African opportunities

agascar, who also ran for the country’s presidency in 2013, offered another interesting view on doing (energy) business in Africa. Energy projects in Madagascar, she said, are awarded via the back door, while bidding rounds go on forever. The power sector in Madagascar lacks foreign investment. There are solutions, Rasolovoahangy believes, but she laid bare the fact that foreign renewable power investors will not come to the country unless they are given some sort of guarantee.

Uganda

There is opportunity for solar PV development in Uganda through the country’s Get FiT scheme. In fact, four PV projects (each of 5 MW capacity) have been approved via the Get FiT scheme and are expected to be commissioned by the end of the year.
The Get FiT program is operated by Germany’s KfW investment bank, which, according to reports will “run the tender process, sign the required agreements, manage funding commitments, and generally promote the program.” The downside is that the last round of proposals for the program in Uganda was concluded in June 2015, leading to a portfolio of 17 projects totaling 157 MW of green energy. Due to limited funding, unfortunately it is not certain whether the program will continue in Uganda for much longer.
Theoretically, there is a lot of potential for solar PV growth in the country, given that only 15% of its population has access to electricity. Uganda is powered predominantly by large hydro plants and to a lesser extent by thermal plants.

Nigeria

The last few months have been a roller coaster for Nigeria, which has faced acute currency problems. Belen Castuera, Chief Investment Officer at the International Finance Corporation (IFC), told the Forum “the swap market has dried up due to the Naira issues.”
“A solution to the currency crisis, which is largely due to the plummeting price of oil, is that while our PPAs are in Naira, the local currency, they are indexed in dollars. Such a mechanism can attract foreign investors, however the deals need to be transparent,” said Waziri Bintube, CEO at the Nigerian Bulk Electricity Trading plc (NBET). NBET is a government-owned company that manages the Nigerian electricity industry. In July, they signed PPAs for a number of projects. These make several PV projects bankable, and indicate that they may reach financial closure relatively soon.
Another problem in the Nigerian electricity market, and throughout the African continent, is inefficient debt collecting mechanisms. “Distribution companies do not make enough effort to collect the debt from consumers,” said Bintube, who added that many houses do not even have a meter installed. “Given the current balance sheets of electricity distribution companies,” argues IFC’s Castuera, “Nigeria cannot develop minigrids and other smart energy projects. Such projects need liquidity.” She also noted, however, that an increase in electricity tariffs in Nigeria was a very good sign, which the government will hopefully continue.

Stick to your plans

“Energy projects in Africa have been slow over the past year,” Andrew Herscowitz, of the USA’s Power Africa, told the event. This is mainly due to macroeconomic conditions, for example many African governments not having sufficient funds to invest in infrastructure projects, Herscowitz argued.
In the following months, Herscowitz expects Africa to generate some good news regarding clean energy. The Nigerian crisis appears to be calming; Ethiopia is expected to implement the solar tenders it announced; and most importantly renewable energy systems are increasingly becoming cost competitive with fossil fuels. For this reason, Herscowitz’s biggest worry is sudden policy change and unstable regulations. “Costs are not going to decrease if investors are scared to invest,” he concluded.
Even if African governments establish bold plans and stick to them, renewable energy development faces a series of structural issues, such as non creditworthy utilities, the need for international guarantees, lack of renewable energy experience, corruption, and so on. The first fruitful cooperative schemes between African states and international financial and development institutions have been established and rolled out, such as the World Bank’s “Scaling Solar.” But across the continent, there is still a whole lot more to achieve.
to build the power system from scratch,” Liberia’s Minister of Land, Mines and Energy Patrick Sendolo told the Forum. The ministry does have a master plan according to Sendolo, however expectation is not high among solar investors. The ministry is looking for $1 billion of international funding to invest in the energy sector in the next four to five years. The first priority though is to develop the grid and build substations.

Sierra Leone

Henry Macauley, Sierra Leone’s Minister of Energy, presented a very common problem for the African continent. “There are many opportunities for investments and partnerships in the energy sector,” said the minister, “however, there is no grid infrastructure or collection mechanism in place,” he added. The existing infrastructure is very old, while the electricity tariffs often cannot be collected. The country therefore needs to embark on new initiatives that provide for electricity tariff collection and account arrangements. Sierra Leone’s minister said the country has a mere 100 MW of installed generation capacity, which it aims to increase to 1 GW by 2018.

Kenya

Kenya has set forth its “Vision 2030” long-term development program, aiming to transform Kenya into a middle-income country by 2030. Under Vision 2030, energy has been identified as one of the key infrastructure sectors upon which economic growth will be based. Therefore, the country seeks to increase its power production by 23 GW before 2030. The majority of this new generation will be derived from projects developed by independent power producers with a focus on renewable energy sources. Today, one quarter of power in Kenya is generated via IPPs.
According to Isaac Kiva, Director of Renewable Energy at the Kenyan Ministry of Energy and Petroleum, the country has provided electricity connection to 54% of its population, up from just 29% in 2013. Their target is for 70% connection by the end of 2017, and 100% by 2020.
Furthermore, Kenya also announced plans to increase interconnection with neighboring countries. “A new link with Ethiopia is already approved and financing will soon be announced,” revealed Kiva.
Power Africa has said that Kenya is “focused on sustaining a stable investment climate for private-sector participation in energy, developing expanded transmission and distribution networks to deliver power to customers, maintaining a creditworthy off-taker, maintaining cost-reflective tariffs, and reducing inefficiency to support more affordable end-user tariffs.” However, it was not made clear at the Africa Energy Forum whether Kenya aims high for solar PV. Currently, hydro, geothermal, and thermal systems power the country, and certain flagship solar PV and wind projects have also been announced. But there is no clear mandate for future PV growth.

Zambia

Part of the uplifting mood at the Forum came from Zambia’s announcement that it had achieved a goal that many considered to be a long way off. The country has tendered 100 MW of large-scale solar PV parks under the World Bank’s “Scaling Solar” program, with electricity to be sold for as little as $0.0602 per kWh.
Zambia has 2 GW of installed capacity, virtually all of which is hydro. Currently, only 25% of the urban population and 3% of the rural population have access to electricity. The vast majority of power in Zambia, including generation, transmission and distribution, is operated by state-owned utility Zesco. Victor Mulenga Mundende, Managing Director at Zesco, told the Forum that there was an energy crisis recently in Zambia, because water reservoirs were running very low. So, the government wants to diversify the energy mix. The country will bring new hydro and thermal plants online soon (including a thermal plant near Mozambique) and also plans interconnection lines with surrounding countries, some of which are in the procurement phase. Nevertheless, Mundende said, solar PV has entered the picture too with
300 MW tendered in the first phase likely to be followed by a second phase tendering a similar amount of solar PV projects. “The goal now is to offer electricity to consumers at a cost reflective tariff,” Mundende concluded.

Madagascar

Emma Rasolovoahangy, the Founder and CEO of oil explorer Petromad in Mad
Forum. “The country is dependent on energy imports – notably oil – today, and since it is a mining country we need energy to sustain the mines and our economy,” said Dissa.
Based on the minister’s presentation at the Forum though, opportunities for the solar sector lie predominantly within the household segment. Dissa noted that “80% of households will be asked to fit renewable energy hybrid systems, e.g. using solar,” adding that the ministry is also planning solar installations for remote communities. He didn’t mention any large-scale solar PV plants.

Ethiopia

Motuma Mekassa, Ethiopia’s Minister of Water, Irrigation and Electricity, offered perhaps the biggest surprise of the Africa Energy Forum. The country, Mekassa said, is going to tender 5,200 MW of solar PV installations. This news was also confirmed in a talk by Andrew Herscowitz; U.S. President Barack Obama’s Coordinator for Power Africa. Herscowitz stated that Ethiopia has announced firm plans for solar power projects.
Today, Ethiopia relies predominantly on hydropower, which accounts for 98% of generation. Ethiopia’s growing economy means that the government is looking to expand the country’s infrastructure, investing in all main sectors, including energy. Given the vulnerability of focusing only on hydropower development, the ministry is diversifying and developing solar, geothermal and wind power too. The selection of generation technology has been based on cost analysis of the available supply options.

Ghana

Ghana’s acting Minister of Power John Abdulai Jinapor’s presentation was highly anticipated among investors, who are encouraged by the country’s Scaling-up Renewable Energy Program (SREP) investment plan. According to the plan, a total of $230 million has been earmarked for the scale-up, in which solar PV is expected to play a significant role.
The minister said that Ghana has installed a mere 23 MW of solar PV power, which corresponds to about 1% of the country’s energy mix. The bulk of Ghana’s energy capacity comes from large hydro, and thermal systems have comprised an additional 2,195 MW of capacity corresponding to 42% and 57% of the energy mix respectively.
The government aims to achieve universal access to electricity for all Ghanaians by 2020, and renewable energies are set to play a leading role, said Jinapor. The Renewable Energy Act is the means to reach this goal. The Act provides for
200 MW (dispersed among 200,000 units) of rooftop solar PV capacity; utility-scale renewable energies to be allocated via tendering schemes; the development of microgrids for islands and lakeside communities, and off-grid installations. At the moment, the ministry is also working on the development of a robust wholesale electricity market, which will facilitate the exchange of power with neighboring countries.

Liberia

The Liberian energy market is an extreme case. Power infrastructure was entirely destroyed in the civil war which ended in 2003. Therefore, “the country needs

Côte d’Ivoire

Adama Toungara, Minister of Petroleum and Energy, told the Africa Energy Forum that Côte d’Ivoire aims to become the number one energy market in Sub-Saharan Africa. Specifically, there are many opportunities for renewable energy investment in the country thanks to the plan to increase the share of renewables from 1% today (generated from biofuels) up to 11% in 2020 (excluding big hydro plants).
The ministry has set a strategic plan for the development of the electricity sector by 2030. Côte d’Ivoire can achieve its goals, said Toungara, because its energy market is built around agreements with independent power producers (IPPs). The energy plan of Côte d’Ivoire has identified 66 projects that will require massive private-sector investment, including through public-private partnerships (PPPs) with independent power producers. Specifically, the country’s strategic plan for 2030 will need $16 billion in investment for generation, $2.6 billion in transmission, $2 billion in distribution and $1.2 billion in rural electrification projects, Toungara estimates. However, to put these installations in perspective, one needs to remember that the country has only installed about 1,500 MW of power generation facilities to date, aiming to increase this to 3,500 MW by 2020. The energy mix of Côte d’Ivoire today consists of 68% gas, 25% large hydro, 6% diesel, and 1% biofuel installations.

Burkina Faso

“Energy is our challenge,” stated Oumar Dissa, Burkina Faso’s Minister of Energy, Mines and Quarries, at Africa Energy