Africa’s transition to cleaner fuels and power generation presents investors with opportunities across the value chain, but more direct project financing is needed, the head of an independent South African power producer said on Thursday.
Brian Dameschief executive of African Rainbow Energy & Power, said the shift to cleaner energy in South Africa, for example, meant a massive addition of new generation capacity with strong growth potential.
“South Africa just has to add more than 50,000 MW of new capacity. Most of it will be renewables,” Dames said, speaking on a panel at the Reuters NEXT conference.
Africa’s most industrialized nation is experiencing record blackouts this year as its unstable coal-fired power plants, which account for more than 70% of generating capacity of around 58,000 MW, struggle to keep up with demand.
The South African government has unveiled a five-year, $84 billion transition plan to reduce carbon emissions and take advantage of other economic opportunities from the energy transition.
The country aims to reduce coal’s share of its power generation to around 38% by 2031, decommissioning aging plants and increasing wind, solar and gas generation to around 47% over the period, according to a plan submitted to the parliament by state. Eskom utility.
Dames, who led Eskom from 2010 to 2014, said African Rainbow Energy and Power has invested in more than 700 MW of wind, solar and biomass generation.
“We want to build an African energy champion based on clean energy. We have projects of around 2.8 GW that we will close next year,” Dames said, adding that the company was considering trading power and expanding into other African countries.
EQUITY FUND
However, a key question that remains to be answered about Africa’s energy transition and its ability to adapt to the impact of climate change is financing.
Despite pledges from developed nations, governments and companies have seen little direct financial inflow into projects in Africa, Dames said, adding that there were still restrictions on obtaining financing for the continent.
Anibor Kragha, executive secretary of the African Association of Refiners and Distributors, acknowledged that projects on the continent were struggling to take advantage of available funding for the energy transition.
“We need to have a designated equity fund for decarbonization projects for Africa that can go beyond commercial banks to development finance institutions, so we can execute them in a meaningful and sustainable way,” Kragha said while speaking on the same panel. .
He said the association was developing a project registry and seeking partners for two funds, one for the development of liquefied petroleum gas across the continent for clean cooking, and another for bankable refinery and storage and distribution infrastructure projects.
“Any project without funding is just an idea,” said Kragha,
