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‘Africa has not yet figured out the most viable investment strategy to employ Renewable Energy as a business case.’

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Agostinho Zacarias

Exclusive interview with Dr Agostinho Zacarias, UN Resident Coordinator and speaker in the Renewables track at African Utility Week.  He will address “Policy mechanisms governing Renewable Energy”.

How well is Africa doing regarding renewable energy infrastructure?  Has the message of the importance of renewables hit home yet in Africa?
Africa is generally now aware of the importance of Renewable Energy (RE) as a business case, but has not yet figured out the most viable investment strategy to employ. There is disillusionment about entry points and required capital outlay with most governments either under- or over-estimating the related costs. The most prominent constraint is meeting the project start-up costs such as feasibility studies, environmental impact assessments and pilot project implementation most of which should be met by public funding and/or guarantees.

Are there some examples of countries which are really doing very well in switching to renewable energy? And in which fields of renewable energy are they doing well?
North African countries such as Tunisia are currently investing in solar energy technologies. South Africa is quite advanced in the policy framework and in particular leading the piloting of solar and wind energy technologies by dedicating zones that are most suited for the respective technologies, e.g., Upington Solar Park project and Port Elizabeth for wind. The other areas where some countries including South Africa have excelled are in using solar for water heating for domestic applications. However, there are challenges of economic viability of the supply of these units on commercial basis.

Government leaders attended COP17 and there will be government leaders at African Utility Week. What do you think is the importance of leaders attending these conferences?
The more the government leaders are exposed to RE and Energy Efficiency (EE) solutions the higher the likelihood of uptake of similar propositions that may be advanced by their respective technocrats back home. It is that much more difficult for local technocrats to convince their own leadership within their respective countries than if the leaders are exposed to the innovations elsewhere and then find that they can be supplied locally as well. It is a matter of genuine listening and respect for the local expertise. So such situations as COP 17 and African Utility Week are important for targeting high profile individuals thereby elevating the status of rather simple technologies to that level.

Do you think the importance of switching to green energy is relayed effectively to the citizens of different countries?
Yes the message is getting louder, particularly as there are demonstrable benefits through savings on the energy bills let alone climate change gains. It has however been much easier to attract industrial energy consumers into RE and EE as the quantum of savings is much higher and therefore significant.

Are the incentives for the development of green energy infrastructure and switching in place in Africa? Where are the shortcomings and where are the advances being made?
The incentives are normally driven by multilateral funding rather than business viability or national government institutions’ support schemes that are based on the national fiscus. That tends to complicate the ownership and buy-in as these incentives are drawn upon as long as they are made available by the external funders and normally die as soon as the external support mechanism is withdrawn. They are also open to abuse as the nationally based monitoring mechanisms are normally too weak as they do not have an obligation of raising revenue to pay back. One of the major draw cards for such schemes is the local employment they may create though frequently temporarily.
What are the renewable energy challenges in Africa and South Africa specifically?
The main challenges are start-up costs and viability. In some situations there are policy vacuums that make it impossible to attract investment both internally and foreign direct investment. In the case of South Africa, the legislation is coming right but rather late as most innovative companies who pioneered in the RE field have actually given up or burnt their fingers. There has been a tremendous level of corruption in the rebate schemes that were introduced by SA Government with the participation of the public utility company. Some of the surviving pioneering companies have since emigrated to the less legislated countries to try and score based on the lesson they learnt in SA.

To what extent are tariff structure recommendations advantageous/disadvantageous to the industry?
The tariff structure is supposed to be a fair instrument for the attraction of all and sundry who wish to participate in the opportunities under the various RE technologies. They take into account the fact that there are different entry costs per RE technology thereby structuring the tariffs to encourage a wider energy mix. The situation under which this may be a disadvantage is if the calculation of a tariff is wrong resulting in under or over costing of the particular energy source to the detriment of the independent power producer’s business or the source of the subsidy being drained, respectively.

How can the tariff structure issues be resolved?
The best way would be to have a highly adjustable tariff determination formula that would be fed with current data. This would be feasible if the public entity charged with supporting the RE initiatives would have an active role in the roll out of pilot schemes.