Africa represents a very attractive continent for the development of renewable energy and there is a global appetite to help it develop its potential, says Michelle Davies, Partner and Head of Clean Energy and Sustainability at Eversheds at the African Utility Week 2014.
Ms Davies told Engerati that Eversheds would like to be part of this development. She said that the conference proved to be a great platform for the firm to pinpoint which African countries have the most potential and need the most assistance from them.
She explains, “As a firm we are really focused on Africa. The continent represents a fantastic opportunity because of the amount of infrastructure work principally and the investment needed.”
Africa is one of the few parts of the world that is host to “absolutely superb natural resources such as wind, biomass, solar and water.
Eversheds’ presence is growing in Africa and this is mostly due to their interest in the continent but it is also because many Eversheds clients have also picked up on the huge potential that Africa has to offer. Many of their clients are moving to Africa to snap up investment opportunities. As a result, the company is following their global clients to the continent.
Major drivers of this move can be accredited to South Africa’s renewable energy development. Ms Davies explains that this move by the government has instilled a sense of belief in Africa and what can be achieved there.
Cheaper solar panels have made it easier to invest in Africa too. This makes it slightly easier for developers to focus on jurisdictions which may have been difficult in the past to bear the cost involved in establishing a presence in some of the more challenging countries, explains Ms Davies.
“There is a real sense that Africa is moving forward. Political risk is definitely decreasing which is a major obstacle to development. Therefore, companies and investors can no longer sit back on the sideline and not be active in what they see as a massive growth market.”
Investors flock to Africa
Investors will be looking for countries that have a real need and a real drive for the development of renewable energy. Improving energy security is at the top of Africa’s list. There is a huge gap between demand and supply and renewable energy can certainly fill this gap.
Investors overseas have recognized this growing need for capacity and capital is moving to the continent in response.
The huge financial crisis in Europe has seen many investors leave to finance projects in Africa as subsidies are not viewed as an issue in Africa, explains Ms Davies.
Due to the financial crisis, European governments have found it difficult to support renewable technologies which were seen to be increasing electricity bills. Therefore, no company wanted to be seen supporting the new technologies. Energy has therefore become a politicized issue in Europe, says Ms Davies. As a result, there is a great deal of regulatory uncertainty in the region.
In addition, most countries will be reaching their renewable energy targets soon. This doesn’t leave much room for growth in Europe so investors are now searching for new investment opportunities so that they can grow their businesses in the market.
Off-grid is a huge trend
Off-grid distributed renewable energy is becoming a huge trend in Africa and it is something that we and other investors will be focusing on.
Residential communities, as well as large industrials and commercials want a more reliable source of power and off-grid distributed renewable energy is being looked at as a solution. Big power users such as the mining industry are already setting up their own supply of renewable power to strengthen reliability.
Once energy storage is added to off-grid distributed renewable energy, the industry will be faced with a huge game changer, explains Ms Davies. “Renewable energy and energy storage solutions will help countries achieve much-needed economic growth.”