More and more people with electricity in Africa

Compensating for the drastic energy shortages in Africa and making the renewable energy market in Africa sustainable. It is around these two subjects that the challenge for independent power producers (IPP) in Africa has been concentrated in recent years. These are players in a new dynamic market which, although firmly encouraged by the United Nations’ objectives for universal access to electricity by 2030, on the other hand conflicts with the difficulties of financing innovative activities in the area and giving guarantees to local companies in energy concessions. One interesting example is the IPP Globeleq, a London-based company established in 2002, which is under the ownership of shareholders CDC (70%), the UK government development finance institution, and the Norwegian Norfund (30%). The company is currently involved in the production of 1,400 megawatts (Mw) in the Sub-Saharan region, guaranteeing 30 percent of all the energy produced in the Ivory Coast and 25 percent in Tanzania, as well as numerous projects across South Africa, Kenya and Cameroon, with at least 2,000 Mw in the development phase.

In more detail, Globeleq generates a total of 440 Mw in the Ivory Coast, 304 Mw in Cameroon, 315 Mw in South Africa, 190 Mw in Tanzania and 75 Mw in Kenya. The company has recently initiated the construction of a 40 Mw photovoltaic plant located 50 km from Malindi (Malindi Solar), which should be up and running by mid-2020, while in South Africa it has acquired a rich portfolio (80 Mw) of renewable energy resources: this includes the 11 Mw Aries solar project, the 11 Mw Konkoonsies photovoltaic plant, the 31 Mw Soutpool solar plant and the 27 Mw Klipheuwel wind farm. The company will also shortly complete a 66 Mw solar project in Boshof. 

Globeleq’s fast rate of development is due to the public-private model, which is finding favourable conditions on the African continent. Backed by guarantees offered first by the British investment fund Actis, and now (since 2015) by the British CDC credit group, and by the Norwegian Norfund, the IPP works closely with state power companies in the countries where it operates as an energy distributor, fostering the dynamism of sometimes problematic industry contexts: this is the case with the twenty-year energy purchase agreement signed with the South African Eskom, weighed down by a debt of 30 billion dollars, or the agreement of the same duration entered into with the national utility company Kenya Power. The interest in working mainly in Sub-Saharan Africa also brings the group in line with UN objectives: the region has in fact the highest percentage of people in the world without electricity (600 million out of 1 billion inhabitants). Sixty percent of those live in rural areas. 

The challenge of expanding the installed electricity capacity in the continent, driven by a participatory model with local governments, has also led the company to focus on Angola. During the recent Africa Energy Forum (AEF) held in Lisbon, the group’s chairman, Fabio Borba, revealed ongoing talks with authorities in Luanda and in particular with the Minister of Energy and Water, João Baptista Borges, with regard to investing in the expansion of the combined cycle power plant on Soyo, an island located at the mouth of the Congo river. Borba explained that Globeleq is very interested in the project, with a view to helping strengthen the gas sector and abandoning the use of diesel generators. The proposal, which the Angolan authorities have shown interest in, involves private investments, above all in terms of infrastructure and energy production, with a model in line with government intentions, thus freeing up public resources to be invested in other areas where the private sector is less effective. As well as reducing electricity costs, the project also offers the opportunity to incentivise the use of renewable energy, in particular solar and wind, and to reflect on the establishment of a company in which the government would hold the majority capital. Borba values the investment for the organization of projects in the country at between 5 and 10 million dollars, and at least 100 million dollars for the construction of infrastructure.