcement of these regulations remains a challenge, said Cormier. Further harmonisation of national regulatory frameworks will be necessary, particularly in regard to transmission pricing and


third-party access. “The WAPP’s Information and Coordination Center (ICC) is already acting as an embryonic system operator that makes possible the current pattern of bilateral exchanges and tracks energy flows across the existing regional grid,” said Cormier. “The demands on the system operator will intensify as the grid expands and there is a need to achieve synchronisation across the region to allow for more fluid exchanges of electricity. The World Bank, along with a number of development partners, has supported WA in its efforts to improve the physical connectivity and integration of electricity grids. “The World Bank has been a longstanding partner for the power sector in West Africa and has supported the WAPP since 2005,” said Cormier. “Through the IDA, World Bank support is directed toward completing primary interconnections. There are currently 4,000km of transmission lines under development, all coming to completion in the early 2020s.” ast year, the World Bank financed a regional grid-connector access project to the Solar Development in Sub-Saharan Africa series of projects, aiming to support a harmonised regional approach through the WAPP’s coordination and preparation, as well as to scale-up cost-competitive large-scale solar generation, with storage. In that context, the WAPP is preparing to competitively procure IPPs for 150MW solar parks, with storage in Mali and Burkina Faso. In addition, the bank financed a regional access project that aims to densify the grid around WAPP substations and accelerate access in Gambia, GuineaBissau and Mali.

PRIVATE ROLE

The World Bank also supports private investment in regional projects through guarantee instruments to back up offtaker payments. It supported the West African Gas Pipeline

and Phase II through a partial risk guarantee to cover the risks faced by investors in the West Africa Pipeline Gas Company arising from non-payment by the largest gas purchaser, the Volta River Authority. The World Bank extended International Bank for Reconstruction and Development guarantees of up to $200m, and, in Ghana, an IDA guarantee of up to $500m for the Sankofa Gas roject, which is expected to leverage private-sector participation and enable the mobilisation of nearly $8bn of foreign direct investment in that country alone. A key focus of future World Bank engagement will be strengthening the performance of power utilities as a foundation for improved service and growing regional exchange. The complexity of the WA power market creates new political and technical challenges that will need to be addressed,” said Cormier. A well-functioning regional power market requires not only the right infrastructure, but also strong collaboration among policy-makers, regulators and utilities at a national and regional level. It also calls for simultaneous policy, regulatory and institutional steps. Trading institutions and stronger commercial arrangements will need to be developed further. The efficient trading of energy across countries is key to overcoming these cost differences, allowing importing countries to have access to more affordable electricity. The role of the ERERA is central in developing an overall regulatory framework that will enable regional trade built upon the basis of industry good practices, consultation and consensus-building with the different actors in the C WA countries (governments, utilities and private sector). nder the umbrella of C WA , countries in West Africa are working together to ensure regulatory consensus, said the bank. The payment record of trading partners in the region is uneven, ac-

knowledges Cormier. In 2016, arrears reached such a level that the WAPP formed a Task Force on Cross-Border ayments for ower Trade to recommend solutions to the problem. To ensure that West African countries realise regional power integration to its fullest potential, the task force recommended a series of actions to improve confidence in the regional power market. These include improving sector creditworthiness, strengthening contracts, providing guarantees and involving regional institutions.

CLEAN COOPERATION

“The continuous decline in solar electricity generation prices, and more recently, battery storage, is generating interest in investing in cleaner and reliable sources of electricity generation in West Africa,” said Cormier. Currently, the region’s energy mix is mostly comprised of diesel, and hydropower, while some larger countries, such as Côte d’Ivoire, have access to natural gas. Given the recent drop in solar prices, the creation of more large-scale solar photovoltaic plants could become critical in reducing the region’s dependence on fossil fuel, supporting a shift towards a cleaner and more affordable source of electricity. “Most countries in West Africa are reviewing their least-cost generation plans to include more solar generation in the energy mix. This is complementary to the development of hydropower resources that has been ongoing over the past decade,” said Cormier. “As the WAPP becomes reality, the role of multilateral donors will extend beyond the financing of physical interconnections toward support in the development of a sound legal, regulatory and commercial framework, and knowledge-sharing around the best financial instruments to mitigate risks of regional transactions. There is a new urgency to help West Africa leapfrog ahead by learning from other power pools already into operation.” ■ Africa Energy Yearbook

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Rentia van Tonder

ead of Power, tandard ank

INNOVATION IS ON THE AGENDA R entia van T onder has b een the driving f orce b ehind S tandard B ank ’ s s trategy to b ecome the mos t active f u nder of pow er projects in A f rica.

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ince joining the company five years ago, Rentia van Tonder has been the driving force behind tandard Bank s strategy to become the most active funder of power projects in Africa. eading up its power sector, she leads the bank s ambitious agenda of innovation as the continent looks to secure funding solutions for an ever-evolving range of projects some of which incorporate innovative techni ues that are taking it into uncharted territory. Van Tonder believes that sponsors, developers, banks and development finance institutions Is must challenge the old ways of doing things and find innovative new partnerships if they are to succeed in African markets. tandard Bank launched its new strategy in the power sector two years ago. We realised that if you continue to focus solely on the old-fashioned, centralised utility model, you may get stuck with projects that are difficult to develop and bring to a close, said van Tonder. o we built a strategy based around a more diversified power sector model, enabling growth in two key areas centralised and decentralised markets. ecentralised power is typically made up of more holistic power supply solutions, which include off-grid, captive-power opportunities. This is an area where new funding possibilities are emerging, such as solar power

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firms that supply captive-power solutions to a range of companies, mainly more industrialised and mining/ resource players. We have been diversifying our portfolio and, at the same time, seeing how we can unlock normal power projects, as well as corporate lending, said van Tonder. tandard Bank has an extensive presence across Africa, with a footprint in 20 countries, which gives it a strong platform from which to unlock some of the opportunities in the power sector that extend well beyond its outh African base. Renewables is an area where there are si eable financing opportunities. We ve learned over the past few years that renewable project sponsors and developers for renewable independent power projects I s in particular are looking for a clearly defined, enabling environment, said van Tonder. These projects are successful if they are clearly defined through a policy environment that make it easier for governments to partner with the private sector, and where all partners clearly understand the re uirements.

SPEEDING UP

Change is coming, though progress can be slow. The problem is not necessarily a lack of funding per se many countries lack a suitable implementation framework, making it difficult to fast track projects. Renewable energy is one area where

more flexible finance solutions are being introduced. istorically, the focus has been on large, baseload power projects built around hydro and coal, and sometimes natural gas. These have served as the key pillars for generation capacity in most countries, but the introduction of renewable energy, and even decentralised and grid integration across the region, means that an increasing number of countries are looking for flexible solutions to ensure that renewable energy projects are properly funded. ambia is a case in point. A few years ago, there was a drought that impacted the country in the form of reduced hydro-generation. That pushed it to think differently about new technologies and led to the introduction of scaling solar and the country s T iT programme, said van Tonder. T iT is a partnership between ambia s epartment of nergy and erman development bank KfW. Their purpose is to facilitate privatesector investment in small- and medium-scale renewable I s. In April, ambia awarded a total of 120MW of solar projects to three different consortia at prices as low as

‘ R enew ab le project s pons ors and developers are look ing f or a clearly defined, enabling environment.


‘ C ou ntries s u ch as Z amb ia are b ecoming more open- minded w hen it comes to e ible ďŹ nance solutions.

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Rentia van Tonder,

ead of Power, tandard ank

INNOVATION IS ON THE AGENDA $0.039/kWh in a tender that forms the first phase of the government s R iT programme. I strongly believe that countries such as ambia are becoming more open-minded when it comes to flexible financing solutions, said van Tonder. If you introduce decentralised energy, then you get different approaches where it is possible to be more open-minded about flexibility linked to remuneration. It has the benefit of making countries more efficient, too.

ROLE FOR DFIs

owever, not all renewables projects in Africa can be funded through commercial debt provided by banks, which means there is still a key role for Is to play as part of the wider funding mix. If progress is slow in tapping commercial bank lending it s not because of a lack of appetite, it s because it can be complicated to structure something that makes sense for commercial banks, especially in an environment where Is have the appetite to fund them as these projects are aligned with their development goals, said van Tonder. he said that tandard Bank can also play an agency role, using its pan-continent presence to provide local funding facilities. But what of other finance innovations in the energy space ne that has gained some traction is the use of inflation-linked debt for renewables projects. The success of these will largely depend on the power purchase agreement A and the tariff structure, and outh Africa may be setting the standard here.

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The reason why it became uite popular in outh Africa was that our A allowed the tariff to be fully indexed, based on the fact that the tariff increases annually by the Consumer rice Index C I rate. iven that the revenue stream is linked to the C I, this allows a funding instrument to be linked to the C I, said van Tonder. The benefit of this is that it lowers the cost of hedging on long-term projects, in order to give them the minimum internal rate of return and still be competitive on the tariff. uch products may not always be the best solution for every project or sponsor as it can be difficult to restructure, or be restricted in terms of refinancing, said van Tonder. We ve done some, but these are not 100 C I funded it s usually a combination. And it s very sponsor specific, depending on what their ambitions and objectives are. It s not necessarily the ideal solution, but it does give some flexibility.

INSTITUTIONAL INVESTORS

ulling in pension funds and other institutional providers is a longterm ambition for African power sector sponsors. At tandard Bank, we ve always been very open to crowding in institutional funders and lenders right from the start of a project, whereas other banks may prefer to look at that later in the process, said van Tonder. We ve been uite clear, especially in outh Africa, on the need to develop a secondary debt market by selling down to institutional funders. This method has worked well for tandard Bank, she said, helping it to diversify its portfolio. But widening the pool by introducing institutional investors is not always easy in other parts of Africa, even though tandard Bank has looked at

opportunities to work with pension funds in countries such as amibia and Kenya. The education process may be a long one, said van Tonder. When we talk about long-term funding in outh Africa, typically it s 17 years rather than the seven- or eight-year terms that some local pension funds are used to in other countries. In outh Africa, that market is well developed, but less so across the rest of Africa. ltimately, van Tonder believes that financiers who are considering investing in Africa s energy market should be clear-eyed about the challenges they face. There are real challenges around payment risk and sovereign risk on I s, she said. I m not always a keen supporter of putting a bandage on a deal from the start. We can get innovative on structuring but if the underlying is still uestionable, it remains an issue. urthermore, banks may be disinclined to back projects when faced with tariffs that are much higher than those charged by a utility, resulting in pressure on the utility to achieve cost-reflective tariffs. We have become more sensitive around a project s competitiveness

relative to cost-reflective tariffs, said van Tonder. ne needs to be uite responsible when we have those types of conversations with sponsors in funding new projects. ■

e ve been uite clear, especially in outh frica, on the need to develop a s econdary deb t mark et b y s elling dow n to ins titu tional f u nders . ’


N e w te c h n ol og i e s

CONNECTING AFRICA’S VILLAGES: SMALL IS BEAUTIFUL

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ini- and micro-grids based on renewable energy are no longer regarded as mere stopgaps while rural communities wait – often in vain – to be joined to the national power grid. Falling prices, increased power output and technological advancements mean that small grids can now being treated as long-term energy solutions in their own right. A plethora of life- and livelihood-enhancing services hitherto out of reach are fast becoming available to Africans in rural areas. Small-scale, renewable generation is regarded as a key element in the drive to provide universal access to power across Africa. But the scale of the universal access challenge remains immense. In its Energy Access Outlook 2017 report, the International Energy Agency (IEA) said that based on policies either being enacted or promised by governments, 90% of the 674m people worldwide without access to electricity by 2030 would live in sub-Saharan Africa. The IEA concluded that new connections to utility-scale grids would bring electricity to more than half of those that gain access, offering the most cost-effective means of access in urban areas.

M ini- and micro- grids that produ ce renew ab le energy are k ey elements needed to help s olve A f rica’ s pow er prob lems , w rites Ian L ew is . However, it said decentralised systems would be the most costeffective solution for more than 70% of those who gain access in rural areas. “By 2030, renewable energy sources power over 60% of new access, and off-grid and mini-grid systems provide the means for almost half of new access, underpinned by new business models using digital and mobile technologies, the agency said. This is reflected in a shift in thinking by governments across Africa, which are starting to view non-utility scale power as an essential part of their forward planning. What we re seeing is off-grid solar being integrated into national energy policies, said imon Bransfield- arth, Chief xecutive of Kbased micro-grid solar provider Azuri Technologies. o Rwanda, Kenya, igeria and, more recently, Ethiopia, have all come up with policies where perhaps one-

e did a few sums and figured ou t that you cou ld do s omething good that you cou ld als o mak e a b u s ines s ou t of . ’

third of the people will be supplied by off-grid power. Importantly, the provision of miniand micro-grids is no longer as reliant as it was on financial support from development agencies or governments to make it economically viable. The advent of affordable, ultra-low power consumption LED lighting, combined with cheaper and more ubiquitous solar and battery costs, means the sector now represents a serious business proposition.

CUSTOMER COSTS FALL

Mini-grids that supply power to entire African villages are now being built by larger utilities, but just as significantly, solar power has become an affordable proposition for many households in rural areas. The proliferation of affordable solar panels and more efficient technology mean many rural households can afford to be connected, given help from companies with the right business model. Bransfield- arth says that when Azuri started out in 2010, pay-as-yougo solar didn’t really exist in Africa, and the ones that did tended to be led by charities and other non-governmental organisations. We did a few sums and figured out Africa Energy Yearbook

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N e w te c h n ol og i e s

CONNECTING AFRICA’S VILLAGES: SMALL IS BEAUTIFUL that you could do something good that you could also make a business out of, he said. “It was driven by the enormous market requirement in Africa and the realisation that just because people have relatively low incomes doesn’t mean that you can’t make a successful business from those customers. Azuri, along with the proliferation of other pay-as-you-go solar services companies around the continent, offer a solution to the problems presented by the steep upfront costs of solar energy generation and the associated peripherals by using the financial clout of their own backers to pay for the equipment. The outlay on solar panels, solar-powered lights, sockets and any other services is then recouped, along with a profit, by charging customers manageable weekly or monthly payments over a fixed period, after which the customer owns the equipment. Bransfield- arth said it s not hard to pique the interest of potential customers who currently rely on kerosene

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or paraffin for their lighting needs. Kerosene is horrible, so if you can just price match kerosene then you’re onto a winner. We can do that roughly for the duration for which the customer is paying, typically 1 months, he said. “But after that they’ve got a system that’s going to last them 10 years or more and by then it s free. The ability to recharge mobile phones – those staples of modern African village life – at home rather than having to travel to a charging station in the nearest town is another attraction. Apart from light and phone charging, other services offered to customers include rechargeable torches and radios, and satellite television, with the cost of all the equipment and services included in the periodic payments.

CULTURAL SHIFT

Azuri TV provides more than 60 channels on 32-inch or 24-inch solar-powered TVs. So in areas where reception has hitherto been limited, the arrival of household solar power may herald a major cultural shift and improve living standards. However, there are limitations to this business model. It’s easy to collect payments using transfers via mobile

phone, but any potential customer must have the financial resources to keep up their payments. This is why Azuri’s model is best deployed in areas where agricultural incomes are reliable, making it well suited to countries with stable farming such as Kenya and igeria, but less so to marginal areas of Africa where output and incomes can fluctuate widely depending on the weather. Azuri has sold more than 150,000 systems since 2012, helping to improve the lives of 750,000 people. It operates in 12 sub-Saharan African countries, but focuses mostly on Kenya, ganda, Tan ania, ambia and igeria. uch figures are impressive for a young industry, but there is clearly much to be done on a continent where 600m sub-Saharan Africans – representing 57% of the region’s population – still live without electricity, according to the IEA. The good news is that renewable energy provision continues to expand quickly. “There is still a long way to go in the countries we’re already in, so that’s going to be our principal focus, but we typically adopt one or two extra countries every year, said Bransfield- arth. The industry is becoming more


‘ W e b elieve that u nivers al acces s to electricity is pos s ib le in the f ores eeab le f u tu re, thank s to a s mart comb ination of national grid ex tens ions , mini- grids and s olar home s ys tems . ’ adept at marketing the benefits of small-scale renewables in areas where the target customers tend live away from the main population centres. Azuri and other pay-as-you-go solar providers typically forge ties with mobile phone networks in the countries where they operate. That’s partly because mobile payments systems are a key to the success of the business. But it’s also because mobile companies already have a presence in remote areas, providing ready-made marketing networks for solar systems. Similarly, a recent tie-up between A uri and nilever s Kenyan subsidiary means it can use the greater reach of nilever s rural sales network to promote the benefits of its own service. Meanwhile, in igeria, Azuri’s solar home TV product is being co-branded and co-marketed by FirstBank of igeria in its rural branches, targeting low-income customers.

easier to persuade one customer to buy a system than a larger group with differing views and differing abilities to pay. “If you’ve got to put a mini-grid in, you’ve got to persuade several hundred customers that they all to want to have this thing that they’ve never experienced before and it s more difficult to do that, he said. evertheless, mini-grids have a vital role to play if the expansion of electricity access is to be speeded up, and if electricity use is to move beyond basic household power, lighting and charging facilities. This sector can count on the involvement of some heavy hitters. French utility Engie is operating or building 13 mini-grids to power villages in Tan ania and ambia, and has an ambitious goal to provide 2,000 mini-grids across Africa by 2025, bringing renewable power to 2.5m people.

MAXIMISING THE POTENTIAL OF THE MINI-GRID

SCALING UP

Mini-grids increase access to electricity even faster, bringing large-scale solar or wind power to entire villages or wider regions. But they come with their own complications, especially if they are to be provided on a commercial basis. Bransfield- arth said it s

Its modular owerCorner offering aims to up the ante for mini-grids by providing power for a wider variety of uses than before from an internet-connected central solar generation and battery storage unit. ambia s first owerCorner was launched in Chitandika, in the east of the country, earlier this year. The vil-

lage, which has 378 households and a population of 1,500, had previously been without electricity access. ow it has enough to power all households and local businesses, as well as a rural health centre and two schools. It can also provide energy for agricultural water pumps, and machinery for carpentry and welding, plus any other creative uses local entrepreneurs come up with. Homes and businesses are fitted with smart meters to measure consumption, efficient appliances are available on a leasing basis and payments can be made using mobile smart money transfer. Engie also has a solar home systems business, Fenix, which has sold more than 400,000 units in ganda, ambia, igeria, C te d’Ivoire and Benin. Since launching enix in ambia in ctober 2017, the firm has sold 70,000 solar systems, demonstrating the demand for smallscale, off-grid power. “We believe that universal access to electricity is possible in the foreseeable future, thanks to a smart combination of national grid extensions, mini-grids and solar home systems, depending on the local characteristics of energy demand, said ngie s Chief xecutive Isabelle Kocher at the launch of owerCorner in ambia. ■ Africa Energy Yearbook

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AFRICAN UTILITIES AT A CROSSROAD: HOW MUCH POWER IS ENOUGH? R es tru ctu ring has helped the f ortu nes of s ome pu b lic u tilities , b u t others remain b ig los s - mak ers .

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he past decade has seen tremendous growth in Africa’s energy capacity. Large-scale investment in hydropower projects have taken shape in Angola, Ethiopia and Mozambique, with potential for the Grand Inga III to materialise in the Democratic Republic of Congo (DRC). Similarly, investments in renewables have increased as the price of solar energy has fallen – countries such as Morocco, Rwanda and South Africa have made considerable strides in bringing online more solar power as part of the energy mix There is still some emphasis on strengthening baseload capacity through improvements in fossil fuel power generation. However, the conversation is shifting away from coal

and oil towards gas as the preferred source. The signs are pointing toward distributed and gradually decentralised generation.

IPP ENGAGEMENT

Historical patterns of completion delays, cost overruns and susceptibility to corruption have impacted on the ability of such projects to have a tangible impact as far as most Africans are concerned. With this in mind some of the central utilities across Africa – such as in Ethiopia, Kenya and more recently, South Africa – have placed emphasis on incorporating independent power producers (IPPs) into power generation activities. With growing technological innovation in grid interconnectivity, the opportunities available to

IPPs has increased considerably. At the same time, governments have had to be mindful of the need to build transmission and distribution infrastructure, which is further impeding progress. This has become a focal point of discussion, with some looking to maintain centralised power generation, transmission and distribution, while critics have emphasised the need to decentralise and better integrate private-sector participation, particularly when it comes to power generation activities in remote areas. A certain level of resistance has been experienced in this regard as central utilities look to maintain control over their respective power grids. Some tough decisions have been required, including the most recent discussion of unbundling South Africa’s Eskom into three separate arms for generation, transmission and distribution given its huge levels of accumulated debt.

RENEWABLES MAKE HEADWAY

One area where central utilities are looking to make definitive improvements is in bringing online more renewable energy capacity, be it through large-, medium-, small- or micro-scale projects. Zambia has made a concerted effort to include renewables into the energy mix, with the largest emphasis being placed on solar – the latest addition is the 34MW Ngoye

Eskom’s Sustainability Team

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solar photovoltaic (PV) plant just outside Lusaka, which is tied to a 25-year power purchasing agreement (PPA) with state utility Zesco. Across the border, Zimbabwe has made similar moves with the launch of its 466KW industrial solar power plant in mid-April, developed and operated by Econet Wireless Zimbabwe. Although the country has looked to liberalise the sector to private participation, capital constraints have posed a key challenge. Nevertheless, plans are afoot for large-scale solar adoption, particularly in the industrial space, with the Zimbabwe Energy Regulatory Agency (ZERA) granting a 25-year power purchase agreement to Econet. In North Africa, Egypt and Morocco are pursuing similar initiatives. Morocco’s Noor-Ouarzazate complex is Africa’s largest concentrated solar power (CSP) plant, producing 580MW, while Egypt’s Benban solar park is aiming to produce 2,100MW – the equivalent of 90% of the Aswan dam’s hydropower plant generating capacity. South Africa has also placed emphasis on increasing its participation of renewables, in particular CSP, wind and solar PV, with a standout being the Khi, KaXu and Xena Solar One CSP plants, which produce a combined 250MW of thermal power. Trends in onboarding wind as a renewable resource have matched those of solar in recent years, though the its potential is less well known and its costs considerably higher should there be lapses in energy generation. The biggest strides have been made by South Africa and Kenya, with the former building a total of 36 wind power plants, while the latter was finally able to bring online the 310MW Lake Turkana Windfarm in late 2018 – Kenya in particular is looking to move more toward wind. Morocco again leads the drive through the Tarfaya Windfarm project, which has steadily contributed 300MW to the national grid and will continue to do so through a 20-year A with state utility ffice ational

de I’Électricité. Though hydro has been lauded for its many benefits, in recent years concerns have increased surrounding the environmental damage caused by altering river flows and water ecosystems, with the additional impact of displacing local communities. East Africa has been hard hit by droughts in recent years, pulling the viability of hydropower down in preference of wind and solar. Other downsides include long project lead times and overruns. Nevertheless, some countries continue with the hydropower expansion capacity, including Ethiopia, with the country generating some 90% of its power requirements through hydro, the largest being the Grand Ethiopian Renaissance Dam (GERD) currently at close to 70% complete. Angola, Mozambique and Tanzania are also investing in various hydropower projects. However, each is also looking at expanding their fossil fuel generation capacity to balance power generation requirements utilising nascent natural resources. On the whole however, the region – excluding South

T rends in onb oarding w ind as a renew ab le res ou rce have matched thos e of s olar in recent years , thou gh the potential of this res ou rce is les s w ell k now n. Africa Energy Yearbook

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AFRICAN UTILITIES AT A CROSSROAD: HOW MUCH POWER IS ENOUGH? Africa – is projected to source more than a third of its power needs through renewables within the next 18 to 24 months.

EMPHASIS ON GAS WILL RISE

The move towards cleaner energy has risen across the world, but also in Africa. The biggest users of fossil fuels in the north and south have made an effort to move away from using carbon-based sources and incorporating more renewables. Many see gas as a replacement for coal and oil. In South Africa, where the grid is over 90% reliant on coal for power, the discussion has revolved around the potential for gas to replace coal. The latest indication of this are the revisions to the Integrated Resource Plan (IRP) of 2018, in which the government pro-

vided an indication that it is planning to enhance the contribution of gas to 16% of the total energy mix by 2030, up from 0%. This will invariably have an impact on neighbouring Botswana, which sources a large portion of its power requirements from South Africa. It will also strengthen cooperation between South Africa and Mozambique, which is currently its largest supplier of gas. For its part, Mozambique is moving ahead with its own gas initiatives, looking to increase its contribution to the main grid from 34% to 46%. A key example is the announcement of the construction of a 400MW gas-fired plant in Inhambane Province. Tanzania is also looking to increase its share of gas. The Kinyerezi II plant, which came online recently, contributes 240MW of natural gas-fired

TOP ECONOMIES BY REGION COMPOSITION OF PRIMARY ENERGY SUPPLY Source: World Bank, 2016 (latest available data)

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energy to the national grid with plans for two additional projects in the same region, increasing power generation capacity to 600MW. In West Africa, Ghana is building a 400MW li uefied petroleum gas (LPG) plant in Tema that will run on a combination of LPG, diesel and natural gas. Added to this is a potential cost saving of some $300m using new reverse-flow technology aimed at moving natural gas from the Aboadze Power enclave to Tema, decreasing its dependence on gas imports from Nigeria. Nigeria itself utilises gas for the majority of its power generation activities. However, like many other African countries, it is not just its power generation infrastructure that is in need of upgrades, it is also the country’s transmission and distribution networks.

DECENTRALISATION GAINS MOMENTUM

With the growing participation of IPPs, upgrading transmission and distri-


bution infrastructure will become key for most utilities across the continent, should they wish to remain relevant. Given the high levels of debt in some utilities – like South Africa’s Eskom and Ethiopia’s Ethiopia Electric Power and the lack of capital financing – as is the case for Tanzania’s Tanesco – centralised utility models will need to reevaluate their roles in the continent’s evolving energy landscape. Some look to have embraced a model of moving away from generation, and focusing on transmission and distribution to increase access to the grid. In April, EEP announced new plant constructions, with a move toward the maintenance of existing power plants and transmission networks. Under similar debt pressures, Eskom is undergoing an overhaul to mitigate rising levels of debt and weak demand for power. Consideration has been given to the viability of unbundling the power utility and splitting it into separate generation, transmission and distribution utilities, while also downsizing its bloated workforce. Other examples include Kenya’s unbundled generation sector, coupled with the introduction of an independent regulatory body back in 2006 – the Energy Regulatory Commission – which has boosted both investment and access to electricity through the participation of IPPs. As a result of the restructuring of the power sector, as well as promulgating much-needed regulatory reform to attract new investments, the country has added 13 additional IPPs and increased electricity access from just 22% in 2012 to over 70% by 2017. Uganda’s case is similar, although it made moves to unbundle its electricity sector some time ago. The three separate arms of the national utility work together while the Electricity Regulatory Authority oversees the sector and regulates the issue of licenses. It also formulates tariff structures and approves the various rates for the cost of power.

Tanesco has also come under pressure to reform since the late 2000s, but has not been as successful as the other examples highlighted. Key challenges pertain to policy implementation, with the government still quite rigid in moving away from a centralised grid system. Zimbabwe’s case is similar. Though ZERA has opened up the generation sector to private participation and has licensed some 30 IPPs, less than a third have been allowed to commence operation. The country is also perceived as a risk among investors, with limited capital resources coming from abroad to stimulate growth in the power sector. In Malawi, the situation looks more positive, with national power utility Escom heeding the advice of the Millennium Challenge Corporation in moving towards unbundling the national power utility and allowing the private sector to focus on generation, while Escom turns its attention toward maintenance of the transmission and distribution infrastructure. Despite this, the government has established another state-owned entity that will be responsible for generation, thereby still allowing for a monopoly control.

THE ROAD AHEAD

Invariably, central utilities across Africa are making positive strides in cleaning up energy generation and allowing for the greater inclusion of renewable energy. As the bulk of this energy comes in the form of IPPs, there is also a definitive move toward allowing private

participation in renewable energy generation activities. Coupled with this is the gradual shift toward gas power as the continent tries to generate cleaner energy. Part and parcel of attracting more IPPs is the drive to increase decentralised power generation aimed at alleviating the pressure on utilities to deliver increasingly more power while maintaining and upkeeping existing generation, transmission and distribution infrastructure. With more IPPs coming on board, central utilities can now focus on maintaining existing infrastructure and attracting more foreign investment to increase transmission and distribution lines for greater connectivity. In due time, the three will intersect in making power grids more dynamic and able to move power back and forth between consumers and producers. Key considerations going forward will remain the willpower of governments to enact these strategies given built-up levels of debt, alongside persistent corruption among the larger utilities, such as Eskom. Should governments follow through with proposed strategies of unbundling they will also need to formulate strong policies to guide the development of the industry in the coming years. Stronger policy reform and transparency along the way will also stabilise investor sentiment and allow for greater participation. This will have an inevitable impact on grid interconnectivity across countries, such as through the various power pools that are currently inefficient and lack weight in contribution to dynamic power sharing. ■

Ouarzazate CSP power plant

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Last word

A PICTURE OF PROGRESS Innovation in technology, project development and financing is the hallmark of frica s energy sector a mark of progress on a continent where more than m people do not have access to reliable power supplies. ames avin reports.

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he challenge facing Africa is clear: without decisive action and investment to close its energy gap by 2030 there will be close to 590m people without access to electricity – more or less the same number of people currently without access. Thankfully, moves are afoot to prevent this from happening. Getting the financing formula right is a good place to start. Governments, banks, development institutions and companies are working closer together to make projects once regarded as too challenging into bankable propositions. The financial challenge is nonetheless sizeable. According to the African Development Bank (AfDB), in order to achieve universal access by 2025 innovative mechanisms are required to mobilise an additional $30bn to $55bn annually in domestic and international capital. etting the financing right is the continent’s main priority, and that means working on legal and regulatory frameworks. Projects have been held back in recent years, not necessarily because of a lack of funding per se, but because the investment climate is often lacking. The absence of a track record in project management has also deterred private investors.

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Governments only have the resources to finance a fraction of the capital investment needed for energy projects. That leaves a considerable role to play for large multilateral institutions, which are becoming more innovative in how they approach energy projects. Take the AfDB, which aims to link stock exchanges, pension and sovereign wealth funds, central banks and other financial institutions in Africa to mobilise the shift towards low-carbon, climate-resilient investment. To support this effort it has launched a new facility – Green Baseload – to provide loans for reliable and affordable renewable energy. The intention is to build a market for investments in solar technology and to scale up private investment in these technologies. rivate-sector financing is making headway across the continent, with public-private partnership (PPPs) gaining the levels of comfort that are the norm in other parts of the world.

ROOM TO GROW

Yet the truth is that there is still a long way to go. In relative terms, private-sector engagement in Africa’s energy sector is small when compared to the market opportunities. That leaves a key role to play for bodies such as the United Nations

Commission for Africa, which is currently working with financial institutions and the UN Secretary-General’s sustainability council to develop a template for defining sustainable investments. It has proposed an SDG7-Sustainability Bond to fast-track investments for clean energy in Africa, aiming initially to raise $5bn through a 15- 20-year maturity issuance. Another key theme is the growing collaboration between entities to ensure that funding packages for renewable projects are approved. One example of this was seen earlier this year when the Board of the Green Climate Fund approved a €100m loan through the WestAfrican evelopment Bank to finance renewable energy development in six countries from the West African Economic and Monetary Union. These organisations are looking to build commercial, sustainable financing for solar investments through senior debt and standby loans while developing technical capacity of private- and public-sector actors. Commercial lenders are also an important presence in the energy financing landscape of Africa, though progress here can be slower than many would like. One obstacle is payment risk; lenders want to see pro-

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Private-sector financing is making headway across the continent, with public-private partnerships gaining the levels of comfort that are the norm in other parts of the world. jects sponsors’ and contractors’ track records before they get comfortable around balance sheet risk, particularly when governments are increasingly wary of footing the bill for loss-making state utilities. There are legitimate concerns about governments’ continuing support for financially troubled power utilities. The precarious financial position of utilities and the limited choice of an alternate buyer in case of utility default remains a factor in disincentivising private capital. However, there are new ways of overcoming such barriers. Some lenders have sought to ringfence cash flows from offtakers using direct payments, for example. Meanwhile, Africa GreenCo has proposed the formation of an intermediary aggregator between buyers and sellers as a way of pulling in sustainable investments on the back of a multi-buyer model. One key theme going forward is the increased use of institutional forms of financing. The rivate Infrastructure Development Group (PIDG), which helped in the financing of hana s Kpone independent power producer (IPP), has backed a credit solution entity that includes local currency guarantees to banks and bond investors to develop local capital markets. In Nigeria, it has established InfraCredit Nigeria, which is designed

to provide credit enhancement on local-currency denominated issuance in Nigeria for infrastructure projects.

TECH POSSIBILITIES

Technological advancements are just as important as financing innovations when it comes to transforming Africa’s energy sector. Key among these are the emergence of decentralised systems that delivery cheaper, greener electricity to non-urban communities. evelopments such as affordable LED lighting – which allow ultra-low power consumption, along with reduced solar and battery costs – have made financing more viable. One of the most positive developments in Africa is the emergence of mini- and micro-grids based on renewable energy. These have moved on from being seen as temporary solutions filling gaps when rural areas want to join national networks – to sustainable models for bringing power to the people over a longer time period. Boosted by technological advances that have reduced prices, this is now a major growth area for ensuring that rural communities are hooked up. The International Energy Agency has described decentralised systems are the most cost-effective solutions for rural areas. By 2030, it predicts that renewable energy sources will

power more than 60% of new access, while off-grid and mini-grid systems will provide the means for almost half of new access, underpinned by new business models using digital and mobile technologies. In the future, off-grid solar systems will be more fully welded into the wider energy mix as part of a seamless whole, thanks to national policy development that is explicitly geared to promoting off-grid schemes. Countries such as Rwanda, Kenya, Nigeria and Ethiopia have all delivered policies where a large proportion of the population can be connected via distributed off-grid systems. This is not just about mini-grids connecting villages. Household solar made financially feasible through the advance of price-competitive solar panel schemes – is another area seeing substantial growth. It means that households in rural areas have the financial means to afford reliable electricity supplies.

REGIONAL POOLING

The move to decentralised energy markets contrasts with another emerging theme in African energy: increased energy integration through regional pooling. Moves are afoot to boost the connectivity of regional networks Africa Energy Yearbook

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A PICTURE OF PROGRESS that previously only operated as standalone, national systems. For example, the Southern African Power Pool (SAPP) is in the process of bringing Malawi, Tanzania and Angola onto the regional grid by 2021. There are also moves to connect eastern and southern regions, with the likes of Tanzania Electric Supply Company and the Kenya Electricity Transmission Company cooperating to build a transmission line between the two countries – it is due for completion in 2020. Regional power integration schemes have done well to tap regional development finance institutions for funding. In the west of Africa, the Western African Power Pool (WAPP) has attracted significant World Bank support. Within the next few years it will launch the second phase of the West Africa Regional Market, creating a day-ahead wholesale power market at the regional level that should afford improved flexibility and efficiency in power exchanges – enabling price signals that are more receptive to investors. Phase three should see the formation of a competitive energy and ancillary services market in the WAPP and short-term exchanges. Building up Africa’s transmission capacity remains a key focus for many countries. Inadequate transmission lines are often the cause of poor electricity supply, rather than inadequate generation capacity per se. Progress is being registered after many years of underinvestment. The Transmission Company of Nigeria (TCN) has, for example, announced major projects as it seeks to ensure that the country’s grid capacity is up to speed with the expansion of generation capacity. In April, it announced plans to build five new transmission substations around Abuja at a cost of $170m. The Nigerian capital’s transmission project is central to the country’s

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efforts to resolve transmission issues. At present, Abuja has just two 330kV substations. TCN is putting in an additional two, as well as a further three 132kV substations in addition to the existing five 132kV substations. Transmissions projects are finally making some headway with donor funders – the European Investment Bank is financing a €40m smart grid technology project in Côte d’Ivoire to support electricity exports to neighbouring states. Due for completion in 2020, it is being developed by a consortium of Machinery Engineering Corporation of China, ABB Group and GE Grid Solutions.

REGIONAL DEVELOPMENTS

Region-wide policy developments should also register progress in the coming year. In North Africa, where Morocco has made serious strides in building up its renewables, governments are preparing plans to boost investment in generation against a backdrop of surging electricity demand. Morocco has proved its credentials as a magnet for private-sector investment in its renewables sector. The Moroccan Agency for Sustainable Energy has introduced low tax rates on residential and business solar energy equipment, a formula that has proved attractive to private developers. According to research from energy consultancy Wood Mackenzie, electricity produced by solar photovoltaic power projects is more competitive than combined-cycle, gas-fired plants. These kinds of metrics will figure prominently on investor radar screens going forward. In Tunisia, there is a growing appetite for renewables, though it is not as developed as Morocco’s market. Last year, the government in Tunis launched a tender for 1GW of solar and wind capacity, but by January this year it announced plans for a more ambitious combined target of 1.9GW by 2022.

PHOTO CREDIT: POWERGEN RENEWABLE ENERGY.

Last word

Not all of North Africa is as advanced in renewable terms. In Egypt, where sizeable discoveries of natural gas have transformed its energy sector – leading to the construction of largescale, combined-cycle turbines – fossil-fuel sources continue to dominate the energy mix. In West Africa, progress is mixed. Nigeria, the largest market, is still held back by some of the debts held by power companies. For example, the Nigerian National Petroleum Corporation and its partner, Black Rhino, have delayed the construction of the planned 540MW Qua Iboe gas-fired plant in Akwa Ibom state because the Nigerian Bulk Electricity Trading Company was reluctant to commit to buying electricity from new projects, as it would increase its liabilities. Cash flow challenges are one obstacle. In East Africa, policy development is moving ahead at an impressive clip. Uganda’s government has crafted an innovative pricing strategy for hydro projects, intended to reduce costs while enabling debt repayments. Residential tariffs on Karuma have been set at $0.497/kWh for the first ten years, followed by $0.27/ kWh for the next five years and then $0.117/kWh thereafter. Those on Isimba will be $0.4164/kWh for the first 15 years, followed by $0.101/kWh from then on. All in all, the activity under way and the appetite shown by financiers of both private and multilateral stripes, suggests cause for cautious optimism. And the more progress there is to see, the more confidence there will be among those considering involving themselves in the world’s largest untapped energy market. ■

PowerGen’s PowerBox in rural Tanzania


Country

Project

Morocco

Matmata, Ahmed El Hansali, El Borj Tanafnit, Daurat

Burkina Faso Bagré Guinea

Garafiri, Grandes Chutes

Cote d’Ivoire Ayame, Taabo, San Pedro

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Togo

Nangbeto

Mali

Manantali

Algeria

Mansouriah, Darguinah

Gabon

Kinguele

Ghana

Akosombo, Kpong

Nigeria

Kainji 11/12, 5/6, Shiroro, Jebba

Cameroon

Edéa I-III, Song Loulou

Congo

Djoué

Democratic Republic of Congo

Inga II, Ruzizi I, Ruzizi II, NziloZongo, Bukavu, Sebeya, Koni

Angola

Cambambe, Lauca, Matala

Namibia

Ruacana

Tunisia

Sidi Salem

Egypt

New Naga Hammadi Aswan, Assiut

Ethiopia

Beles, Gilgel Gibe

Uganda

Nalubaale, Kiira, Nkusi

Tanzania

Lower Kihansi, Pangani Falls II

Malawi

Tedzani 1-3, Wovwe, Nkula A

Mozambique Mawusi, Corumana Madagascar Mandraka, Andekaleka

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Zambia

Victoria Falls, Kariba North

Zimbabwe

San Isidro, Kariba South

Lesotho

Muela, Mantsonyane I & II

South Africa

Steenbras, Drakensberg, Vanderkloof

50% of Africa’s installed hydropower capacity - large hydro, service and rehabilitation and small hydro. We focus on the best solution “from water-to-wire”.

ANDRITZ HYDRO GmbH ⁄ andritz.com/hydro

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15.02.2019 09:17:28

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Africa Energy Forum 2019 Yearbook  

Africa Energy Forum 2019 Yearbook  

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