Renewables revolution in Africa
Alumnus Karl Upston-Hooper, General Counsel at Camco Clean Energy, writes about the importance of renewal energy and his experience working to grow the industry in Sub-Saharan Africa.
In September 2015, the 193 member countries of the United Nations (UN) General Assembly adopted 17 Sustainable Development Goals (SDGs) in New York—the seventh of which aims at realising universal access to modern energy services. Two months later, world leaders gathered at COP21 to thrash out the Paris Climate Agreement, the single most important step yet towards keeping global warming within ‘acceptable’ limits.
These two landmark deals were testimony to a world waking up to its social and environmental responsibilities. A core element of both agreements was the realisation of the need to work with, and via, the private sector to deliver the significant scaling up of investments in sustainable development projects.
December 2015 was also the month that the Renewable Energy Performance Platform (REPP) was formally incorporated, with a clear mission to catalyse the growth of Sub-Saharan Africa’s renewable energy industry. With £148m in committed funding from the UK Government, the focus of REPP is to ensure that transformation renewables projects in Africa reach financial close.
I’ve worked with the European Investment Bank and UN Environment in establishing REPP, and now serve as its Legal Counsel. In my time in these roles I saw that Africa has an abundance of natural resources—an infinite supply ready and waiting to fuel a continental energy revolution. But progress is desperately slow—with the exception of South Africa, countries in the Sub-Saharan region are falling increasingly far behind the rest of the world when it comes to investment in renewable energy.
With over 20 projects currently receiving financial support, primarily in the form of quasi-concessional debt, REPP is seeking to kick start a renewables revolution in Africa. The key to this revolution is overcoming the barriers to bankability. This involves the nitty gritty legal work of ensuring high-quality power purchase agreements, transaction and security documentation that is acceptable to senior lenders and assisting developers to have their environmental and social plans prepared to International Finance Corporation (IFC) standards.
There is sufficient capital available to implement a low-energy future for Africa, but it speaks a different language from those on the ground trying to make a difference in people’s day-to-day lives. The role of the REPP team is to bring these two worlds together, to ensure that ‘Debt Service Coverage Ratios’ and ‘Political Risk Insurance’ result in homes with light in the evening and businesses with a stable supply of electricity.
Two recent projects highlight the way that REPP is seeking to fashion a sustainable ecosystem of renewables expertise in Sub-Saharan Africa. In Northern Nigeria, Pan Africa Solar provides solar home systems that enable rural households to install lighting and small appliances—REPP has supported PAS with an innovative $2.2m trade finance facility and, through leading a syndicated facility, brought further investors to PAS. Consequentially, 175,000 people will have electricity for the first time and this number will grow to more than one million by 2030. In contrast to the off-grid nature of PAS, REPP has provided debt funding for Virunga Power that has enable the development of the Sakhala (6MW) and Mathioya (4MW) run-of-river hydro projects on the Nzoia River in south-west Kenya. By enabling the connection of renewables to the Kenyan grid, REPP is building human capital in the sector (at both a policy and developer level) and de-carbonising Kenya’s electricity network to assist it in meeting its commitments under the Paris Agreement.
Africa is disproportionally impacted by climate change and, as evidenced from the recent catastrophic cyclones in Mozambique, limited in its ability to adapt to and recover from the impacts of climate change. Although the declaration of SDG 7 is an acknowledgement by the global community of the key role that access to energy plays in social and economic development, such development must occur within the paradigm of the Paris Agreement. The deployment of public funding to leverage the investment of private capital in autochthonous renewable energy sources, through initiatives such as the Renewable Energy Performance Platform, is a crucial step to setting Africa on a low-carbon development pathway.
Karl Upston-Hooper is now based in Helsinki, but his interest in energy and natural resources began at Victoria University of Wellington’s Law School in 1990 and developed during his LLM (Hons) under the supervision of Professor Richard Boast QC.
Victoria University of Wellington’s Toitū te Ao—Sustainability Week runs from 9–13 September.