Project Finance

Renewable Power Project Finance

Green energy this, clean energy that, and then what about sustainable energy here, and renewable energy there, and what about alternative energy, or environmentally friendly, or… many terms very sexy this millennia yet interchangeably used to say a slightly different thing. We will not interfere in explaining which is what, yet rather say what we mean by that:

  • Clean energy as in clean air / water / earth at every stage of production & consumption (so it includes sources such as nuclear energy)
  • Renewable energy as in recyclable / re-growable / renewable resources (here nuclear is dependent on whether uranium is considered finite)
  • Green energy as in clean energy but also coming from natural renewable resources (here there is a problem with nuclear waste)
  • Sustainable energy as then also green if environmental aspects also satisfy long-term socioeconomics (while nuclear may be most sustainable of all, issues are safety record & water use)
  • Alternative energy as in renewable for most people, but in here, as alternative to whatever is mainstream in a particular location (so say nuclear in Iran)

Hydropower plant installations started at the end of the 19th century, with the largest developments in the West & East blocks being built before & after the Second World War. Today the largest plants are typically in places like China and Brazil, and new (large) capacities keep on being added.

Given the environment consciousness of the late, large scale hydro is considered as damaging to the river & forest ecosystems, as well as displacing to people & animal populations- so there is a lot of research going towards small-scale / off-grid / captive hydropower.

As one would imagine, hydro potential is where there is a lot of rain and where there are rivers & lakes to store it for a season. Solar potential would approximately be the opposite of hydro, while wind potential can be found everywhere with the strongest gushes typically being at the edges of the continents or where the mountains meet the seas.

Most of the talk today is of wind & solar, the initial buildup was through state feed-in incentives and thereon through the technological improvements. Given the oscillations in power output, today a manufacturing trend is into hybrid power which uses sun or wind in balancing combo with gas or while a battery storage system. This is probably the closest to the definition of alternative energy because it comes in form of tech innovation.

Irena has a great snapshot of the renewable energy supply around the world, so not repeat what it says please do have a look. Irena also has an atlas of maps for quick & dirty evaluation of locations, say for geothermal energy (huge potential!)

What about nuclear energy? Although bulk of the stock is old, with those first plants built in the 50s already out of commission, and as the plants from the 60s & 70s are counting their days as we speak, nuclear power still accounts for about 10% of all power generated globally.

2EMMA analysts believe that nuclear energy (and uranium along with it) still has a lot of potential, and if not in the typical large-scale capacity, then certainly in smaller (cluster) reactor type of instalments.

Photo:TK

To wrap up the sources of energy, we are not going to talk of fossil fuels because even oil giants do not want to speak of them- for example BP going off oil, or Exxon Mobil being scrapped of Dow Industrial Index; and the Economist calling it game over… instead a larger grouping of natural sources recycled into bio-energy.

Some of the more popular sources of biomass, which in turn become a quick burning energy are sugarcane, agricultural residue/waste, algae, wood-chips, non-productive bushes/plants/tress, urban garbage, etc. With the technological advancement more & more can be squeezed out of biomass, while less & less pollutants are released in the process.

So if we stick to renewables- biomass, hydro, wind, sun & geothermal– then we have a lot of potential across our EMMA country focus:

  • Hydro:
    • SADC: African monsoon belt, from DRC to Mozambique
    • MENA: potential water wars in the region with Turkey & Syria controlling most of it
    • CACA: some ex-USSR infrastructure still in place in Kyrgyzstan & Tajikistan
    • SEE: good rainfall & many rivers in most of the Balkans
  • Wind & solar:
    • Everywhere & anywhere, easy to install & relatively cheap for any capacity
    • Well-established process for financing, deployment, generation & maintenance
    • As if running a ‘real’ agri-farm
  • Geothermal:
    • Eastern Africa Rift – Ethiopia & Kenya, down towards SADC
    • MENA & SEE, CACA – Atlas mountains; and Turkey, spreading to Balkans & CACA
  • Bio:
    • Modernisation: retrofit of boilers into existing sugar mills (Senegal, Sierra Leone, Cote d’Ivoire, Togo, Benin, Nigeria, Cameroon, Gabon, Congo-B, DRC, Malawi, Mozambique, Tanzania, Kenya)
    • Efficiency: gumtree & palm plantation tree replacement / rotation (Liberia, Cote d’Ivoire, Ghana, Nigeria, Cameroon, Gabon, Congo-B)
    • Diversity: biodiesel feedstocks such as jatropha trees and cotton grains (Burkina Faso & rest of West Africa)
    • Recycling: coal-bed methane into methane gas (abandoned coal mines in SADC)
    • Control: bush encroachment to use invasive bushes (from Namibia to the East African savannas)

While a case study for cleaner & more efficient energy could probably be built anywhere in the world- Africa serves as best case in point due to its large size and poor energy infrastructure, while wind power serves as a good sample for project development / finance: If you would like to know more about this Renewable Power Project Finance Vitrine Theme– you can write us with a genuine interest to discuss this further, and we will send you the password to the next sections of the renewable power case: It includes the experts involved, their approach to project development in Africa, and the example of a wind project finance template

 

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