Power sector investment trends in Sub-Saharan Africa Prof Anton Eberhard Graduate School of Business University of Cape Town @AntonEberhard www.gsb.uct.a.za/mir
Power imbalances within Africa
Electricity generating capacity in SSA Country MW GDP (PPP) USD billions Angola 1657 102.55 Cameroon 1007 41.72 DRC 2506 22.31 Cote d Ivoire 1522 31.84 Ethiopia 2127 82.97 Kenya 1816 62.81 Mozambique 2429 20.61 Nigeria 5900 363.42 South Africa 44283 489.59 12 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 3038 91.65 Zambia 1819 19.28 Zimbabwe 1966 3.79 SSA Total 80225 1811 SSA-RSA 30364 1321
Africa is short of grid-power: cf reliance on back-up generators 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 % firms with generators % electricity from back-up generators Source: World Bank Enterprise Surveys (2014)
100 Power shortages exacerbated by poor performance of existing power plant e.g. South Africa s Eskom 95 90 85 80 75 70 65 60 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Generation capacity additions in Sub-Saharan Africa (MW) 85 50 80 45 75 40 70 35 65 60 30 55 25 50 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20 SSA (left axis) SSA-RSA (right axis)
Countries that have added the most MWs since 2000 Rest Cameroon Madagascar South Africa Uganda Senegal Cote d'ivoire Kenya Sudan Ghana Angola Ethiopia
Investment in power in SSA (ex RSA) Excluding Government/Utility; US$m 3,000 2,500 2,000 1,500 1,000 500 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IPP Investments China (private & public) Arab (private & public) ODA (OECD) DFIs (Multilateral)
2,000 1,800 1,600 1,400 1,200 1,000 Investment in power in SSA (ex RSA) Excluding Government/Utility; US$m, 5 year moving average 800 600 400 200 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IPP Investments China (private & public) Arab (private & public) ODA (OECD) DFIs (Multilateral)
1000 IPP investments in SSA (ex-rsa) US$m 900 800 700 600 500 400 300 200 100 0 1994 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2500 Countries with the most IPP capacity in SSA (ex RSA) MW 2000 1500 1000 500 0 Togo Rwanda Zambia Mauritius Cameroon Senegal Tanzania Uganda Ghana Côte d'ivoire Kenya Nigeria
Number of IPPs per country 0 2 4 6 8 10 12 Kenya Uganda Mauritius Senegal Nigeria Tanzania Ghana Cameroon Côte d'ivoire Angola Zambia Togo Cape Verde Madagascar Sierra Leone Gambia Rwanda
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%
Chinese supported power projects in SSA (MW) Wind, Onshore, 201, 3% Coal, 900, 12% HFO +MSD/HFO, 10, OCGT+CCGT, 1672, 22% Hydro, large, 4864.1, 63%
South African Renewable Energy IPP Programme +- US$19 bn 92 projects 6327 MW..since 2011!
Dramatic price reductions in South Africa REIPPP competitive tenders (ZAR c/kwh) 300 250 200 150 100 50 0 Round 1 Round 2 Round 3 Round 4 Onshore wind Solar PV
South African REIPPP debt funding (1-3) International 14% South African 86% DFIs 31% Life funds 5% Commercial Lenders 64% 17
Billions no. of projects per lender South African REIPPP major debt providers (1-3) 25 20 15 10 5 - 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
no. of projects per shareholder 18 South African REIPPP Prominent shareholders (1-3) 16 14 12 10 8 6 4 2 - - More than 100 different shareholder entities - 46 participated in 2 or more projects
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)
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
Thank you for your attention Prof Anton Eberhard Graduate School of Business University of Cape Town @AntonEberhard www.gsb.uct.a.za/mir