Key insights from the Africa Energy Indaba 2019 CEO Roundtables

By Admin – April 4, 2019

Africa Energy Indaba business@businessmatch.joburg via eversrv.com

8:45 AM (17 minutes ago)

The Africa Energy Indaba 2019 launched the inaugural series of CEO Roundtables, where CEOs and Leaders from across the continent gathered to address some of Africa’s energy challenges from a business perspective. There are 600 million Africans without modern access to electricity and the rising crisis of youth who won’t be able to find jobs. The scale at which the need is rising is disproportionate to our ability to service that need. The purpose of the discussion was to brainstorm solutions for the benefit of business and the African consumers; and to turn vision into action.

CEO Roundtable 1: The business challenge of on-grid vs. off-grid energy supply

CONTEXT AND CHALLENGES

We are moving from consumers to prosumers (produce and consume).
Utilities require a new approach as many have not adapted to the changing needs.
The challenge of accurately predicting outcomes when dealing with new developments.
Realities of regulatory problems and the fine line between over- and under-regulating.
For the economy to grow we need base load supply. While off-grid solutions can help to uplift communities, grid infrastructure provides more opportunity.

POSSIBLE SOLUTIONS & NEW WAYS OF THINKING

The entrepreneurial opportunity of providing the energy for the future:
– Learning from other business models e.g. the mobile phone industry
– Technology is now available to offer hybrid solutions suitable for industrial applications
– Integrated approach by communities can drive innovative solutions e.g. cow dung biogas
A shift in thinking from “on-grid vs. off-grid” to “distributed vs. centralised” leads to new opportunities and solutions which arise from existing together in a synergistic manner.
Alternatives to load shedding: The advancements in batteries might offer a possible solution; or tariff increases during peak hours could shape behaviour more voluntarily.

CEO Roundtable 2: Funding and Credit ratings

CONTEXT AND CHALLENGES

Funding is available but there are not enough bankable projects – how to get more projects to bankability?
Instability shocks investor confidence. If investors return, it is at a higher cost due to political risk insurance which ultimately lead to higher prices for the consumer and reduces ROI.
Credit rating is a problem: entities and off-takers are more credit-worthy than some countries. A good credit rating is required to source the funding needed to improve the energy access issue.
How to tap into the gap in residential demand?
Need alignment with the regulator on all aspects including water, energy and environmental.

POSSIBLE SOLUTIONS & NEW WAYS OF THINKING

Combined financing: Liquidity facility or supports to bridge the utility payment delays, mitigates some of the credit risk and can help to improve credit.
Advantage of aggregation: Instead of competing for the same projects, DFIs and commercial banks could share the load of the many risk profiles which exist in one project. Another option is clustering smaller projects in one portfolio, leading to a more sustainable investment option.
Accountability of the consumer, to ensure continued private sector involvement.
Off-takers who do not rely on government will become more common.
A system operator which is be regionally based could be one solution.