African markets

Main Takeaways | African markets and opportunities for cross-border renewable energy investments

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On March 30, 2022, Carl Fleming and Emeka Chinwuba, partners in McDermott’s Energy and Project Finance Practice Group, hosted Dr. Abdelilah Chami, Head of Sustainability for North and Central Africa at Enel Green Power, and Jay Katatumba, Chief Investment Officer at Africa50 Infrastructure Fund, for a lively discussion on Africa’s renewable energy space and cross-border investments.

The transition to renewable energy in Africa has progressed impressively over the past decade, with many countries striving to increase their renewable energy capacity in recent years. Forecasts by the International Renewable Energy Agency (IRENA) indicate that with the right policies, regulations, governance and access to financial markets, sub-Saharan Africa could meet up to 67% of its energy needs. by 2030. This is reflected in the fact that the average annual investment in renewable energy has increased tenfold, from less than half a billion dollars during the period 2000-2009 to 5 billion dollars during the period 2010-2020.

Below are the main takeaways from the webinar:

1. The participation of Development Finance Institutions (DFIs) in the electricity market in Africa is primarily driven by their mandate to make the cost of electricity more affordable, increase access to electricity and improve the reliability of its electricity supply.

2. Energy access and consumption in Africa has global ramifications as we look to trade, trade and development, future demographic trends and geopolitics as it relates to energy costs and access. energy.

3. From an energy sector policy perspective, each African country should take a holistic view when looking at specific national and regional energy needs, the entire value chain, related and existing infrastructure, local capacities and local regulatory and governance frameworks.

4. By accessing various African jurisdictions for investment opportunities, private sponsors focus on predictability, highest risk-weighted returns, existing infrastructure and the entire value chain proposition for a specific asset.

5. Private sponsors also seek opportunities where projects are bankable and structured with very limited reliance on grants or other credit support from host governments.