GETFiT results, achievements and challenges in an Africa perspective Prof Anton Eberhard Graduate School of Business University of Cape Town @AntonEberhard www.gsb.uct.a.za/mir
Africa is short of power and too few have access 600 400 200 Generation capacity (MW per million population) 0 SSA South Asia East Asia Electricity consumption (kwh per capita per year) 1500 1200 900 600 300 0 SSA South Asia East Asia Electrification rate (Percentage of households) 100 75 50 25 0 0.15 0.12 0.09 0.06 0.03 0 SSA SSA South Asia South Asia East Asia Power prices (US$ per kilowatt-hour) East Asia Source: Africa Infrastructure Country Diagnostic
Reliance on back-up generators an indication of the inadequacies of grid-power 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)
Power requirements in SSA will double by 2030 and treble by 2040 to meet suppressed demand, power economic growth and widen access 1297 1020 812 400 514 640 2015 2020 2025 2030 2035 2040 Source : IEA, 2015
But investment in new power capacity in Sub-Saharan Africa has been slow, however is now picking up 85 50 MW 80 75 70 65 60 55 45 40 35 30 25 MW 50 20 SSA (left axis) SSA-RSA (right axis)
China and IPPs fastest growing source of investment in SSA $2,000.00 $1,800.00 5 year rolling average $1,600.00 Investment in $ millions $1,400.00 $1,200.00 $1,000.00 $800.00 $600.00 $400.00 $200.00 $- 1994 1995 1996 1997 1998 Sum of IPP Investments 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sum of China Flows (private & public) 2008 2009 2010 2011 Arab (private & public) 2012 2013 ODA (OECD) DFIs (Multilateral)
IPP capacity added in SSA (ex-rsa) MW 1000 900 800 700 600 500 400 300 200 100 0
DFI contribution to IPP investments $ 800.00 $ 700.00 $ 600.00 Investment Mn $ $ 500.00 $ 400.00 $ 300.00 $ 200.00 $ 100.00 $- 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 Investment DFI investment in IPPs
Countries with the most IPP capacity in SSA (ex RSA) MW 1521 1065.5 866 MW 656 100 100 170 271.8 304 351 427 445.9
Number of IPPs per country 0 2 4 6 8 10 12 KENYA UGANDA MAURITIUS SENEGAL TANZANIA NIGERIA GHANA CÔTE D'IVOIRE CAMEROON ANGOLA ZAMBIA TOGO CAPE VERDE MADAGASCAR SIERRA LEONE RWANDA GAMBIA
In four years, South Africa s Renewable Energy IPP Programme has attracted more investment and added more MWs than the rest of SSA over past 25 years +- US$19 bn 92 projects 6327 MW
In 4 years, wind energy prices in South Africa have fallen 48% and solar PV 71% (ZAR c/kwh) 300 250 200 150 100 50 0 Round 1 Round 2 Round 3 Round 4 Onshore wind Solar PV
Gobally, solar PV auction prices are falling sharply Utility-scale (>= 5 MW) Solar PV Auction Average or Lowest Tariffs, 2015-2016 25.0 20.0 20.0 PV Tariff (US$c/kWh) 15.0 10.0 5.0 3.0 3.5 3.7 3.8 3.9 4.1 4.4 4.8 5.0 5.8 6.0 6.1 6.1 6.4 6.5 6.5 6.6 6.9 6.9 7.5 7.7 7.8 7.9 8.1 8.5 8.7 8.8 8.9 8.9 9.2 9.4 11.6 16.4 15.2 0.0
Competitive tenders yield better price outcomes than directly negotiated projects or feed-in tariffs (Solar PV in Sub-Saharan Africa) 30.0 25.0 25.0 21.4 20.0 US$ c/kwh 15.0 16.4 18.0 10.0 10.8 5.0 6 0.0 Auction REFiT Directly Negotiated
GETFiT biomass and hydro outcomes 18 projects selected: 152 MW or 816 GWh/ p.a. of clean, renewable energy Total GET FiT commitment: 94 m, private investment of 442 m (leverage of more than 1:4.5) First bagasse project started commercial operations Q 1 2015; GET FiT payment September 2015 First hydro project has reached financial close, several have started construction 3 projects on reserve list, awaiting additional funding
GETFiT solar facility outcomes Tender launched January 2014; projects selected end of October less than 10 months Reverse auction principle to determine solar prices in Uganda 4*5 MWp or 34 GWh selected for support Total GET FiT commitment: US$ 18 m, private investment of US$ 59 m (leverage of 1:3) Implementation timeline about 1 year
Overall achievements of GETFiT Increased investment in small renewable energy projects Developed a pipeline of bankable projects Lowered transaction costs Developed standardized bankable documents and contracts (RfQ, RfP, PPA, IA, DA) Helped to de-risk projects Assisted developers to secure finance and lenders with due diligence
How can Uganda build on the GETFiT experience? Need to continue on path of competitive tenders for new power better investment & price outcomes than directly negotiated deals or FiTs builds a pipeline of bankable projects more transparent recent international RE auctions reinforce potential benefits Can use GETFiT RfP and standardised contracts (PPA, IA, DA) as basis for future auctions But can tweak and improve process and documents and learn from best practice internationally Need to build and sustain capacity to run effective auctions Key challenge is to de-risk projects to maximise international investor interest
Thank you for your attention Prof Anton Eberhard Graduate School of Business University of Cape Town @AntonEberhard www.gsb.uct.a.za/mir