Fieldstone Africa, the leading independent investment bank in the energy and infrastructure sector, issued the October edition of the Fieldstone Africa Renewables Index (FARI).
FARI, which is released three times a year, ranks African countries in terms of their current suitability to invest and achieve successful renewable projects.
In the current index, Morocco leads African countries in a category referred to as the Big 5, denoting the national markets most suitable to invest in renewable projects. Morocco is described in the report as having enormous ambition with a projected 42% renewable generation by 2020, with billions of dollars in expected investments. Morocco replaces South Africa, which was the top ranked country in the previous index in June 2016.
Morocco is followed in the ranking by Uganda in the current rankings, which is emphasis on electrification, with a recognition of superior solar and hydro resources. The FARI report describes the country as achieving “a smart interplay” of enabling regulatory environment and donor funding. Uganda’s first solar plant has been commissioned, providing 10MW to the country’s grid. Several other projects are to close in the next few months.
Egypt is ranked third with ambitious renewable plans, which were slowed by contractual issues in the standard form. Confidence is said to have been restored through means which will encourage investors to return to the market.
South Africa, has experienced uncertainty as the country’s power utility, Eskom has refused to enter into power purchase agreements with preferred bidders arising from the South African government's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The program is effectively frozen.
In the June 2016 index, South Africa was the leading country in Africa, followed by Morocco, Uganda and Egypt. In the latest, October 2016 index, South Africa is placed in a separate category reflecting its ambiguous commitment, leaving the ranking with Morocco occupying first position, followed by Uganda and Egypt.
South Africa has been placed into the ‘Sleeping Giant’ category of the index - a new category created to express its current market predicament - highlighting that the country’s promising potential has been stifled by Eskom’s refusal to sign further power purchase agreements for renewables - despite requests by the Department of Energy and National Treasury.
Jason Harlan, Chief Executive Officer of Fieldstone Africa said: “It is significant that South Africa has fallen out of our current ranking. The fact that approximately $14.7 billion has been invested already since 2011 signals that renewables should be part of an energy mix needed to replace the aging thermal fleet.
Index has four categories:
- The Big Five- these are markets in which investment in renewable energy is compelling (Morroco, Uganda, Egypt, no other country was deemed to qualify as part of The Big Five in the October 2016 index);
- Honourable Mention- markets where evidence points to significant progress towards investable opportunities (Algeria, Cameroon, Ghana, Nigeria, Senegal, Zambia);
- Little Gems- smaller markets that may not host large scale opportunities (Rwanda and Djibouti); and
- Sleeping Giant – a new category created due to market developments (South Africa).
Countries such as Ethiopia, Kenya, Ivory Coast and Mali were included in the FARI Honourable Mention list, but not retained on the current list. These countries, like South Africa, show potential but there are legal or regulatory hurdles present.
Additional information on FARI can be found on the Fieldstone Africa website: www.fieldstoneafrica.com