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Highlights from the 2019 Africa Energy Forum

In June 2019, 2,010 attendees, 10 ministers, nine secretaries of state and 312 industry speakers gathered in Lisbon for the 21st edition of the Africa Energy Forum (aef). Here are some of the most memorable moments.

This article first appeared in ESI Africa Issue 4-2019.
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Following an incredible 20th anniversary celebration in Mauritius last year, the Forum returned to Europe in 2019 – gathering influential decision-makers to delve into the multitude of challenges and opportunities facing power generation across the continent.

Project finance was of course a key theme of the conference, with panels focusing on emerging investment trends and the latest indicators in private investments and independent power producers.

The growing prominence of renewable energy resources across the continent was explored in fuel-specific sessions, including progress updates regarding renewable energy targets. Gas-to-power strategies and discussions around the development of gas infrastructure also featured heavily in this year’s discussions.

The Innovation Theatre explored the development of battery storage across the continent and the innovative solutions it can provide for rural communities. Country-focus sessions explored project pipelines and unique investment opportunities in countries such as Ghana, Morocco, Mozambique, South Africa, Angola, and Nigeria.

Senior Business Development Manager at DLA Piper Nicolas Stofenmacher commented: “aef feels better here – smoother and more seamless.”

A wave of progress

Over the years, aef has become a platform to announce industry developments. Several of these deals and project announcements took place during the conference, including the revealing of the ‘Transparency Tool’ by ATI and KfW – an energy solution to quicken the pace of electrification in Africa.

CDC Group launched new transmission and distribution company Gridworks, and the DBSA committed $4.9 million of development funding to Joule Africa’s hydropower project in Sierra Leone.

AfDB launched the report Revisiting Reforms in the Power Sector in Africa, while Wärtsilä launched a Modular Block solution for providing ready-to-go power plants.

FIRST (Facility for Investments in Renewable Small Transactions) announced a financing update for a ZAR245 million facility for Building Energy’s Kruisvallei Hydroelectric Project.

Frank Tinarwo, the principal energy development officer at Zimbabwe’s Ministry of Energy & Power Development, commented: “aef was a great opportunity for my Ministry to interact with potential investors to attract foreign direct investment into the energy sector … the parties that attended indirectly drive the policy-making process in any country and there is no better platform for that kind of interaction than aef. I’m looking forward to the 2020 edition and to having a success story from the relationships I formed with some of the companies I met this year.”

The 2019 edition of the Forum also launched the Africa Challenge Cup – a football tournament in partnership with Kohler, Principal Partner of Manchester United, Kohler-SDMO and Clarke Energy, raising £30,000 for victims of Cyclone Idai. This special event was a major networking platform for attendees, who were able to meet the Manchester United legends managing the two Africa & RoW teams.

One of the most innovative changes in 2019 was the move towards gender diversity in the energy sector. As a business with 75% female leadership, all sessions in Lisbon were moderated by 52 of the most brilliant women in the energy sector. Matteo Brambilla, the managing director of Building Energy, summed up the mood of investors in Lisbon: “Meetings that usually take place over six months can be completed in three days … we only do one show a year and it’s this one. We do one and do it well.”

The challenges remain

The topic of financial sustainability of utilities was raised by attendees to this year’s aef, as they felt this presents a major hurdle to attracting power investment. Energy expert, Anton Eberhard, from the Graduate School of Business at the University of Cape Town, explained that South Africa’s state-owned utility Eskom was “effectively insolvent”.

In a knee jerk reaction, utilities often increase electricity prices in the hope of reaching cost-reflective tariffs. However, there are examples of tariff hikes, which merely increase the strain on utilities by scaring off investors worried about what to do in the event of off-taker bankruptcy.

The Forum’s attendees are also concerned that demand for electricity remains low in many African regions, threatening the viability of new projects. Stakeholders argue this challenge is a ‘chicken and egg’ situation, as new power delivered reliably to consumers will change energy users’ behaviour, triggering business and residential activity and driving power demand.

Andrew Herscowitz, coordinator of Power Africa, a US initiative established by former president Barack Obama to widen access to electricity on the continent, told the forum mini and micro-grids are not commercially viable at present and expressed doubt about their effectiveness in lifting African people out of poverty and supporting industrialisation.

Herscowitz was not the only sceptic, with many African state representatives arguing they are still trying to find methodologies to define the right electricity tariff to accompany mini-grids. Others argued that the business models behind mini-grids needed improvement to make them commercially viable.

Off-grid and grid connected development has increased access to electricity; however, there remains a need for power solutions to be innovative and tied to customers’ needs. The innovation message at aef includes the need to facilitate knowledge transfer from international companies to African stakeholders, to empower local communities.

About the event

Africa Energy Forum is a deal-making platform gathering decision-makers from across the energy value chain to discuss opportunities for the investment and development of African power projects. Africa Energy Forum 2020 will take place in Barcelona, Spain between 30 June and 3 July 2020. To find out more visit www.africa-energy-forum.com or email aef@energynet.co.uk.

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