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Promoting the set up of a: REGIONAL CREDITWORTHY INTERMEDIARY OFFTAKER AND POWER TRADING COMPANY

Mission STATEMENT

Africa GreenCo aims to increase private sector investment in energy generation in sub-Saharan Africa by mitigating the credit risks associated with the current lack of creditworthy offtakers. Current weak financial position of utilities and limited choice of an alternate buyer in case of utility default deters private capital. An intermediary aggregator between buyers and sellers can help attract sustainable investments in the power sector on the strength of a multi-buyer model. Its role as a financially sustainable intermediary offtaker and power trading company can also stimulate regional electricity trading and facilitate more efficient use of available and new resources by optimising them on a regional basis. Through its activities Africa GreenCo will increase the supply of, and the demand for, finance for energy projects, and mobilize private sector capital more quickly towards critical and transformative capacity additions, reducing pressure on utilities as well as financial liabilities for sovereign governments.

2x Population growth

5x Increase in GDP

70% Urbanisation

70% Grid access up
from 25%

4x Power Consumption
to 1600 TWh pa

More than $800bn in capital needed
$490 billion
for new generating capacity
$350 billion
for transmission and distribution
Value unlocked by regional approach:
$40 billion
in capital savings from integrated planning
$10 billion
African consumer savings of $10bnpa through lower LCOE
  • Lack of creditworthy counterparties for generation projects scale up
  • Rehabilitation of utilities is key but sustainable and material improvements can only occur in the medium to long term
  • The current project-by-project approach to electrification of the continent is unsustainable
  • The main issues created by the current funding model are that:
  • Support through existing instruments is not sufficient to address funding gap
  • Credit enhancement of projects on a one-off basis adds cost and delays
  • No single project is able to shift the attitude of commercial investors to bankability; a systemic and structural change is required
  • Putting the burden on governments to provide explicit and implicit guarantees or counter-guarantees shifts the creditworthiness issue to the sovereign level
African countries cannot continue to add contingent liabilities against these commitments given their current fiscal position and the medium term macro-economic environment
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Unlike current development efforts which mostly focus on project preparation, advocacy, capacity building or on the financing components for renewable energy generation, Africa GreenCo proposes an introduction of a principal in the market which addresses the core issue of creditworthiness of off-takers and the lack of a viable power market to sell electricity production.

The envisioned entity is an ambitious attempt to help increase the liquidity and scale of regional power trade and develop the power pools in sub-Saharan Africa by providing them with the first ever government co-owned, independently managed and financially sustainable electricity service provider capable of developing a fair and standardised electricity market.

Africa GreenCo would act as intermediary offtaker only and would not manage the physical transmission and distribution of energy. It would not own any of the grid infrastructure or seek to replace existing utilities. Rather than replacing existing structures, it complements them, and can further act as a bridge to any future energy regional market liberalization and energy trade integration. Africa GreenCo would help liquify and expand energy power markets by acting as a credit risk-mitigating intermediary for privately financed power projects through long-term power purchase agreements (PPAs) and back-to-back power sale agreements (PSAs) to various offtakers including state utilities.

Africa GreenCo aims to learn from, and where possible replicate, the dynamics of more advanced power markets, in particular building on the experience of the Power Trading Corporation of India (PTC India). PTC India was also set up in order to act as a credit risk mitigating intermediary offtaker for privately-financed regional power generators. In the process, it catalysed the entire Indian regional power sector trading market.

Challenges

2x Population growth

5x Increase in GDP

70% Urbanisation

70% Grid access up
from 25% in SADC

4x Power Consumption
to 1600 TWh pa

More than $800bn in capital needed
$490 billion
for new generating capacity
$350 billion
for transmission and distribution
Value unlocked by regional approach:
$40 billion
in capital savings from integrated planning
$10 billion
African consumer savings of $10bnpa through lower LCOE

Context

  • Lack of creditworthy counterparties for generation projects scale up
  • Rehabilitation of utilities is key but sustainable and material improvements can only occur in the medium to long term
  • The current project-by-project approach to electrification of the continent is unsustainable
  • The main issues created by the current funding model are that:
    • Support through existing instruments is not sufficient to address funding gap
    • Credit enhancement of projects on a one-off basis adds cost and delays
    • No single project is able to shift the attitude of commercial investors to bankability; a systemic and structural
    • change is required
    • Putting the burden on governments to provide explicit and implicit guarantees or counter-guarantees shifts the creditworthiness issue to the sovereign level
African countries cannot continue to add contingent liabilities against these commitments given their current fiscal position and the medium term macro-economic environment.

Strategy

Unlike current development efforts which mostly focus on project preparation, advocacy, capacity building or on the financing components for renewable energy generation, Africa GreenCo proposes an introduction of a principal in the market which addresses the core issue of creditworthiness of off-takers and the lack of a viable power market to sell electricity production.

The envisioned entity is an ambitious attempt to help increase the liquidity and scale of regional power trade and develop the power pools in sub-Saharan Africa by providing them with the first ever government co-owned, independently managed and financially sustainable electricity service provider capable of developing a fair and standardised electricity market.

Africa GreenCo would act as intermediary offtaker only and would not manage the physical transmission and distribution of energy. It would not own any of the grid infrastructure or seek to replace existing utilities. Rather than replacing existing structures, it complements them, and can further act as a bridge to any future energy regional market liberalization and energy trade integration. Africa GreenCo would help liquify and expand energy power markets by acting as a credit risk-mitigating intermediary for privately financed power projects through long-term power purchase agreements (PPAs) and back-to-back power sale agreements (PSAs) to various offtakers including state utilities.

Africa GreenCo aims to learn from, and where possible replicate, the dynamics of more advanced power markets, in particular building on the experience of the Power Trading Corporation of India (PTC India). PTC India was also set up in order to act as a credit risk mitigating intermediary offtaker for privately-financed regional power generators. In the process, it catalysed the entire Indian regional power sector trading market

Africa GreenCo Team

kata-profile

Ana
Hajduka

Founder & CEO

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cathy-oxby

Cathy
Oxby

Commercial Director

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Lovemore
Chilimanzi

Technical Director

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penny-herbst

Penny
Herbst

Non-Executive Director

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Advisory Committee

phillippe

Andrew
Mitchell

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phillippe

Philippe
Niyongabo

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tantra-thakur

Tantra
Thakur

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Abyd
Karmali

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James
Bond

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Grant Support Provided by

Recommended by the SE4All Finance Committee Report

Supported by

Supported by

Supported by

Supported by

Supported by

Media

Cathy Oxby quoted in the IPS Daily Report– October 2017

ESI Elites 2017 – Ana Hajduka – January 2017

Interview with ESI Africa – March 2016

Interview with ESI Africa – September 2016

Brookings BlogJune 2016

Petrolium Africa – April 2016

ICA Africa – November 2015

ICA Africa – November 2015

African Investor – June 2016

COP 23

We are delighted to be presenting at COP23, “Africa GreenCo: A PPP to De-Risk and Scale Up Sustainable Investments in the African Power Sector.” Click to view full details below.

Venue: EUPavilion, Bonn Zone

Date/Time: 14 November 2017, 16:00-17:30

Africa GreenCo CEO Ana Hajduka cycling from Spain to Morocco for COP22, Moving for Climate NOW.

Downloads

 


Africa GreenCo Feasibility Study


Africa GreenCo Feasibility Study Annexes

 


Africa GreenCo Feasibility Study


Africa GreenCo Feasibility Study Annexes

Contact

Suite 1, 3rd Floor
11-12 St. James’s Square
London
SW1Y 4LB

South Africa:
Fountain Court, 232 Waterkloof Road, Brooklyn, Pretoria, 0181

Ana Hajduka (Africa GreenCo Founder and CEO)
ana.hajduka@africagreenco.com
+44778 920 4363