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KenGen slaps Kenya Power with Sh1bn fine for payment delays

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Kenya Electricity Generating Company (KenGen) has slapped Kenya Power with a Sh1 billion penalty for flouting a 40-day window limit for paying debts owed to it in the financial year ended June 2018.

“Interest income from Kenya Power relates to interest penalties charged due to late payments invoices. Interest on late payments accrues after 40 days,” says KenGen in its annual report released this week.

Kenya Power owed KenGen Sh21.88 billion as at the end of June 2018.

By the time KenGen was closing its books for the financial year ended June, Sh13.71 billion due from Kenya Power had been outstanding for more than 60 days while a further Sh694.63 million had remained unpaid for over a year.

Of the Sh21.88 billion due to KenGen from Kenya Power, only Sh7.44 billion or 34 per cent had not breached the payment window as per the agreement signed by the two State-owned corporations.

Kenya Power buys a mix of hydro, thermal, wind and geothermal-generated electricity from KenGen and independent producers for onward sale to homes and businesses.

KenGen then bills it every month for the power delivered.

KenGen currently sells its generated electric energy to a single off-taker, Kenya Power, and recognises this as a business risk.

“This comes with the attendant risk of late or delayed payment for electricity sales which could have adverse effects on KenGen’s flow of revenue,” says KenGen.

The penalty raised the power generator’s finance income 2.5 times to Sh3.34 billion.

KenGen says that it deploys a robust debt management programme for increased collection of overdue amounts.

The firm reports in its post-balance sheet items that it received Sh18.57 billion from Kenya Power after closure of its books, reducing the trade receivables to 3.31 billion.

It adds that mitigating against revenue flow glitches calls for it to deploy a robust debt management programme for increased collection of overdue amounts even as it calls for the enactment of the Energy Bill into law to give it an option of customers to sell to.

“This will allow entry of more players in the wholesale and retail of electricity (business), thus giving KenGen an option to sell bulk energy to multiple customers,” says KenGen.

– BusinessDaily

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Energy

Africa’s 25 Under 40 Energy Women Rising Stars

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Africa’s 25 Under 40 Energy Women Rising Stars (Source: African Energy Chamber)

The African energy sector serves as a catalyst for global development, and in this dynamic industry that powers the modern world, a select group of remarkable women have emerged as trailblazers. The African Energy Chamber (AEC) is proud to announce the “25 Under 40 Energy Women Rising Stars’ – individuals whose dedication, ingenuity and unwavering commitment serve as beacons of hope and pillars of inspiration. These women are redefining the possibilities within a traditionally male-dominated field, and the AEC proudly celebrates the rising stars who are leading the way towards making energy poverty history by 2030.

In no particular order:

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Gbemisola Adeyemi Afolabi, Junior Geoscientist, AMNI International

Adeyemi Afolabi, a budding Junior Geoscientist at AMNI International, is an emerging force in the energy sector. With a Masters’ Degree in Energy Geosciences from Rice University, she brings a fresh perspective to her role. Adeyemi’s educational background, combined with her passion for geoscience, underscores her dedication to exploring and understanding the Earth’s resources. Afolabi’s commitment to harnessing scientific knowledge for practical energy solutions sets her apart as a promising talent within AMNI International.

Ibilola Akinnola, LNG Shipbroker, Maersk

Ibilola Akinnola has a wealth of experience across the legal and logistics fields, and represents an individual whose creativity, commitment and drive has advanced the global energy industry. A qualified Solicitor and Barrister of the Supreme Court of Nigeria, Akinnola went on to complete her Masters’ degree in International Shipping Law at Queen Mary University of London. Now, she works at integrated logistics company Maersk as the LNG Shipbroker, and continues to make a lasting impact in the industry.

Rekik Bekele, CEO and Founder, Green Scene Energy

Rekik Bekele is a seasoned professional with over 10 years of experience in renewable energy. With a BSc in Electrical Engineering, she leads Green Scene Energy PLC as its CEO, providing affordable solar solutions in Ethiopia. Bekele also serves as a board member at Ethiopian Solar Energy Development Association, an Acumen fellow, and founder of PurposeBlack ETH and Run Africa. Her diverse initiatives drive positive change in energy and social development.

Sarah Bouzid, Technical Sales Lead: Production Systems Division, Schlumberger

Sarah Bouzid is a Chemical Engineer and Technical Sales Lead for Schlumberger’s Production Systems Division – representing the only woman in this role in the MENA region. Her expertise lies in the Audit to Optimize program, where she engages with clients to enhance process equipment performance. After completing an engineering degree from Bourmerdes University, she worked in various roles at Sonatrach. Navigating the largely male-dominated sector, Bouzid serves as a beacon of hope for women in science and engineering.  

Sandra Chukwudozie, CEO, Salpha Energy

Sandra Chukwudozie is the Founder & CEO of Salpha Energy, a company dedicated to providing clean, affordable and innovative energy solutions for a carbon-neutral future. She is also Executive Director of Dozzy, one of Africa’s largest petroleum storage facilities. After completing her studies at the University of Dundee in 2015, Chukwudozie dedicated her professional life to supporting economic growth through energy development, gaining experience in international management, industrial relations and economics. Her innovation, resilience and ability to embrace change has made her a leader in her field and an inspiration to many across the industry.

Nadia Simao da Costa, HR People Analytics Supervisor, Chevron

Nadia Simao da Costa is the People Analytics Supervisor at Chevron and represents the youngest person to be selected for Human Resource leadership at the company in Angola. Leveraging analytics and evidence to develop strategies to manage the current and future workforce needs, Simao da Costa is a strong advocate for inclusivity and human capital development. As the African energy sector grows and more people enter the workforce, professionals such as Simao da Costa serve as valuable role models.

Eghosa Ebube, Portfolio Analyst, Chevron Nigeria

Eghosa Ebube, initially Project Engineer and now Portfolio Analyst at global energy powerhouse Chevron, brings a wealth of expertise to the table. Having honed her skills in various roles including Onshore Construction Engineer, she has emerged as a force to be reckoned with in the energy sector. Her adeptness in engineering and her dedication to innovation shine through in her work, making her a pivotal contributor to Chevron’s and Nigeria’s energy success.

Katuiscia Laurence Ewane, General Field Engineer, SLB

With a Masters in Industrial Engineering from Ecole Nationale Supérieure Polytechnique, Katuiscia Laurence Ewane has spent several years working for global energy services company SLB. She currently serves as a General Field Engineer for the company and has pioneered several successful initiatives, including a new approach for the integration of Drilling Fluids and Cementing Fluids; completing a complex cementing operation on Mt Cameroon; and spearheading community outreach under the SLB Excellence in Educational Development program. Ewane is a testament to the important role female engineers play in Africa.

Taimi Itembu, Public and Government Affairs, ExxonMobil

A Harvard Kennedy School graduate with over 14 years’ experience in leadership, energy and policy, Taimi Itembu represents an inspirational leader in Namibia’s energy sector. She has served in various roles in the Namibian Government, showcasing her aptitude for policy dialogue and partnership building to drive transformation across the region. Her leadership in energy and exploration includes advocating for Africa strategy, investment protection, and a favorable operational environment, and as an industry expert, she represents a beacon of impactful leadership.

Anine Kilian: Managing Editor, Energy Capital & Power

Anine Kilian is a strong advocate for Africa’s energy development. Currently serving as the Managing Editor for Africa-focused investment platform Energy Capital & Power, Kilian’s journey began as a dedicated journalist and editor after studying at the Tshwane University of Technology in South Africa. Her career has taken her worldwide, and her expertise led her to become a pivotal writer at Creamer Media before joining Energy Capital & Power in 2018. Recognizing her talent and passion, Kilian was swiftly promoted to Managing Editor in 2021. Her journey epitomizes resilience, growth and a commitment to driving Africa’s energy narrative at a time when the continent needs it most. Kilian represents a standout figure in the landscape of energy journalism and advocacy.  

Ubuhle Noluti Mtetwa, National Manager, Secondary Logistics, bp Southern Africa

Armed with a degree in Transport Economics and Logistics Management, Ubuhle Noluti Mtetwa spearheads innovative projects in a traditionally male-dominated industry. In a relatively short period of time, Mtetwa climbed the ranks at bp from Logistics Intern to National Manager of Secondary Distribution. Now, she supports diversity efforts, using her platform to not only advance logistics in Africa’s energy industry but support the progression of others.

Faith Musimenta, Senior Petroleum Economic and Financial Analyst, Petroleum Authority of Uganda

Faith Musimenta is currently the Senior Petroleum Economic and Financial Analyst at the Petroleum Authority of Uganda (PAU), where she leverages her skills in investment analysis to develop oil and gas financial models for billion-dollar projects. After competing her studies at the University of Dundee, Musimenta worked for various financial institutions including Citi Bank, Diamond Trust Bank and DFCU Bank. She represents an inspiration for women across the African financial sector, and continues to advocate for both inclusivity, sustainability and development of Uganda’s oil and gas industry. 

Nancy Asantewah Nkansah, Resource Manager: Planning and Supply Chain for West Africa, SLB

Nancy Asantewah Nkansah, a Resource Coordinator at SLB with 8+ years’ experience, excels in planning chemical requirements and workforce coordination for efficient operations. With a BA in Political Science and a Geography minor, she spearheads resource management, enhances supply chain efficiency and facilitates environmentally responsible practices. From groundbreaking innovations to resilient problem-solving, Nkansah is redefining the energy industry in Africa.

Ezinne Nnachetta, Development Geologist, Chevron

Following the completion of her MSc in Petroleum Geoscience at Imperial College London, Ezinne Nnachetta has gained significant experience as a leading geoscientist for global energy major Chevron. Her 10-year commitment to the company demonstrates her dedication to opening up new hydrocarbon basins, integrating innovation with petroleum and forging new paths for women in energy. Nnachetta represents a role model for aspiring women in the field. 

Teresa Isabel Nnang Avomo, CEO, GEPetrol

Teresa Isabel Nnang Ovomo, accomplished CEO of Equatorial Guinea’s national oil company GEPetrol, ascended to the position after working in various positions at the company, including Deputy Director of Operations where she streamlined and optimized the NOC’s upstream operations. Armed with a Masters from Heriot-Watt University, her journey includes various pivotal roles at Repsol. Avomo’s leadership exemplifies operational acumen, innovation and drive, and she serves as an inspirational figurehead, both in Namibia’s and Africa’s energy sectors.

Monique Ntumngia, CEO, Green Girls Project

Monique Ntumngia is a sustainability entrepreneur and advocate for climate-gender justice. Founding Green Girls Organization, a Pan-African energy social enterprise, she leverages AI to pinpoint clean energy challenges faced by women in African rural communities. She is also the Founder of Monafrik Energy, whereby Monique measures and compares environmental impacts in supply chains, advancing clean energy initiatives. Her impactful work exemplifies her dedication to providing clean, affordable energy solutions not just in Cameroon but across Africa and beyond.

Lynette Nyagah, Project Lead, Bentworth Energy

As Project Lead at East Africa’s pioneer oil and gas service company, Lynette Nyagah plays a pivotal role in establishing robust operational and quality systems. A graduate from the University of Cape Town, Nyagah gained experience in the sector as a Field Engineer for Baker Hughes. Now, she plays an instrumental part in positioning Bentworth as a globally recognized and competitive firm. Advocating for innovation in carbon footprint reduction, automation for enhanced efficiency, and the increase in participation by local African companies, Nyagha is an inspiration to many in the industry.

Oneyka Cindy Ojogbo, Partner, Centurion Law Group

Oneyka Cindy Ojogbo has a proven track record of providing strategic counsel to clients in complex energy transactions and projects. A graduate of Columbia Law School, Ojogbo currently serves as a Partner of Centurion Law Group, a pan-African legal and business advisory group. Throughout her career, Ojogbo has counselled clients across power, energy and infrastructure sectors. Her work has covered multiple sectors and tackled transactions of varying complexity, with her determination, passion and vision serving as an inspiration for many.

Isioma Okolo, Reservoir Engineer, Shell

Isioma Okolo is a Reservoir Engineer with the Shell Petroleum Development Company in Nigeria. She holds a Bachelor of Engineering Degree in Petroleum Engineering from The Federal University of Technology Owerri and an MBA from the Edinburgh Business School, Heriot-Watt University. Having worked as a Consultant in PricewaterhouseCoopers and as a Society of Petroleum Engineering Certified Engineer, Okolo is paving the way for a prosperous future for Africa and beyond.

Uzochukwu Ozoh, Legal Advisor, Chevron

With a LLM from the University of Dundee and an MBA from Imperial College Business School, Uzochukwu Ozoh has emerged as an accomplished transactional lawyer who merges business acumen, legal prowess and risk analysis within the energy sector. Currently serving as Legal Advisor at Chevron, Ozoh guides a team of legal experts facilitating intricate gas, commercial, and supply chain transactions exceeding US$1 billion. Her mastery of stakeholder relations, leadership and organizational development makes her a force to be reckoned with.

Lecticia Sepulvede, Public and Government Affairs Advisor, ExxonMobil

Lecticia Sepulvede has a Masters in Petroleum, Energy, Economics and Finance from the University of Aberdeen and currently serves as the Public and Government Affairs Advisor for global energy major ExxonMobil. Her vision is to support Mozambicans achieve their full potential, and she works closely with stakeholders to facilitate safety and security efforts in the Cabo Delgado province of the country. Her commitment to people, her focus on the energy sector, and her ability to manage stressful environments makes her a highly valuable and admirable energy professional.

Eman S Shahin, Performance Lead and Senior Petroleum Engineer, Dragon Oil Egypt

Eman Shahin is a proficient Performance Lead and Senior Petroleum Engineer (SPE) at Dragon Oil Egypt, and boasts over 9 years’ experience in reservoir, petroleum and production engineering. Her prowess spans budgeting, production forecasting, reservoir development planning and optimizing waterflood management. As a leader and coach at SPE Egypt, her commitment to mentorship shines. With roots at Cairo University and experience at GUPCO, Shahin’s journey embodies expertise, leadership and fostering an inclusive energy landscape.

Mwanyengwa Ndapewoshali Shapwanale, Director: Communications and Stakeholders Relations, ReconEnergy Namibia

Mwanyengwa Ndapewoshali Shapwanale is the Director of Communication and Stakeholder Relations at Recon Energy Namibia. With a degree in Communication and Media Studies from the University of Cape Town and 10 years’ experience in journalism and communication, she brings valuable compliance and ESG skills to her role in the energy sector. As the youngest member of Recon’s management, she plays a pivotal role in shaping the organization’s communication landscape.

Natznet Tesfay, VP Economics & Country Risk, S&P Global

Natznet Tesfay is Vice President of Economics & Country Risk at S&P Global Market Intelligence. Leading a global team of 150+ experts, she forecasts economic and country risk outlooks. With a rich background at IHS Markit and Exclusive Analysis, her expertise spans geopolitical analysis, energy transition and supply chain alignment. With degrees from Harvard University, The London School of Economics, and SOAS University of London, she has emerged as a trailblazer and advocate for Africa’s economic future.

Nidra Araba Yebuah, Digital and Integration Account Manager for Ghana and Equatorial Guinea, SLB

Nidra Araba Yebuah is an accomplished Senior Geologist and Account Manager with over a decade of experience in the oil and gas service industry. She blends technical proficiency with business acumen to excel in her role. Her expertise spans data interpretation, geological environments and technical sales support. Yebuah has significantly contributed to sub-Saharan African operations, demonstrating innovation and leadership in the dynamic industry.

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Energy transition policies and regulatory developments light up across Africa

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Energy transition is a key topic of discussion at the African Mining Indaba, currently underway in Cape Town, South Africa. Across the continent, countries in Africa are gearing up for energy transition by implementing policy and legislative frameworks that take into account the energy crisis and the need for a renewable, decarbonized, decentralized energy supply that addresses climate change and the commitments made under the Paris Agreement. Lawyers in Egypt, Ghana, Morocco, Namibia, Nigeria, South Africa, Tanzania and Uganda outline the efforts taken by the governments in their countries to address this urgent need to harness renewable power.

Egypt

Lamyaa Gadelhak, Baker McKenzie Cairo Partner & Co-Head of Banking and Projects:

“In Egypt, article 20 of the Investment Law No. 72 of 2017 (Investment Law) provides that companies that are established to develop a strategic or national project that contributes to achieving development, or projects in partnership with the private sector and the State, the public sector or the public business sector, in the area of public utilities, infrastructure, new or renewable energy, roads, transportation or ports, may, by a cabinet decree, be granted a “single license” (commonly referred to as the “golden license”) for the establishment, operation and management of the project, which will include a construction permit and an allocation of real estate property required for the project (License).

Such a License will be effective without the need for any further procedures and may include other additional incentives for the project provided in the Investment Law. The aforementioned was further developed through Cabinet Decree No. 56 of 2022, which specified a series of requirements to be met for a project to be considered a strategic and/or national project. In addition to meeting a set of conditions, said projects must be a development in one of the fields specified in the cabinet decree, which include, but are not limited to, green hydrogen projects, green corridor projects, renewable energy projects aimed at supplying desalination projects and green hydrogen production projects with energy, and carbon capture, utilisation and storage (CCUS) projects. 

The conditions, set out in the cabinet decree, will be subject to a yearly review in light of any changes to the State’s economic development plan. Said conditions were reiterated and detailed in the “Guidelines for Issuance of the Golden License” issued by the General Authority for Investment and Free Zones (GAFI), which sets out the eligibility requirements, terms and conditions, procedures and required documentation for obtaining the License.

Among the other incentives provided under the Investment Law, and which can be included in the License, Article 11 provides that companies set up before 28 October 2023 to operate in certain industry groups, could obtain a deduction from their taxable income. This incentive is limited to seven years from the date of commencement of the project and is not perpetual. Furthermore, the Investment Law provides that additional incentives around, for example, utilities connection costs, land allocation costs and technical training may be made available to a project by a cabinet decision.

The Government of Egypt has now also expressly recognized the production, storage and export of green hydrogen and green ammonia among the areas falling within the State’s economic development strategy. It has passed a decree that would allow green hydrogen and green ammonia projects to benefit from a wide range of State support under the country’s existing Investment Law, including tax incentives. This is a key development for Egypt’s hydrogen economy and we expect that it will stimulate private investment and the development of new green hydrogen and ammonia projects in the country.”

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Ghana

Sefakor Kuenyehia, Solicitor & Barrister, Kimathi & Partners in Ghana:

“A recent legal development in Ghana was the amendment of the Renewable Energy Act, 2011 (Act 832) by the Renewable Energy (Amendment) Act, 2020 (Act 1045) (amended Act). The amended Act was passed on 29 December 2020 and establishes a procurement scheme to deliver a competitive market rate for electricity generated from a renewable source.

The Government of Ghana, through the Energy Commission, has also produced the Renewable Energy Master Plan 2019, and the Sustainable Use of Natural Resources and Energy Financing (SUNREF) 2021. Under the Renewable Energy Master Plan, the government proposes incentives in the form of substantial tax reductions. It also proposes exemptions of import duties and VAT on materials, components, equipment, and machinery (that cannot be obtained locally) for manufacturing or assembling renewable energy resources. Also, under the Sustainable Use of Natural Resources and Energy Financing (SUNREF) Programme, the government, in collaboration with other agencies, is offering businesses, organizations and households an opportunity to access financing for sustainable energy projects, and technical assistance in structuring green investment.”

Morocco

Keltoum Boudribila, Partner, and Saad Khaldi, Associate, Nasrollah & Associés Baker McKenzie in Morocco:

“In May 2022, the House of Representatives of the Moroccan Parliament unanimously adopted Bill 40-19 amending Law 13-09 on renewable energies and Law 48-15 on the regulation of the electricity sector and the creation of the national electricity regulatory authority. The Bill will aim to simplify the authorization procedures, to strengthen the attractiveness of the renewable energy sector for national and international investors, as well as to safeguard the economic and social balance of public actors in the electricity sector. In January 2023, the other chamber of the Moroccan Parliament, the Chamber of Councillors, adopted these texts unanimously.

The new legal framework will allow industries to produce their own renewable energy for their operating needs and supply it to other consumers. Morocco has been liberalizing the renewable energy sector for several years, and is continuing on this path with these legislative amendments.”

Nigeria

Oludare Senbore, Partner at Aluko & Oyebode in Nigeria:

“Following the decisions taken during COP 26, the President of Nigeria announced the intention for Nigeria to achieve a net zero emission target by 2060. In order to achieve this objective, the Federal Government of Nigeria on 24 August 2022, launched its Energy Transition Plan (ETP). The ETP, which was launched by the Vice President on behalf of the Federal Government of Nigeria, has a double-pronged objective of achieving universal access to energy by 2030 and a net-zero emission target by 2060.

The foregoing actions support Nigeria’s energy transition drive, which includes an updated Nationally Determined Contribution (NDC) under the Paris Agreement that was submitted in May 2021, and which highlights the country’s commitment to reduce greenhouse gas emissions by 20% unconditionally, and a conditional reduction target of 47% by 2030. This was followed up with the enactment of the Climate Change Act 2021 in November 2021, which provides a framework for achieving low greenhouse gas emissions (GHG), inclusive green growth and sustainable economic development in Nigeria.

An additional legislative action by the Federal Government of Nigeria is the Petroleum Industry Act of 2021, that empowers the Nigerian National Petroleum Limited (a state-owned oil company) to engage in the business of renewables. This further confirms the country’s drive for energy transition, as do proposed amendments to the Electric Power Sector Reform Act, which provide that distribution companies must ensure that a portion of the electric power that they purchase must be from renewable sources. This is supposed to provide support for the growth of renewable power projects.”

South Africa

Kieran Whyte, Partner and Head of the Energy, Mining & Infrastructure Industry Group at Baker McKenzie in Johannesburg:

South African President Cyril Ramaphosa launched the new Just Energy Transition Investment Plan (JET IP) for South Africa at COP 27 in November 2022. The JET IP is aligned with the Cabinet-approved National Just Transition Framework. The South African government has noted the plan outlined the investments required to achieve the country’s decarbonization commitments, while promoting sustainable development, and ensuring a just transition for affected workers and communities – in other words, a whole society approach.

The JET IP covers electricity, new energy vehicles (NEVs) and green hydrogen and identifies USD 98 billion in financial requirements over the next five years, to come from both the public and private sectors. The goal of the JET IP is to decarbonize the South African economy to within the NDC target range of 350-420 MtCO2 by 2030, in a just manner. The JET IP is centred on decarbonization, social justice, economic growth and inclusivity, and governance. The investment criteria for the Plan include projects that deliver on greenhouse gas emissions reduction and just transition outcomes, and are catalytic in nature and ready to implement.

Key investments under the JET IP will include:

Electricity – Decommissioning (repowering and repurposing with clean technologies), transmitter grid strengthening and expansion, and renewable energy.

New Energy Vehicles – Decarbonizing the automotive sector and supporting supply chain transition towards green sustainable manufacturing.

Gaseous Hydrogen (GH2) – Essential planning and feasibilities including port investment to enhance exports and boost employment and GDP.

Cross-cutting – Investment in skills development and municipalities.

At COP 27 Masopha Moshoeshoe, a green economy specialist in the Presidency’s Investment and Infrastructure Office, said that the country was seeking to attract investment worth USD 250 billion for the development of its green hydrogen energy economy by 2050. Moshoeshoe said the industry could create around 1.4 million jobs and USD 30 billion in annual revenue by 2050, but that renewable-power generation capacity of between 140,000 MW and 300,000 MW was needed to supply the green hydrogen sector. The country currently has renewable energy capacity of around 40,000 MW.

In late January 2023, Team Europe (the European Union and its member states) launched the Just and Green Recovery Team Europe Initiative for South Africa, as part of its Global Gateway programme. The initiative includes funding of more than EUR 280 million in the form of grants, which will be directed towards supporting policy reforms on green recovery, unlocking green investments and building a knowledge-based transition in South Africa.

Just transition

In South Africa, there is a requirement to build economic and social resilience to meet the NDC targets, and to manage transition risks and ensure social preparedness as the country diversifies its energy mix and grows new industries. A just transition takes into account the requirement to balance the reduction of carbon emissions with the impact of this transition on employment and the need to develop long-term green energy jobs, especially in respect of impacted communities that have a current heavy reliance on fossil fuels. There is also a need to recognize location and sector-specific vulnerabilities (such as care, preparation and social infrastructure) and intergenerational effects. 

Coal remains the primary source of energy for the country, but in order for South Africa to reach its reduction in carbon emission targets, this must change. Reskilling the existing workforce and educating the future workforce is also essential. South Africa updated its NDC under the Paris Agreement in 2021 and now has a proposed revised target range of 398 to 510 Mt CO2-eq for 2025, and 398 to 440 Mt CO2-eq for 2030. 

Policy developments

There have been a number of policy developments to assist South Africa with its energy transition. The National Development Plan (NDP), the draft Integrated Energy Plan (IEP), the Renewable Energy White Paper, the Nationally Determined Contribution (NDC), the Just Transition Framework, and enabling policies under development and in implementation, outline the policy foundation for energy transition in South Africa and the move away from carbon-fueled energy. The Integrated Resource Plan (IRP) 2019 covers the government’s plans for power until 2030 and outlines a decreased reliance on coal-powered energy and an increased focus on a diversified energy mix that includes renewable energy, distributed generation and battery storage.

The Renewable Energy Independent Power Producer Procurement Program (REIPPPP), introduced in 2011, outlined the procurement of renewable energy in the country. The sixth round of the REIPPP kicked off in 2022 and this round aims to procure 2.6 GW of solar and wind power. To incentivize the self-generation of renewable energy, the South African government has also indicated that it proposes to scrap the threshold for distributed energy generation of 100 MW, meaning that large-scale power plants in excess of 100 MW could be built without a license, to meet their own demand and to sell to the grid.

Trading in carbon offsets in the carbon market, where companies can pay other entities to offset their emissions for them, is also growing in popularity in emerging markets. In August 2022, the Johannesburg Stock Exchange announced that it was investigating the possibility of introducing a carbon trading market in South Africa. 

Further, recent amendments to the Electricity Regulation Act proposed by the Department of Minerals Resources and Energy are likely to address, inter alia, the electricity supply deficit, the vertical structure of the market and the lack of competition, the introduction of a multi-market including independent power producers (IPPs), and the formation of a central purchasing agency.

The amendments will also address the introduction of a day-ahead market to accommodate hourly supply and demand, the direct procurement of power by municipalities, the increase in the threshold pertaining to self-generation, the need to accommodate low carbon-emitting generation technologies, the timing of licensing applications, changes in transmission system operation including power trading, and the creation of additional regulatory capability. The strategy aims to accelerate affordable, decentralized, diversely owned renewable energy systems.

Tanzania

Shemane Amin, Partner at A&K Tanzania:

“Tanzania has refocused its attention on the energy future, with the Ministry of Energy actively pursuing investment opportunities in renewables to improve the country’s energy mix. This is specifically in relation to solar, wind and geothermal opportunities – and to add more renewable energy sources to the national grid to meet the country’s growing demand for power.

The Government of Tanzania is targeting an electrification rate for the entire country of 75% by 2035 and in the next six to seven years is striving to add 2 GW of renewables to the grid. In order to attract these investments, the government is striving to create a more conducive business environment in which such power projects can be sustainable, this includes providing investment incentives. In the 2022 budget speech, the Ministry of Energy highlighted, among other things, the establishment of the Renewable Energy Strategy and Roadmap. In a nutshell, the refocus on the energy future and the momentum behind renewables in Tanzania make this a key area to watch for investors.”

Uganda

Arnold Lule Sekiwano, Partner at Engoru, Mutebi Advocates in Uganda: 

“There are a number of policy initiatives which have been passed purposely to facilitate energy transition in Uganda. Such policies include the Climate Change Policy 2015, which focuses on the use of alternative renewable energy sources such as solar, biomass, mini-hydro, geothermal and wind; and the Renewable Energy Policy (2007), which forms the basis of the underlying framework for renewable energy.

Furthermore, Uganda’s Vision 2040 has also emphasized clean sources of energy to avert climate change. These policy initiatives have culminated into the recent enactment of the Climate Change Act, 2021. The Act governs the national response to climate change. One of the stated purposes of the Act is to give effect to the UN Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement. Generally, there is an increased focus on the utilization of renewable energy resources and technologies in Uganda and a regulatory focus that supports energy transition.”

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ENERGY: Senegal faces key technology decisions in its search for the optimal gas-to-power strategy

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Senegal’s domestic gas reserves will be mainly used to produce electricity. Authorities expect that domestic gas infrastructure projects will come online between 2025 and 2026, provided there is no delay. The monetization of these significant energy resources is at the basis of the government’s new gas-to-power ambitions. In this context, the global technology group Wärtsilä conducted in-depth studies that analyse the economic impact of the various gas-to-power strategies available to Senegal. Two very different technologies are competing to meet the country’s gas-to-power ambitions: Combined-cycle gas turbines (CCGT) and Gas engines (ICE).

These studies have revealed very significant system cost differences between the two main gas-to-power technologies the country is currently considering. Contrary to prevailing beliefs, gas engines are in fact much better suited than combined cycle gas turbines to harness power from Senegal’s new gas resources cost-effectively, the study reveals. Total cost differences between the two technologies could reach as much as 480 million USD until 2035 depending on scenarios.

Two competing and very different technologies

The state-of-the-art energy mix models developed by Wärtsilä, which builds customised energy scenarios to identify the cost optimal way to deliver new generation capacity for a specific country, shows that ICE and CCGT technologies present significant cost differences for the gas-to-power newbuild program running to 2035.

Although these two technologies are equally proven and reliable, they are very different in terms of the profiles in which they can operate. CCGT is a technology that has been developed for the interconnected European electricity markets, where it can function at 90% load factor at all times. On the other hand, flexible ICE technology can operate efficiently in all operating profiles, and seamlessly adapt itself to any other generation technologies that will make up the country’s energy mix. In particular our study reveals that when operating in an electricity network of limited size such as Senegal’s 1GW national grid, relying on CCGTs to significantly expand the network capacity would be extremely costly in all possible scenarios.

Cost differences between the technologies are explained by a number of factors. First of all, hot climates negatively impact the output of gas turbines more than it does that of gas engines.

Secondly, thanks to Senegal’s anticipated access to cheap domestic gas, the operating costs become less impactful than the investment costs. In other words, because low gas prices decrease operating costs, it is financially sound for the country to rely on ICE power plants, which are less expensive to build.

Technology modularity also plays a key role. Senegal is expected to require an extra 60-80 MW of generation capacity each year to be able to meet the increasing demand. This is much lower than the capacity of typical CCGTs plants which averages 300-400 MW that must be built in one go, leading to unnecessary expenditure. Engine power plants, on the other hand, are modular, which means they can be built exactly as and when the country needs them, and further extended when required.

The numbers at play are significant. The model shows that If Senegal chooses to favour CCGT plants at the expense of ICE-gas, it will lead to as much as 240 million dollars of extra cost for the system by 2035. The cost difference between the technologies can even increase to 350 million USD in favor of ICE technology if Senegal also chooses to build new renewable energy capacity within the next decade.

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Risk-managing potential gas infrastructure delays

The development of gas infrastructure is a complex and lengthy endeavour. Program delays are not uncommon, causing gas supply disruptions that will have a huge financial impact on the operation of CCGT plants. Nigeria knows something about that. Only last year, significant gas supply issues have caused shutdowns at some of the country’s largest gas turbine power plants. Because Gas turbines operate on a continuous combustion process, they require a constant supply of gas and a stable dispatched load to generate consistent power output. If the supply is disrupted, shutdowns occur, putting a great strain on the overall system. ICE-Gas plants on the other hand, are designed to adjust their operational profile over time and increase system flexibility. Because of their flexible operating profile, they were able to maintain a much higher level of availability.

The study took a deep dive to analyse the financial impact of 2 years delay in the gas infrastructure program. It demonstrates that if the country decides to invest into gas engines, the cost of gas delay would be 550 million dollars, whereas a system dominated by CCGTs would lead to a staggering 770 million dollars in extra cost. Whichever way you look at it, new ICE-Gas generation capacity will minimize the total cost of electricity in Senegal in all possible scenarios. If Senegal is to meet electricity demand growth in a cost-optimal way, at least 300 MW of new ICE-Gas capacity will be required by 2026.

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