When Barack Obama introduced Power Africa in 2013, he said the programme would offer “a light where currently there is darkness, the energy needed to lift people out of poverty”. The ambition was certainly on par with the challenge: through a mix of donor money, development bank funds and private equity, the initiative aimed to create 30GW of new capacity by 2030 to help bring power to 620 million Africans who still lack access to the grid.
Cynics have since spent much energy in calling Power Africa an unrealistic scheme that has yet to deliver its first electrons to African households. But seen from London, hints are that they may be getting their wires crossed. Seventeen years before its self-imposed deadline, the public-private partnership seems to be driving a flurry of activity on the investment side.
On 23 June, Harith General Partners and Africa Finance Corporation announced a plan to merge their power assets to create a new entity worth $3.3 billion. Not only does the effort impresses in numerical terms – the financiers say the platform will comprise assets capable of generating nearly 1.6GW, enough to supply power to 30 million people – it will also pool together a handful of the continent’s most high-profile projects.
AFC, for instance, will contribute interests in Cenpower, owner of Ghana’s 230MW Kpone Independent Power Project, and Cabeólica, a 25.5MW wind farm that provides 20 percent of Cape Verde’s energy needs. These will be combined with projects backed by the Pan Africa Infrastructure Development Fund, managed by Harith, including the 450MW Azura Edo IPP in Nigeria, the 420MW Kelvin Power Station in South Africa, the 310MW Lake Turkana Wind Power project in Kenya and the 90MW Rabai Thermal project, also in Kenya.
One of the merger’s objectives is to bring projects to operation more quickly. “The new venture will be in a position to develop and finance projects through corporate finance transactions and project finance, significantly reducing the lead time to bringing power projects to fruition,” the two institutions explain.
Scale is also being sought by Denham Capital, another usual suspect of the emerging market power space. A day before the Harith/AFC tie up, the New Jersey-based firm unveiled a partnership with GreenWish Partners to develop and finance a 600MW renewable energy portfolio across sub-Saharan Africa. The move is not a first for Denham, which last September formed another tie-up with Madrid-based Jenner Renewables to build wind, solar and small hydro projects in Latin America, the Middle East and North Africa.
For its part, GreenWish reached financial close in 2015 on Senegal’s 20MW Senergy II plant, which will be part of the portfolio. The electricity produced by the solar plant is said to be 50 percent cheaper than what the current energy mix costs the country.
Believe it or not, though, that was not the end of it. In the morning of 23 June, we also learnt that Mainstream Renewable Power had received a $117.5 million equity injection from affiliates of the International Finance Corporation and two emerging market funds. The operation’s objective was to provide Lekela Power, a $1.9 billion platform the Irish developer established last year with Actis, with firepower to build 1.3GW of new facilities by 2018.
And investor appetite for pan-African initiatives is not limited to these three: in November, a subsidiary of Cape Town-based insurer Old Mutual acquired the 50 percent it did not already own in African Infrastructure Investment Managers (AIIM) from Australia’s Macquarie. AIIM, which raised $500 million for its latest fund, is not a minnow. Neither is it new to the power game, having crafted several pan-African platforms with specialist developers over the last couple of years.
As it happens, 23 June was the second day of the Africa Energy Forum, a high-profile conference gathering many of the industry’s luminaries. That may have helped catalyse announcements. Still, their number and importance suggest the wind is blowing in the right direction.