This year, the African Energy Forum (AEF) hosted in Dubai began with six African ministers of energy presenting their development plans, and ended yesterday with 11 committees showcasing their investment opportunities and upcoming power projects on the continent.
A focal point of interest throughout the AEF sessions was around financiers’ and especially private equity funds’ readiness to invest. An equally important recurring theme extended to how to get this investment flowing, ESI Africa reports.
Emphasis on regional power pools
The level of engagement between participants included conversations around renewable energy, cross-border grid connectivity with emphasis on the role of regional power pools to develop these, as well as a mix of generation technologies including natural gas and fossil fuels.
Peter Ballinger, director at OPIC told ESI Africa editor, Nicolette Pombo-van Zyl: “There have been conversations about renewable energy, interconnectivity between the grids, the Southern African Power Pool, the East African Power Pool , a lot of discussions around Mozambican gas and how that can be used in Southern Africa.”
He added: “It is very clear that the private sector companies that are here understand that the growth rate is quite high in sub-Saharan Africa even though they are somewhat diminished elsewhere, so there is a great deal of interest.”
Listen to the full interview with Ballinger here:
Debating off-grid solutions and investment
African ministries of energy are now more open to explore options to scale down and distribute projects in an off-grid manner, or off-grid systems that are then more palatable to finance individually. As governments in Africa still face considerable challenges there exists opportunity in examining the details of their current policies and the details of their tariff structures.
Christopher Steinbach, Managing Director, Yingli Africa explains: “It is exciting to see that governments are considering smaller programmes, yet also continuing to seek information about how to move forward on the bigger utility scale projects where their tariffs need to be aligned to make sense for both the country as well as the investors entering the market.”
He added: “An interesting topic addressed at the conference was how to take the learning from the South African programme – that has been a huge success, where pricing was driven down to about $0.5c (ZAR6) per watt for PV – can you take that programme and policy and move it to another African country?”
Listen to the a live interview with Steinbach here:
The South African programme template
This year conversations at the AEF showed a clear path in terms of where Africa is going – projects that have been in play for two to three years are now showing progress; and financiers are becoming more comfortable with managing the risk factors and trying to be more creative in how they can support these programmes and projects.
Karen Breytenbach, Head of IPP Programme, National Treasury South Africa and ESI Africa special correspondent at the AEF participated on a panel that discussed how Eskom’s renewable energy programme managed to grow so quickly whilst taking into consideration the sensitivities around economic and small business development as well as the socio-economic objectives of government.
On the newly announced gas programme, Breytenbach said: “We [South Africa] will look at imported gas and Silas [fellow panellist and presidential advisor,, Silas Zimu] also mentioned that we need to look regionally and see how we can encourage regional integration.”
Listen to the interview with Breytenbach:
In a side-discussion that took place between the DoE, KfW German Development Bank and the DBSA the Facility for Investment in Renewable Small Transactions was discussed. This is an initiative that aims to assist in the financing of projects that seek to participate in South Africa’s Small Projects Independent Power Producer Procurement Programme.
“We run a small renewable energy programme for under 5MW, but funding those small programmes is as expensive as funding the larger programmes – as the transaction costs are basically the same”, said Breytenbach.
Shiddika Mohamed, programme director of EnergyNet’s African Energy Forum shared an insightful moment from the event, stating that: “The Minister of Ghana said ‘if we [Ghanaian government] do not stop load shedding by December 2015, I will step down’ –That’s quite a commitment.”
Listen to the interview:
Mohamed concluded: “Debate in some of the sessions covered whether we should be driving the development of renewable energy alone or whether we should include more fossil fuels in this drive.”