Fieldstone Africa, a leading independent investment bank and financial service provider in energy and infrastructure in Africa, today released its first renewables index for 2017. The Fieldstone Africa Renewables Index (FARI) ranks national markets in terms of current suitability to invest (time and capital) to achieve successful renewable projects.
In the previous Fieldstone Africa Renewables Index, released in October 2016, Morocco was rated the top country in Africa, followed by Uganda, with Egypt holding third place. In the latest index, Morocco still leads, due to its pioneering efforts in renewable base load in Africa resulting from its commitment to concentrated solar power (CSP). Uganda’s steady progress towards achieving its plan for 1 500MW of renewable generation by 2020 saw it retain its second place in the ranking.
However, Zambia pipped Egypt to third place due to its solar and hydro initiatives, underpinned by a transparent regulatory and approval regime. Egypt’s aspiration to further develop its renewable energy programme has suffered from recent currency deregulation, leading to an exodus of international investors.
Jason Harlan, CEO of Fieldstone Africa commented: “The signals for renewables in Africa continue to remain positive as FARI shows. Initiatives on the continent seem more credible than earlier efforts, and there is certainly a variety – from large-scale, systemic programmes to incremental build-up based on long-term goals.”
South Africa, by far the country with the most potential, is still stuck in a category of its own, called “(Fitfully) Waking Giant”. At the time FARI was introduced, South Africa was the leading country on the continent in terms of its renewable energy programme. South Africa’s reputation and position on the index began to slip due to a refusal by the country’s energy utility, Eskom, to sign power purchasing agreements with several Independent Power Producers (IPPs). Power purchase agreements won by IPPs in rounds 4 and 4.5 of the government’s auction process, the Renewable Energy Independent Power Produce Procurement Programme (REIPPPP), have remained unsigned for several months, seriously denting investor confidence in what was internally recognised as a highly successful programme.
This has changed somewhat over the last two months, with President Jacob Zuma announcing in his State Of The Nation address that they will be signed. However, Eskom is now trying to play old coal plants to be decommissioned against additional renewables and threatening to call in the government guarantee provisions for existing IPPs.
These issues aside, South Africa’s potential remains high. The country could rocket back to the top of the index, based on South Africa’s Independent Resource Plan as it currently stands, which calls for the addition of 1,000 MW of renewable energy a year for several years. One positive development is that some small IPPs have been fast tracked and the long-outstanding Round 4 bids seem likely to be given the go-ahead.
Harlan said it is hoped that in due course the “Big 5” category – which currently only comprises Morocco, Uganda and Zambia - will reach five entries as envisaged, as candidates listed in the “Honourable Mention” and “Countries To Watch” categories start to move up the ranking.
Countries in the Honourable Mention category are:
- Algeria (proposed a 4 000MW programme to utilise its solar potential)
- Ethiopia (focussing on hydro power, looking to establish IPPs for photovoltaic and geothermal)
- Nigeria (focused on solar power, may yield several projects of scale)
- Egypt (currency deregulation has led to exodus of international investors)
- Senegal (commissioned 20MW photovoltaic at the end of 2016 and signed a wind programme of the same size)
- Ivory Coast ( Re-joins the index for the second time with its biomass and seven hydro projects, including a 275MW project under construction)
- Kenya (has issued seven licenses for photovoltaic projects after years of sorting through 3000 original renewable submissions).
- Cameroon (power utility ENEO is seeking partners to develop a 20MW solar generation plant)
- Madagascar (new to the index, actively evaluating solar, hydro and wind.)
- Mozambique (new to the index, has signed a 25 MW power purchase agreement in conjunction with Norfund)
Countries To Watch category:
Best Intentions (Not Best Results)
Tanzania, on the east coast of Africa, is also in a category of its own, described as having the Best Intentions (Not Best Results) – the category aims to make note of plans that do not work in order for the index to be a useful tool. Tanzania’s drive to curb corruption has also led to the country attempting to keep its electricity prices very low even in the face of economic evidence showing this to be counterproductive.
Harlan said FARI continues to track movements on renewable energy projects in Africa, the regulatory environment enabling investment in projects and the benefit to economies these initiatives bring.
Additional information on FARI can be found on the Fieldstone Africa website: www.fieldstoneafrica.com