Graduate school of business University of Cape Town 2018

EEG funds expert training on renewable energy financing for sub-Saharan African officials at the University of Cape Town

To meet rapidly growing electricity demand, many sub-Saharan African nations are looking to their abundant renewable resources – river systems, bioenergy, sunshine and wind.

Development of renewable resources is increasingly being led by Independent Power Projects (IPPs) – power plants built, financed, owned, and operated by the private sector.  However, the enabling environment for renewable energy IPPs varies substantially across countries.

To help improve the enabling environment, EEG funded 11 African officials – from Ethiopia, Rwanda, Uganda and Mozambique – to attend a course at the University of Cape Town (UCT) on Finance, Contracts and Risk Mitigation for Private Power Projects in Africa.

The week-long course, in March 2018, was delivered by a series of world renowned experts in renewable energy finance, contract law and public policy.

UCT Professor Anton Eberhard and Wikus Kruger – who lead an EEG Core Project on Renewable Energy Auctions – hosted the event.

Wikus Kruger, said: “For our EEG core project, success will mean that sub-Saharan Africa sees an increase in well-designed and effectively implemented renewable energy auctions that deliver low-cost renewable energy projects on time. Trainings like this one will be one of the main means to achieve this change.”

Anton delivered a unit on power sector investment trends in the region, while Wikus lectured on the design of renewable energy auctions, the use of which is now considered international best practice in procuring renewable energy IPPs.

Daniel Gross, a Lecturer at Yale with a wealth of experience financing renewable energy IPPs, delivered a series of interactive units on project finance. Student learnt the fundamentals of financial modelling and how to size a debt facility.

Jay Govinder, South African head of Projects and Infrastructure at law firm, Cliffe Dekker Hofmeyr, lectured on the various elements of a power purchase agreement (PPA). PPAs, she explained, are the central contract between an IPP and offtaker. They define the tariff structure, purchase obligations and duration in which an IPP will feed electricity into the grid, and are the lynchpin of project financing.  

Other units were delivered by senior financiers, lawyers and energy specialists at the World Bank, private banks, investment funds, law firms and utilities.

By all accounts the training was a success. EEG surveyed the course participants and conducted interviews to garner feedback on the event, and the responses were positive.  

Ethiopian participants explained that for them, the training was particularly timely. The Ethiopian electricity market is just beginning to open up to private participation, and there is a great need for capacity building in renewable energy IPP procurement.

Ethiopia is currently establishing a new Office of Public Private Partnerships in the Ministry of Finance and Economic Cooperation to be able to manage the upcoming IPP tenders. Abebe Tadesse, Deputy Head of this new office, was one of the five Ethiopian participants funded by EEG.

To UCT, this direct and positive impact on policy is the key measure of success.

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