NABA Summit Summary: Session III – Renewable energy

With a forecast of 93 percent increase of power demand between 2014 and 2035, the African continent faces both opportunities and challenges in providing sustainable energy sources to the African consumer.What is the role of renewable energy in the African power policies? How can government policy help boost Norwegian investments in the renewable energy in the continent? – And how can government officials and the private sectors facilitate knowledge transfer between Norwegian and African companies? The session invited the private sectors and government officials to discuss best practices, government policies and knowledge transfer.Panellists discussed the opportunities and challenges in increasing access to affordable and reliable power; and ways the private sector and government are collaborating in tackling these challenges. They highlighted the importance of including renewable energy in Africa’s energy strategies and the cooperation between African governments and the private sectors in addressing policies and regulations in promoting sustainable economic development. Bureaucratic delays to projects and lack of cost-reflective tariffs are some of the barriers to investment. For example, Mr. Donovan, Partner at DLA Piper (UK) noted that government should provide and assist project companies in obtaining all necessary permits and licenses. The right regulatory frameworks must therefore be in place in order to attract investment in the sector. Panellists also addressed the need for a holistic approach to energy development, which ties technology to socioeconomics aspects of project countries. Mr. Anderson from Multiconsult explained how they provide capacity building and monitor the socioeconomic and environmental relations in order to create efficient and viable energy solutions for sustainable economic and social development.

We must find ways for creating financial sustainability in order to create access to renewable energy in the poorest countries

– Mr. Morten Svelle, Coordinator for Clean Energy , Ministry of Foreign Affairs.Mr. Svelle highlighted the government’s strategic goals and directions towards renewable energy in the developing markets. There is a focus of contributing to a sustainable economic growth by providing universal access to modern energy for productive use and increasing the share of renewable energy in the global energy mix. As such, the Norwegian government’s strategy of supporting power projects in the developing economies is shifted towards a more result-oriented approach. Mr. Svelle noted that Norway supports the UN sustainable energy for all, which defines some strategies and possible indicators for evaluating the effects of the government’s efforts.Mr. Svelle addressed institutional challenges in the development of renewable energy strategy. He noted that Universal access for productive use of energy is essential, and building on the country’s energy strategy is vital in creating a sustainable national power system that would help foster economic growth. Government subsidies in the power system can undermine the sustainability of the project and weaken investment opportunities, and Mr. Svelle stressed on the importance of strengthening the support of private investments in power production. Reducing risks at the early stage of the project implementation is also vital for attracting investments. He calls out for a stable and solid power system and affordable prices, and encourages the Norwegian private sectors in building a cluster on energy competence based on investment, technology, experience and research so that the global community creates sound and sustainable energy systems in developing economies.

Many African countries can jump over the fossil infrastructure, and move towards a future which accommodates renewable energy

– Mr. Terje Osmundsen, Senior Vice President, Scatec Solar.Mr. Osmundsen addressed the competitiveness of PV and the challenges of discovering renewable opportunities in the African continent. How can we make sure that we are not putting too many barriers for investment in the development of renewable energy? He pointed out that the cost of renewable is not high, and the cost for construction will be reduced when production costs are reduced. Scatec Solar has a strong focus in Africa, and the company has been developing power plants in several African countries.Mr. Osmundsen highlighted the economic opportunities of renewable energy. For example, he mentioned that the cost of capital is decisive for PV competitiveness. Reducing production cost and access to competitive loans are some of the key elements in PV projects. He noted that  that most African countries can expand renewable energy without great difficulties, and many African countries can jump over the fossil infrastructure, and move towards a future which accommodates renewable energy. However, the challenge in most African countries is discovering opportunities at an early stage. Maximising the local content have therefore been an essential aspects in Scatec Solar’s strategy. Mr. Osmundsen urges African countries to start their power strategy with focus on renewable energy.

The corporate social responsibility to cover the construction of a power plant is interesting. APSD does not and will not displace residents during the construction of plantations

– Finn T. Jacobsen, African Plantation for Sustainable Development (APSD)Mr. Jacobsen addressed the challenges of providing access to energy in local communities in Ghana through knowledge transfer, community empowerment and social responsibility. Access to local firewood and charcoal play an important part of the energy mix of many of the poorest African communities. However, lack of sustainable approach is having unfavourable impact on forests and environment, which in turn deteriorates the living conditions of local communities. APSD’s initiatives in Ghana have the potential of ending this trend.The company is a great example of knowledge transfer and corporate social responsibility (CSR). Founded by Mr. Erling Sven Lorentzen, a world leader in the paper and pulp industry, APSD transfers expertise in Eucalyptus forestry management to biomass-fuelled power plants in Ghana.  The company is involved in two projects in Ghana, which have a strong focus in strengthening agriculture, charcoal burning and capacity building. One of the projects focuses on carbon neutral thermoelectric power generation fuelled by biomass from sustainably managed eucalyptus plantations. The second project involves plantation development in the areas of Brong Ahafo Region of Ghana. Mr. Jacobsen noted that the plantations would contribute in reversing the rapid deforestation of Ghana, while capturing and storing substantial volumes of carbon dioxide. Planting more trees is hence a critical factor in APSD strategy. Mr. Jacobsen stressed on the importance corporate social responsibility, as APSD does not displace residents during the construction of plantations.

A lot of the challenges of renewable project is related to attracting investments and getting governmental approval. Government should provide and assist companies with obtaining all necessary permits and licenses

– Mr. Ben Donovan, DLA PiperMr. Donovan addressed the financial and legal aspects of project development in the African continent. The challenges of renewable project in the African context is related to attracting investments and getting governmental approval. He noted that the juridical technicalities with power projects are very complex and important, and must be in place from the start of the projects.There is a complex contractual relationship in power projects in the continent. Lack of developed power markets or merchant markets and historical IP industry means that economic stabilisation is required to support foreign investment. Lack of legislation and historical protections often mean that bilateral government support and assistance is required in reaching full potential. Collaborating with the governments at an early stage of the project development is often necessary and beneficial. Mr Donovan stressed on the importance of administrative support, economic stabilisation provisions, financing, government support and cost-reflective tariff in the development of power plants in the African continent. Government should therefore provide and assist companies with obtaining all necessary permits and licenses.

We help avoid barriers by assisting investors, project developers, policy-makers and energy system regulators in making qualified and decisions based strong analyses and technical understanding

– Mr. Ryan Anderson, Section Leader Renewable Energy, MulticonsultMr. Anderson shared his experiences from the GET FiT (Global Energy Feed in Tariff) Program. GET FiT is a new mechanism for mobilizing private investment in developing countries. The concept of the programme combines the mechanisms and structures of the public sector with those of the private sector. Multi Consult led the implementation of GET FiT program in Uganda with multidisciplinary services. The program in Uganda aims to increase private investments in renewable electricity generation in Uganda, with the construction of up to 20 projects during the next five years. As an implementation consultant, Multiconsult implemented the program on behalf of the Government of Uganda by providing services in the field of management, engineering sciences, environmental consulting, financial, legal appraisals of projects and construction supervision.Mr. Anderson mentioned that Get-Fit financing has taken 2.5 years to get “all the wheels running”. The project is now bankable, and there is a power purchase agreements in place. He noted that Multi Consult  avoid  barriers by assisting investors, project developers, policy-makers and energy system regulators in making qualified and decisions based strong analyses and technical understanding.Writer: Dede Koesah