Power sector investment trends in Sub-Saharan Africa

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1 Power sector investment trends in Sub-Saharan Africa Prof Anton Eberhard Graduate School of Business University of Cape

2 Power imbalances within Africa

3 Electricity generating capacity in SSA Country MW GDP (PPP) USD billions Angola Cameroon DRC Cote d Ivoire Ethiopia Kenya Mozambique Nigeria South Africa counties account for 90% of capacity 30 countries have gridconnected power systems smaller than 500MW 13 smaller than 100MW Few economies of scale Large energy resources remain undeveloped Sudan Zambia Zimbabwe SSA Total SSA-RSA

4 Africa is short of grid-power: cf reliance on back-up generators % firms with generators % electricity from back-up generators Source: World Bank Enterprise Surveys (2014)

5 100 Power shortages exacerbated by poor performance of existing power plant e.g. South Africa s Eskom

6 Generation capacity additions in Sub-Saharan Africa (MW) SSA (left axis) SSA-RSA (right axis)

7 Countries that have added the most MWs since 2000 Rest Cameroon Madagascar South Africa Uganda Senegal Cote d'ivoire Kenya Sudan Ghana Angola Ethiopia

8 Investment in power in SSA (ex RSA) Excluding Government/Utility; US$m 3,000 2,500 2,000 1,500 1, IPP Investments China (private & public) Arab (private & public) ODA (OECD) DFIs (Multilateral)

9 2,000 1,800 1,600 1,400 1,200 1,000 Investment in power in SSA (ex RSA) Excluding Government/Utility; US$m, 5 year moving average IPP Investments China (private & public) Arab (private & public) ODA (OECD) DFIs (Multilateral)

10 1000 IPP investments in SSA (ex-rsa) US$m

11 2500 Countries with the most IPP capacity in SSA (ex RSA) MW Togo Rwanda Zambia Mauritius Cameroon Senegal Tanzania Uganda Ghana Côte d'ivoire Kenya Nigeria

12 Number of IPPs per country Kenya Uganda Mauritius Senegal Nigeria Tanzania Ghana Cameroon Côte d'ivoire Angola Zambia Togo Cape Verde Madagascar Sierra Leone Gambia Rwanda

13 IPPs by technology SSA (ex RSA) Waste/bagasse 3% Hydro, large 5% Coal 3% Geothermal 2% Hydro, Small (<50MW) 1% Wind, Onshore 6% HFO+MSD/HFO 17% OCGT+CCGT 62%

14 Chinese supported power projects in SSA (MW) Wind, Onshore, 201, 3% Coal, 900, 12% HFO +MSD/HFO, 10, OCGT+CCGT, 1672, 22% Hydro, large, , 63%

15 South African Renewable Energy IPP Programme +- US$19 bn 92 projects 6327 MW..since 2011!

16 Dramatic price reductions in South Africa REIPPP competitive tenders (ZAR c/kwh) Round 1 Round 2 Round 3 Round 4 Onshore wind Solar PV

17 South African REIPPP debt funding (1-3) International 14% South African 86% DFIs 31% Life funds 5% Commercial Lenders 64% 17

18 Billions no. of projects per lender South African REIPPP major debt providers (1-3) ZAR 18 ZAR 16 ZAR 14 ZAR 12 ZAR 10 ZAR 8 ZAR 6 ZAR 4 ZAR 2 ZAR 0 Nedbank Standard RMB ABSA IDC DBSA EKF Investec Old Mutual IFC Rest Window1 Window2 Window3 The rest category includes OPIC, AfDB, Liberty Group, ACWA, EIB, Sanlam, FMO PROPARCO and Sumitomo

19 no. of projects per shareholder 18 South African REIPPP Prominent shareholders (1-3) More than 100 different shareholder entities - 46 participated in 2 or more projects

20 Uganda GET FiT Programme Uganda now has more IPPs than any other African country (ex RSA) 15 projects approved totaling 128MW, next week more Mostly small hydro, but also bagasse/biomass More recently 2x PV Premium Payment Mechanisms on FIT Robust competitive procurement process (assessed on technical/environmental/social/economic merit) With bankable PPAs, IAs, DAs And World Bank PRGs (but not utilised)

21 Summary of Macro Investment Trends IPPs and China are now fastest growing sources of funding for power projects But still insufficient to meet power demand Concessionary DFI and ODA sources remain modest, but for some countries are still NB Most IPPs have been thermal; most Chinese projects are hydro, but this changing Grid connected renewable energy markets taking off Potential to learn from RSA & Uganda programmes but with lower transaction costs Grid-connected renewables need to be backed by reliable dispatchable power such as gas

22 Thank you for your attention Prof Anton Eberhard Graduate School of Business University of Cape