The Summit, which took place in Cape Town from 4 to 5 October, saw green energy attracting finance as international investors were presented with a plethora of Africa’s renewable-energy opportunities.
Private Power is Booming
Rand Merchant Bank’s (RMB) CEO, Emrie Brown, during the event, identified a growing trend for metros and private companies to either generate their own power or to source it from third parties as power opportunities expanded beyond the state utility, Eskom.
According to an international media statement, financial institutions such as RMB are seeing value in funding independent power initiatives. Brown said South Africa’s (SA) current energy shortfall was estimated at around 6 000MW, but ballooned to around 15 000MW if taken into account Eskom breakdowns and its plans to retire power stations at end of life.
To resolve the energy crisis would require significant investment from both the private and public sector. Brown said it was estimated that the total power-sector investment until 2030 would be R1.2 trillion ($67 billion). It is estimated that over the next three years, $7.5-$10 billion would be required to fund the government renewable-energy programme alone.
Banks Believe RE to be Financially Rewarding
Brown told the many delegates RMB believed such programmes to be highly bankable, requiring 80 to 85% of debt. She said the bank was encouraged by increased activity in the sector under the Renewable Energy IPP Procurement Programme (REIPPPP), the risk-mitigation IPP programme and initiatives by municipalities such as Cape Town, eThekweni and Johannesburg to set up their own power-generation programmes.
“We fully support these initiatives and believe they’re a critical part of our energy transition,” said Brown. “Private power is booming! Private companies now either generate their own power, or they source it from third parties.
She also said it was critical to continue to facilitate registration and licensing of generation capacity and to gain clarity around wheeling of power across SA’s network.
UK Promises Commitment to African RE
Delivering a keynote address at the GEAS, United Kingdom (UK) trade commissioner for Africa, John Humphreys, agreed that renewables represented a significant investment opportunity for international, as well domestic companies. “Renewables are a good investment,” he said. “Renewables are bringing down the overall cost of energy and making business more efficient, which makes it an increasingly attractive investment.”
Humphrey emphasised that the UK was committed to investing in Africa’s green-energy potential. “With a growing population and an economy worth $2.4 trillion, there are huge opportunities across African emerging sectors such as technology, clean energy and sustainable infrastructure,” Humphreys said. “We are excited to be growing the UK-Africa relationship in these industries.”
Brown said only a fraction of Africa’s energy potential was currently being exploited in areas such as hydropower, solar, biomass, wind and geothermal energy and called for domestic and international capital to be mobilised for innovative financing in Africa’s energy sector with a focus on renewable energy. “Electrification efforts need to be open to private-sector investment and innovations, such as solar energy and battery storage, which have made a tremendous impact in enabling access for millions of poor and underserved households.”
According to experts, the challenge of Africa’s energy transition was twofold-managing the risks to vulnerable communities directly impacted by climate change, while at the same time supporting the people whose lives are inextricably linked to the fossil fuel industry and for whom that transition represents a direct threat to the livelihoods.
“The greatest challenge is to deliver the vision of a just transition – a more socially inclusive society, which has managed the social risk of the change and sees the economic opportunity that the change brings.” Emcee Brown, CEO RMB
GEAS Vice President of Energy, Paul Sinclair, said the views of business leaders supported the mission of the Summit to improve sustainable energy access in a way that made business sense. “We completely agree that there are great opportunities in low-carbon energy,” he said. “This event is all about enabling investment into new energy projects, providing energy access and shaping the future of Africa.”
