Opportunities and Success Stories of thePrivate Sector Participation
in Energy Sector of Africa
We b i n a r fo r t h e J a p a n e s e P r i v at e S e c t o r o n D o i n g B u s i n e s s i n A f r i c a ,S e p t e mb e r 2 0 2 0Power, Energy, Climate and Green Growth

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WHO WE ARE

Energy Complex: A One-Stop Energy Shop For the Public Sectorand Private Sector
The Power, Energy, Climate and Green Growth Complex is established in 2015 to achieve the New
Deal on Energy For Africa to provide energy access to over 600 m people who cannot have accessto the electricity. It is aligned with one of the High 5s, “Light Up and Power Africa”.
 Provide financing solutions
to the private sector transactions
 Provide Technical Assistanceon policy and regulation
 Analyze power sector
information and data Mobilize climate andenvironmental finance Strengthen the capacities ofAfrica’s climate data centers todisseminate climate
information for developmentin Africa
Source: African Development Bank

FinancialSolutions,Policy andRegulation
ClimateChangeand GreenGrowthPowerSystemsDevelopment

RenewableEnergy andEnergy
Efficiency

 Develop the transmission
and generation systems inPublic Sector
 Provide deep sector
technical expertise toutilities to drive them tocorporate efficiency
 Off-Grid and Mini-Gridtransactions
 Business developmentin the sectors ofRenewables and Energy
Efficiency and Clean
CookingBeyond Financial Assistance, Our Approach Comes with Added ValueSector
expertise• Extensive knowledge gained from long-term sector engagement• In-house engineers to provide technical advisory and regulatory experts to assess
regulatory risk and structure accordinglyCountry riskmitigation• Strong government relations• Honest broker role
• Synergies with other complexes and regional offices of the AfDB Group

Access to fullcycle capital• As the AfDB’s Energy Complex’ arm, we can leverage the Bank’s funds and seamlessly
deliver financial products according to company maturity and project’s stage

Patientcapital• Long-term investment horizon• Impact capital

Regionalnetworks• With a regional network across stakeholders, we can introduce companies to co-investors,
potential clients and other strategic partners

Source: African Development Bank

Complementary Special Financial Instruments
TECHNICALASSISTANCE

 Grants for early stage project development and capacity building support (SEFA) Sovereign programs with advisory services
 Climate finance-linked technical assistance Facility for Energy Inclusion (FEI: On-grid and off-grid) On Grid: Small-scale IPPs, captive power, commercial & industrial projects and mini-grids
 Off Grid: Off-grid solar companies using pay-as-you-go technologies or lease-to-own models

SPECIAL FUNDS

 Sustainable Energy Fund for Africa 2.0 (SEFA) Operational focus on Green Baseload, Energy Efficiency, and Green Mini-Grid Project preparation grant for developers (feasibility studies, ESIA, etc.)
 Concessional financing (loan, equity, result-based grant)
 Green Climate Fund (GCF), Climate Investment Funds (CIFs), Global Environment Facility (GEF) Aim to build resilience to climate change and support transition to green growth in Africa
 Provide concessional debt and other instruments to enhance project bankability
 Stronger targeting for innovative projects in high-risk settings
 Application via AfDB as an Accrediting Entity

Source: African Development Bank2

RESOURCES AND ENERGY MARKET IN AFRICA

Africa is “Rich” in Energy Resources (Renewables and Gas)

Solar PV (10 TW)

Hydroelectric (350 GW)“Proved” reserved gas is 510 Tcf in 2018.
Geothermal(15 GW)

Wind (110 GW)

The volume is expected to grow due to therecent gas discoveries in Africa. 40% of the
global gas discoveries between 2011 to 2018
are from “Africa”.
Source: Atlas, BP, Africa Energy Outlook 2019, Africa 50

Power Generation to Increase More Than Double by 2040

2000

Electricity generation in Africa by resources, 2018-2040
(tWh)

1600

1200

800

400

Renewables (Solar PV, Geothermal, Windand Hydro, etc.) play a leading role inexpanding generation, capitalizing on therich natural resources in Africa and falling
technology costs (e.g. Scaling Solar
Program in Ethiopia: USD 2.5 cents /Kwh).
Natural Gas remains a strong option forgeneration. Natural Gas can help satisfy
the growing appetite for baseload
electricity and complement the rapid
expansion of renewables.
No increase for coal due to the climate
concerns.

Sources: Africa Energy Outlook 2019, IEA Homepage, AfDB

3BUSINESS OPPORTUNITIES FOR JAPANESE STAKEHOLDERSGeothermal Opportunities through Public Financing and IPPs
Geothermal opportunities will be promoted by most of the East African courtiers to meet their mitigation
objectives under Nationally Determined Contributions (NDCs). Opportunities exist in Djibouti , Uganda,Tanzania, Comoros in addition to Kenya and Ethiopia.
Strong initiatives by Japanese on public financing scheme:
12 out of 16 turbines in Olkaria I to V in Kenya have been provided by Japanese companies, MSK/MHPS andTTS/Toshiba. Olkaria I Unit 6 is being constructed by Marubeni/Fuji. JICA has been involved as financier in
Olkaria projects since 2010.
IPPs trend and opportunities for Japanese:
Kenya: Olkaria III (139MW) is “only” IPP in this continent operated by Ormat.
• Menengai (35MW X 3): F/C is expected from Quantum, Sosian or Ormat;• Olkaria VI (140MW): KenGen is to award a winner from 5 group bidders;• Olkaria VII (140MW): Exploration is currently going on as future IPP;
Ethiopia:• Tulu Moyo (50MW+100MW): PPA signed by Meridiam and Reykjavik Geothermal;• Corbetti (50MW+100MW): PPA signed by ARREF and Reykjavik Geothermal;

Source: African Development BankIntroduction of AfDB’s roles in Menengai Geothermal IPPs

(4) To provide AfDB’s debt
finance to IPPs;(5) To mobilize climate financeto IPPs;
both through AfDB’s private
sector window.
(1) Mobilized and provided
USD 25M from Climate
Investment Funds (CIFs);(2) Provided USD 120M from
AfDB’s own finance;
both through AfDB’s public
sector window in exploration stage.

(3) To provide PRG toIPPs to coverobligations of KPLC
and GDC for 3
months of IPP’srevenue.

Sources: AfDB and CIFs

A Wave of New Gas Development is Coming in Africa
Africa will become a major player in natural gas market as a consumer, producer and exporter driven by the newly
discovered gas fields in Mozambique, Tanzania, Egypt, Mauritania & Senegal and South Africa.
Opportunities exist across the gas value chain for Japanese stakeholders:• LNG /FLNG, LNG carrier, Processing, Pipeline, FSRU/FSU, Petrochemical Plants, Generation Plants, Fertilizer, etc.
Sample ‘gas’ projects promoted by Japanese:• EQ Guinea LNG: Mitsui (8.5%) & Marubeni (6.5%) has shares in the project;• Moz Coral South FLNG: JGC is EPC contractor with Technip & SHI;
• Moz Area 4 LNG: JGC is EPC contractor with Fluor and Technip;
Sample ‘gas to power’ projects promoted by Japanese:
••
•
•
•

Tunisia Carthage Power (CC 471 MW): Marubeni has 40% of share of IPP;
Ghana Cenpower Generation (CC 340MW): Sumitomo has 28% of share of IPP;
Ghana Takoradi T2 (CC 120MW): Mitsui is EPC contractor with KEPCO;
Tanzania Kinyerezi II (CC 240MW): Sumitomo/MHPS/Toshiba is EPC consortium;
Moz Maputo (CC 110MW): Sumitomo/IHI is EPC consortium.

Sources: Africa Energy Outlook 2019, African Energy Outlook 2020, AfDBRenewable Energy IPPs and Battery Storage

Recent trend in renewable energy IPP procurement:• South Africa REIPPP• Scaling Solar Program (Zambia, Senegal, Madagascar, Ethiopia)• GETFiT Program solar and mini-hydro (Uganda, Zambia,Mozambique)• Solar PV IPP procurement in Egypt, Tunisia, etc.
Emerging focus on Battery Storage in support of Green Baseload:• South Africa ESKOM battery storage• Regional power pool (e.g. WAPP)

Highlight: Zambia Renewable Energy Financing Framework
In collaboration with the Green Climate Fund (GCF), AfDB aims to financeto 100 MW of small-scale solar PV and mini-hydro projects selected under
GETFiT Zambia Program
Source: African Development Bank

Facility for Energy Inclusion (FEI) The Facility for Energy Inclusion (FEI) is a USD 500m debt financing platform anchored by
the African Development Bank for small-scale projects from private sector companies, withthe objective to aggregate capital; structure bankable projects; and accelerate
development of electricity access solutions using clean energy.

(on-grid)(off-grid) First close in November 2019 Small-scale IPPs, captive power projects, commercial &industrial projects and mini-grids
 Investment limit at USD 30m or 25MW for projects
 Long-term amortizing loans in project financestructures (senior and subordinated) and technicalassistance reimbursable grants for late stage projects
 EUR, USD or local currency, with a tenor up to 15 years

 Operational since Q3 2018
 Off-grid solar companies using pay-as-you-go
technologies or lease-to-own models
 Debt for working capital, inventory finance andconsumer finance from USD 2m to USD 20m
 Corporate, secured or senior loans to SPVs in assetbacked structures (securitization)
 EUR, USD or local currency, with a tenor up to 5years

Source: African Development Bank

Example 1: BBOXX RWANDA
USD 8 m loan in
Rwandan Francs
secured by inventory,
to finance consumer
receivables.

Example 2: SUNCULTURE KENYA
USD 2.25 m inventoryfinancing operation for a
based-technology company
leader in solar water pumps
and irrigation solutions forsmallholder farmers

Green Mini-Grids (GMGs)
 Driving the creation of a sustainable mini-grid market to achieve universal access, AfDB
is positioned as a credible advisor and advocate, as well as financing partner capable ofmobilizing investment resources at scale for mini-grids investments.
Highlights
 Ethiopia:USD 15 million sovereign loan saving (Africa Development Fund) reallocated/approved to finance mini-grids in 25 villages.
 DRC Programme: USD 20 million senior loan for the DRC green mini-gridprogram approved along with GCF’s USD 20 million co-financing.
 GMG Market Development Programme: Critical market support services e.g.
GMG help-desk for mini-grid developers, production of market studies.
 Expanding to new countries: engagement initiated in Togo, Guinea,Madagascar, and Angola all with strong partnerships with GIZ, WB, BOAD,
and/or AfDB wider operations.
 Results Based Finance (RBF) grant/reimbursable grant instrument: underdevelopment to be deployed for first time in Togo and DRC in 2020.
Source: African Development Bank

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SUCCESSFUL CASE BY JAPNESE STAKEHOLDERSSuccessful Case : Mozambique LNG Project (Area 1)
The Project• LNG Development (13 mtpa) with gas resource from
Golfinho-Atum field in the coast of NorthernMozambique. Total is an operator.
• An exemplary project linking between Africa andJapan in terms of trading, investment, financing andtechnology, contributing the development inMozambique and the southern Africa region.
Japanese Stakeholder’s Role
• About 30% of LNG will be supplied to Jera, Tokyo Gas
and Tohoku Electric Power.
• Mitsui & JOGMEC has 20% share of concessionaire.
• Financed by JBIC (USD 3 Billion) as well as commercialbanks (MUFG, Mizuho, SMBC, etc.) covered by NEXI’sloan insurance (USD 2 Billon).
• NYK, MOL, and “K” Line are in negotiation to operate
LNG vessels through a separate financing scheme.
Source: African Development BankKey Figures
Total Project Cost

20 Billion USD

AfDB Senior Loan

400 million USD

AfDB Board
Approval

Nov, 2019

AfDB’s Role

Only DFI Participation,
Political Mitigation Role,
TA to enhance local
content/governanceTHANK YOU !
Naoshige Kinoshita
Chief Investment Officer, Energy Financial Solutions,Power, Energy, Climate and Green Growth,Namho Oh
Senior Investment Officer,
Renewable Energy and Energy Efficiency,
Power, Energy Climate and Green Growth,African Development BankLIGHT UP AND POWER AFRICA

www.afdb.org