23. May 2018
On Tuesday 15 May, Multiconsult hosted a one-day conference attended by numerous experts on solar power from both the public and private sectors. That mix of people would undoubtedly have pleased Astrup.
“To achieve global climate change goals, massive investment is needed. The private sector will play a critical part in that”, said the minister in his speech.
“The biggest obstacle to investment in Africa is risk. That’s why it’s important for countries to implement new legislation, and for us to continue contributing with things like training programmes. In order for collaborative projects to succeed, it is vital for the authorities and the private sector to work together, and for us to provide a predictable business environment” added the minister.
Broad exchange of experience
The full name of the conference was “International Solar Day: Africa in focus” and many of the talks were on key elements of the business environment such as legislation, transmission and distribution networks, financial conditions and technological development.
After Multiconsult’s CEO Christian Nørgaard Madsen had welcomed those assembled, senior advisor Mari Sofie Breline Furu, also of Multiconsult, gave the first talk. She presented a comparative analysis of four African countries. Last year Multiconsult studied the environment for investment in Kenya, Uganda, Mozambique and Tanzania, as well as analysing solar power auctions and the resulting prices.
“The 1.3 billion inhabitants of Africa need electricity, both off-grid and on-grid. 62.5 percent of the sub-Saharan population does not have access to electricity, and it will be impossible to give people in rural areas access to cheap energy without off-grid solar power”, argued Brelin Furu.
Auctions are currently the main strategy for procuring utility-scale power plants. In general, investment is increasing and prices are continuing to fall.
“But there are big variations in the prices resulting from the auctions”, she pointed out.
Kenya is leading the way
In its analyses, Multiconsult studied the relationship between the business environment and investment in renewable energy, as well as between various factors and the resulting prices for a large number of auctions. Unsurprisingly, the results show that the business environment is important: factors such as solar irradiation, the size of the auction and when it was held, as well as the general investment climate in the relevant country, only explain 50 percent of the price variation. This suggests that market conditions, sector-related risk and the design of the auction play a significant role, and should be given serious thought when planning and implementing auctions and bidding processes.
“Of the countries analysed, Kenya stood out by having attracted much more investment than the other countries covered by the analysis. Kenya was also the only one to have a rapidly growing off-grid market. This includes 13 independent power producers and 19 large off-grid power plants. Kenya has successfully created a business environment that makes the market more attractive and somewhat less risky than the other countries”, said Brelin Furu.
Many questions, some answers
Over the course of the International Solar Day, which was organised by Norwegian Energy Partners and the Norwegian solar energy cluster, there were a number of talks on topics ranging from opportunities in the Nigerian solar power market and knowledge-sharing about grid-connected solar to microgeneration and distributed generation. Between them, they partially answered the introductory questions raised by Jon Dugstad of Norwegian Energy Partners at the start of the conference:
“What have we learned by working on projects in Africa? What can we learn from other countries? What can we do as a country to reduce the risks involved? What should our priority markets be? And how can we ensure that projects in Africa are profitable?