From pig-manure power to wind farms, Virginia’s Dominion Energy is transforming itself into a renewable energy powerhouse—and Berkshire Hathaway’s cash will only accelerate the process. 



“Pigs are extremely efficient,” says Kraig Westerbeek, who oversees renewable energy production for Smithfield Foods, the world’s biggest pork producer. For what farmers put into them, they get a lot out. “They eat 2.4 pounds of feed per pound of gain,” he says. “And they produce more gas per pound of live weight.”



Westerbeek is talking about greenhouse gases emitted by the millions of pigs his industrial farms produce each year. Inside his giant barns, manure and urine ooze through holes in a concrete floor before getting piped to open-air ponds called lagoons—some the size of four football fields. In these lakes of livestock waste naturally occurring bacteria—called methanogens—continue to feed and fart out more gas. All this methane ends up in the atmosphere, and that is bad news for the planet. Pound for pound, methane packs 25 times the greenhouse effect as the standard environmental villain, carbon dioxide. To make matters worse, it’s long been standard practice for farmers to spray the odoriferous lagoon waste on croplands as rich fertilizer—subjecting Smithfield and its former hog-producing subsidiary, Murphy-Brown, to environmental litigation and scathing publicity as local communities cope with the stench and health risks.



But today, Westerbeek has a better story to tell. In recent years Smithfield has been working to perfect methods of capping lagoons with heavy plastic covers that trap the methane (and much of the reek). The gas inflates the plastic domes in amounts sufficient for people to walk on—like an extremely gross air mattress. Smithfield has partnered with Richmond, Virginia-based utility giant Dominion Energy to market the gas. Under the plan, Dominion will siphon the pig gas out of these anaerobic digesters, inject it into interstate pipelines and sell it to green-minded customers looking to cut their carbon footprints. The end result is arguably the cleanest electricity in the nation, says Dominion Chief Operating Officer Diane Leopold. “It’s a win-win-win.” With renewable energy projects, she says, “it’s about how many boxes you can check. This one has an extra box.”



Over the next decade, Dominion aims to invest $650 million into agriculture-derived gas projects. Smithfield will contribute another $250 million. The expected result: 8 billion cubic feet per year of livestock gas—thus preventing the emissions equivalent of 3.5 million tons per year of carbon dioxide. That’s like taking 750,000 cars permanently off the road, or planting 60 million new trees every year. It may sound gimmicky, but replacing just 12% of fossil fuel gas with methane captured from pigs, dairy cows or landfills “can make everything net zero” on an emissions basis, says Leopold.



Helping to underwrite those investments will be the $10 billion ($4 billion cash; $6 billion assumed debt) that Berkshire Hathaway&nbsp;<a href="https://www.forbes.com/sites/eriksherman/2020/07/06/berkshire-hathaway-dominion-energy-natural-gas-pipeline/#204094d3481c">said Monday</a>&nbsp;it will pay for Dominion’s 7,700 miles of long-haul gas pipelines. Dominion had to sell its pipelines to fund investment into renewables, says Hugh Wynne at SSR. And that gave Warren Buffett the opportunity to double down on Berkshire’s pipeline holdings, at a good price. “Buffett is taking advantage of their situation,” says Wynne.



For Buffett, the deal complements Berkshire Hathaway’s existing 16,000-mile pipeline network, thus supporting his bet that natural gas will put the final bullet into coal and be a mainstay of U.S. power generation for decades to come. Berkshire already owns massive wind farms that generate 6,600 megawatts across the West—so it is also knee-deep in renewable energy. And Berkshire’s money will do double environmental duty, as Dominion will use some of the cash to help build its green future. All told, Dominion expects to make some $55 billion of investments by 2035 into low-carbon energy sources—spurred on by Virginia’s aggressive new mandate for 100% carbon-free electricity by 2045.



What a departure this is from the old Dominion Energy. The utility was founded as Virginia Railway &amp; Power Co. in 1909 by Frank Jay Gould, son of robber baron Jay Gould. Its roots are firmly planted in Appalachian coal. Even as late as 1995, when its current CEO Tom Farrell came on board as general counsel, more than half of its power came from burning coal.



Over the past 15 years, Dominion has slashed its carbon dioxide emissions by 52%, first by replacing coal-fired power plants with cheap and plentiful natural gas, and more recently by investing in solar and other renewables. In a decade the carbon intensity of Dominion’s power generation has fallen from more than 1,200 lbs. of CO2 per megawatt-hour to less than 600 pounds. This is in the lowest quartile of American electric utilities, according to consultancy MJ Bradley Group.



A big contributing factor: the changing economics of renewable power. “Solar was not affordable; five years ago we didn’t have a single panel,” Farrell says. Now Dominion, which had profits of $1.4 billion on revenues of $16.5 billion in 2019 (and whose dividend yields 5%), is the fourth-largest solar operator in the country.



Dominion is far from alone in its rush into renewables. Since 2003—when coal provided 51% of America’s electricity—the nation’s power utilities have dramatically cut back their combustion of coal in favor of renewables and cleaner-burning natural gas. Currently, coal fuels just 17% of electricity, and renewables have surpassed it for the first time ever. This trend is just getting started. With its new 2045 mandate for zero-carbon electricity, Virginia joins California, New Mexico, New York, Washington and Hawaii.



After $40 million in R&amp;D write-offs they settled on perfecting the systems being deployed today, whereby each farm’s manure lagoons have been turned into anaerobic digesters that capture its gas and sends it via pipeline to a centralized processing plant. After about three weeks in the digester, what’s left of the manure comes out the other end as sterile, nutrient-rich organic matter used as fertilizer or even livestock bedding. The now less odoriferous water is sprayed on crop fields. The Dominion/Smithfield joint venture will deploy systems at hog operations in North Carolina, Virginia and Utah.



Dominion is also working with startup Vanguard Renewables, which deploys similar systems at dairy farms. Vanguard is backed by the foundation of eBay billionaire Jeff Skoll, among others. It already has 42 diary farms signed up. Vanguard’s president, Kevin Chase, says that even though so-called dairy digesters had been perfected in heavily subsidized Europe over the past decade, owners of natural gas pipelines were initially skeptical at letting in bovine gas. “It was guilty until proven innocent,” says Chase, whose Wellesley, Massachusetts-based company has since landed long-term contracts with Vermont Gas, Middlebury College and Polar Beverages.



Though plenty of municipal sewage systems utilize similar digesters to process human waste, these aren’t as cost-effective because of the plethora of other stuff people put down the drain. “Animal waste is cleaner and more homogenous,” says Chase, because we know that the hogs and cows are eating and what’s coming out. A solution for chicken waste remains an elusive “Holy Grail” because its high ammonia content makes it extremely caustic and tough to process.



Renewable fuels are a priority at the EPA. To ensure that refineries and utilities use the mandated volumes of green fuels, the EPA requires that they either generate or trade for compliance credits (called Renewable Identification Numbers). Thanks to its negative-carbon attributes, livestock gas qualifies for the highest-value credits—meaning that customers could pay Dominion ten times more for hog gas than for the same quantity of gas fracked out of shale formations. That could be enough to generate an additional $100 million a year in revenue.



Not everyone is impressed by the potential for renewable natural gas. “Putting it into a pipeline is better than letting it go loose,” says William McDonough, visionary architect and author of <a rel="noreferrer noopener" href="https://mcdonough.com/cradle-to-cradle/" target="_blank">Cradle To Cradle</a>, about the need for a circular carbon economy. “But it’s still a fugitive carbon. To say it’s the cleanest energy is not correct, if you’re considering climate change.”



McDonough favors using ever-cheaper solar and wind power to electrolyze water into hydrogen. “Green hydrogen” and other climate-friendly efforts are already in the works at Dominion. COO Leopold says they’ve successfully blended 10% hydrogen into their gas-fired power plants; “It’s expensive at the moment, but solar was expensive, too.”



In the years ahead, Dominion could well become Virginia’s biggest private landowner due to all the solar panels it expects to install. And it’s begun replacing diesel-powered school buses with electric ones statewide. Offshore in the Atlantic Ocean, Dominion this summer has installed the first two of what could be hundreds of 800-feet-tall offshore wind turbines generating 2,600 megawatts.  (Reflecting its renewable energy efforts, Dominion has been named to Forbes’ annual <a href="https://www.forbes.com/sites/maggiemcgrath/2019/11/12/inside-the-2020-just-100-how-we-rank-americas-best-corporate-actors/#6e3a06d55bc4">Just 100 list</a> of socially responsible companies.)



Even after Dominion has transitioned from nearly all-coal to zero-carbon in a generation, it will still be looking for the next best thing. Maybe nuclear fusion? “I don’t doubt it,” says Farrell. “A sustainable company is one that adapts to challenges and weathers the storm.”



&#8211; <a href="https://www.forbes.com/sites/christopherhelman/">Christopher Helman</a>, Forbes Staff, <a href="https://www.forbes.com/energy">Energy</a>

gettyimages-849890542-594×594

How Buffett’s $10 Billion Pipeline Deal Is Doing Environmental Double Duty Helping Dominion Energy Turn Acres Of Manure Into Clean Power

Ujunwa Ojemeni is an impact investing, energy and development expert with experience in the areas of opportunity maturation, financing, and policy.



At the Office of to the Honourable Commissioner for Energy &amp; Mineral Resources Lagos State, she drives policies, investments opportunities and implementation strategies to deliver reliable energy to the citizens of the State. She is also an Advisor with the Private Finance Advisory Network (PFAN) &#8211; the multilateral, public-private partnership initiated hosted by United Nations Industrial Development Organisation (UNIDO) and Renewable Energy and Energy Efficiency Partnership (REEEP) focused on bridging the investment gap between investors and entrepreneurs and project developers by facilitating investment into promising clean energy and climate change projects.



She was previously the Senior Investment Associate at All On, responsible for driving clean energy investments opportunities from origination to closing as well as providing strategic, governance and operational support to All On’s investees. 



Before that, Ujunwa coordinated several gas and power development opportunities of up to $300 Million at Axxela Limited (Oando Gas &amp; Power), and earlier at the Management Consulting unit of KPMG, she focused on start-up advisory and business process improvement. She received her Master’s degree in International Development &#8211; Development Finance from the University of Manchester, and has a First-Class Bachelor’s of Science degree in Banking and Finance from the University of Nigeria, Nsukka.



In acknowledgement of her contributions to the energy sector, she was selected as one of the 60 young African Clean Energy Leaders for the Open Power Africa 2019 program by Enel Foundation and was a finalist at the IFC Sustainability Exchange Contest for Youth Innovations 2019. She was also recently awarded the 2019 Young Leaders Award in the Energy and Sustainability category, by the Mandela Washington Fellowship Alumni Association in Nigeria (MWFAAN). 



Passionate about social responsibility, volunteering and philanthropy, she founded the SME Transformation Project through which she provides business advisory and funding to womenowned SMEs in low-income communities. She helps them navigate through basic business challenges such as marketing and distributing channels, product line expansion, and most importantly, funding, which they have difficulties accessing from traditional financiers.



Ujunwa also volunteers as a mentor with the Cherie Blaire Foundation, where she provides support to women entrepreneurs and helps them grow as they build their businesses in different parts of the world.



To promote the participation in the energy sector, she founded the African Women in Energy Development Initiative (AWEDI Network) focused on promoting the growth of the women in the sector through mentorship programs, career sponsorship (acceleration), networking opportunities, professional development and leadership training for women at all stages of their energy careers and for female students at the secondary and tertiary levels.

Outlook-image.png1_

Op-Ed: Promoting The Growth Of Women In The Energy Sector

Inspiring
women to lead in the energy sector and industry at large to improve the
imbalance of representation, is an ambition to be realised by all, according to
Mariam Kane-Garcia, the newly appointed CEO and Managing Director of Total
South Africa. 



She wants
to encourage and inspire people to push the boundaries of possibility,
regardless of the minority groups they belong to; while at the same time emphasising
the importance of not doing so at the expense or the credibility of minority
groups, specifically women in leadership. 



She
lives with the conviction that a diverse workforce and management team drives
the competitiveness of the business, the ability to innovate, the ability to
attract opportunities and their social license to operate. 



“At
Total, we enable all our employees to develop their professional skills and
advance in their career without discrimination of any kind.” 



However,
the presence of women leadership in the energy sector is still insufficient,
despite progress. The ‘Global Energy Talent Index Report 2020’, found that
women make up only 8% of the workforce in the global oil &amp; gas sector, 9%
in each of the petrochemical and power sectors, 12% in the nuclear sector, and
15% in the renewables sector.



Furthermore,
says the report, only 17% of women (of an already small pool) are placed on
leadership training programmes, compared to 22% of men. And the fact that women
have shown preference to training, learning and development suggests that
they’re still coming up against a glass ceiling and are eager for opportunities
to smash through it.



Mariam
emphasises that there is an opportunity for all in tackling the imbalance and
being catalysts for change instead of casualties for change. Diversity is a key
performance lever for success and both men and women have a critical role to
play in realising much change to rebalance industries. The task is not to
shoulder the typical roles assigned in industry, but for women and men to
interlink as the connective fibre that will materialise the successful growth
of industries in a notable way, as well as the economy. 



The
reasons for women’s underrepresentation in the sector are complex. There are
historical factors. Even today, research suggest that young girls are not
encouraged to eye careers in what is considered a technical, or masculine
industry. 



With
that in mind, it’s critical that women pursue and embrace the opportunities
that come their way, says Mariam Kane-Garcia, who is the first woman to hold
the senior position at Total South Africa. “Total offered me a managed career
path and I seized these opportunities successfully,” she says.



This
reciprocal relationship with Total has kept Kane-Garcia with the company for
nearly 20 years. She grew up in West Africa – Mauritania and Côte d&#8217;Ivoire –
and attended the ESCP Business School in Paris. She joined Total shortly after
finishing at the ESCP in 2001, and has held a series of positions in finance,
strategy, and business development at group offices in France, the UK,
Singapore and Vietnam. In 2019, she moved to South Africa as Executive Vice President
for marketing and services Southern Africa, and as CEO and Managing Director of
Total South Africa.



As a
vocal champion for diversity and inclusivity, she feels strongly that women
should be represented, not as a minority, but because they are deserving. This
will ensure that the wrong message is not sent and that it does not dilute the
impact of their performance in achieving their status. 



Not
only do women have to be placed in more leadership positions, but they also
need more exposure to technical roles, starting with education and vocational
training. 



Total
South Africa is committed to long term partnerships within the communities in
which it operates and has partnered with the Department of Agriculture,
Forestry and Fisheries Female Entrepreneurship Awards since 2003. Total South
Africa also supports other talent linked initiatives like Buskaid and Afrika
Tikkun, to create shared value and ensure the development of women at
grassroots.



In
2006, the company created its own Total Women Initiative for Communication and
Exchange (TWICE) Network as a platform to help women find their way and fulfil
their potential in the company, and Kane-Garcia herself set up the Twice Network
for Total UK’s upstream operations. 



When
it comes to gender equality, both women and men have to contribute.



We
stand to benefit from women and men’s unique contributions to truly propel the
energy sector forward. We need to create solutions with a business model as to
not simply place a band-aid on issues but rather create sustainable solutions
with a long-term commitment to solve and defy barriers. 



She concludes that, “If we are more inclusive, we are more connected; and if we are more diverse, we are more creative in solving the challenges we face.”



Content provided by Total

DSCF7750

Here’s how Mariam Kane-Garcia is leading the way at Total South Africa

It has been half a year since 195 countries came together in Paris for the adoption of the first-ever universal and legally binding global climate deal. In short, the accord, which will enter into force in 2020, aims to limit global temperature increases to below two degrees Celsius. While some are skeptical, Adnan Amin, the Director General of the International Renewable Energy Agency (IRENA), is optimistic.
“Paris has made a huge step-change in people’s expectations regarding the reality of energy transformation,” says Amin.
Amin predicts that the agreement will be a turbo boost for the world’s renewable energy sector.
“The political ambition we achieved in Paris was only possible because renewable energy solutions have become mature enough to be implementable and viable,” says Amin.
The growing value of renewable investments prove this.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5216" src="/wp-content/uploads/2017/05/002-300x200.jpg" alt="" width="300" height="200" />
“Between 2014 and 2015, global investment in new renewable energy capacity jumped from $270 billion to $330 billion. This was before the Paris Agreement. In addition, renewables installed capacity has jumped by 120 percent since 2000, and the costs of technology has fallen dramatically.”
When it comes to alternative energy, Africa is expected to be on the forefront of what Amin calls an energy revolution.
“Renewables deployment in developing and emerging economies has overtaken that in developed markets, including fast-growing economies like the United States,” he says.
“As the electricity demand in mature markets has more or less stabilized, it is soaring in the developing world. The energy demand in Africa for instance, is expected to double, or even triple by 2030,” says Amin.
Amin points to South Africa, Morocco and Kenya as countries to watch.
“The commitment South Africa is making to renewable power generation, and the fact that some projects are delivering solar and wind power that price-wise are more or less on par with coal-generated power, is remarkable.”
While solar PV uses solar panels to capture the sun and convert it into energy, Concentrated Solar Power (CSP) uses mirror structures, known as heliostats, or lenses to concentrate the sun’s rays onto a central point. This concentrated light is converted to heat, and then into electricity.
“South Africa has started to integrate storage components in CSP plants, which is reducing prices even further. CSP is not competitive with coal, South Africa’s main source of electricity, but it is getting there,” Amin says.
He notes that the country is also proving itself in terms of policy innovation.
“I have spent some time with officials there, going through their procurement process. All I can say is that these processes are some of the most rigorous, effective, and transparent I have seen.”
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5213" src="/wp-content/uploads/2017/05/009-300x200.jpg" alt="" width="300" height="200" />
Then there is Morocco, which recently inaugurated the first phase of the Ouarzazate CSP plant. Upon completion, it will have a 2GW power generation capacity.
“Morocco has gone from very little to no investment in renewables four years ago to $2 billion last year,” says Amin.
“The country has produced some of the most interesting wind and solar projects in the world. Their latest utility-scale wind investment is yielding power that costs $0.03 per Kwh. That is the lowest we have seen anywhere so far,” he says. “The government has bene very clear that this was achieved without incentives and subsidies. Morocco is a game changer in Africa, and is beating everyone else hands down.”
Kenya is doing well too.
“We will see geothermal development move very fast, with very cheap base-load electricity. Kenya is also investing in wind, with the wind farm in the Turkana District going online hopefully later this year,” says Amin, referring to the 250MW wind project, which is the largest in Africa.
Apart from individual countries tapping into renewable energy sources to improve national energy levels, what is more important is the formation of a so-called renewable energy corridor.
“Interconnections have been realized and are being built between markets in eastern and southern Africa,” he explains. “If we can achieve integrated markets with strong regulatory frameworks and transparent policy, we will start attracting financing and investment at a scale we have not seen before in Africa.”
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5217" src="/wp-content/uploads/2017/05/005-300x200.jpg" alt="" width="300" height="200" />

Going Green  To Light Up  The Continent

Two boreholes, drilled deep into the Karoo wilderness, have thrown fracking optimism into the garbage can. The core samples go by the mundane names of KZF-1 and KWV. They took weeks to drill and cost $2 million. Between them, they have thrown into doubt the dream of unearthing enough energy to power Africa.
The discovery was made by teams of researchers, from the Karoo Research Initiative (KARIN), who spent more than a year studying the vast wilderness in South Africa.
“The more we see, the more questionable the entire thing becomes, whether it will be profitable or not,” says Wlady Altermann, Head of Geology at the University of Pretoria, who inspected the core samples.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5006" src="/wp-content/uploads/2017/05/Wlady-Altermann_JC-2-300x200.jpg" alt="" width="300" height="200" />
Geologists found there is not as much shale gas in the Karoo as the government and energy companies claim. In 2009, Econometrix, South Africa’s largest independent macroeconomic consulting firm, believed there was 485 trillion cubic feet (tcf) of natural gas – the government and energy companies took this as gospel; it supported the case to open up the Karoo.
In May, research by Selwyn Adams, Principal Geologist at Petroleum Agency South Africa, which licenses onshore and offshore gas exploration, says their best model was 183 tcf.
Now, an even more lean estimate has emerged from Doug Cole, Senior Specialist Scientist at the Council for Geoscience (CGS), a parastatal mandated to research South Africa’s geology. He says there could be as little as 32 tcf, a fraction of the bigger amount that caused all the excitement.
By comaprison, 72 tcf is in Mozambique’s Offshore Area 1, one of the most important natural gas accumulations discovered in the last 20 years. The discovery, made 200 kilometers offshore in the Rovuma basin, alone is enough to add $39 billion per year to Mozambique’s Gross Domestic Product (GDP) by 2035.
“Initially I think they just took the volume of the base and didn’t consider the dolerites. It was obviously much too much,” says Cole.
KARIN was merely studying the geology of the Karoo and stumbled on the evidence.
“We have not seen a rock yet that would produce enough organic matter to produce shale gas in large amounts,” says Altermann.
“The conclusion of KARIN’s boreholes throws doubt into the original claim of the fifth largest reservoir of shale gas. From these two boreholes, the presence of shale gas is questionable, but this does not mean these results will be the same on other sites.”
The dolerites found could make it even more expensive to get any shale gas out. Unlike the shale gas boomtowns of the United States, the Karoo is littered with these dolerites – high temperature rocks – which burn off gas before it can be fracked.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5007" src="/wp-content/uploads/2017/05/Doug-Cole_JC-1-300x200.jpg" alt="" width="300" height="200" />
These discoveries are likely to strengthen the case against fracking by farmers, who fear it could pollute water. Hydraulic fracturing, or fracking, uses millions of liters of water with a 1% mix of chemicals, to fracture the shale to release natural gas at depths of 1,500 meters. This could contaminate borehole water used by the farmers.
Unlocking the mystery of the risk to underground aquifers is Kate Robey, a 30-year-old hydrogeologist at the CGS.
“In the 1970s, a South African-based parastatal called Soekor was mandated to find oil. Shale wasn’t even known then. But, during those explorations they did find gas. It is based on this information from the 1970s that we think there may be shale now&#8230; It is old data that wasn’t even looking for shale.”
There were questions when Robey, who was on site when KARIN was drilling KZF-1, hit fresh water at 560 meters below the surface. They didn’t expect it.
“The Tankwa site, which went 560 meters, hit artesian water so fresh I couldn’t believe the probes giving me the results. I had to drink it myself. We never expected that. We expected the water to be more salty. It may even be that these deep aquifers are fresher than the shallow ones,” says Robey.
Although Robey says this is an anomaly, finding fresh water in Tankwa throws up more questions about fracking.
“Due to the sparse data we have on deep groundwater in South Africa (based on the Soekor holes) we expected groundwater at depths greater than 500 meters to be saline, which could be concerning if shale gas activities were to continue in the Karoo at great depths. If not properly managed or monitored, and there is interaction between the saline groundwater and the shallow aquifers in the Karoo, this could result in irreversible damage of the water.”
“However, on the converse, now that we found that there was fresh water at such depths, a lot more interesting questions and research needs to be undertaken. Such as can we use this hot water for geothermal energy or even as a future water resource?”
This is why Robey will be digging deeper in the heart of the so-called ‘sweet spot for fracking’ in the Karoo, near Beaufort West.
“We need to get these properties because if ever, one day, fracking does take place, it will prove if there is any pollution from the deep groundwater into the shallow.”
It could take up to 15 years to collect the data. In the researchers favor is the current oil price. The drop in commodity prices has given a vital lifeline for researchers to gather the data before legislation goes through. It needs to be above $70 a barrel to turn a profit from fracking; at the time of writing it is $47.17.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5004" src="/wp-content/uploads/2017/05/Kate-Robey_JC-1-300x200.jpg" alt="" width="300" height="200" />
Will fracking mean jobs?
“Let’s get rid of the rumors – fracking won’t benefit the lower class. The actual production through fracking would require high-end technology and expertise, which up to now, is not available in the country,” says Altermann.
“You don’t need people with shovels and hammers. It’s high technology stuff, skilled people will be flown in.”
A fracking future that seems far away.

The Fracking Future Fades

Ageneration of small-sized nuclear plants will revive Africa and give it all the energy it needs. This is the solution of nuclear physicist Kelvin Kemm. He is the CEO of Nuclear Africa and an old hand in the energy game.
“Three quarters of African countries can become nuclear countries within the next half a dozen years. I would advise they do it,” says Kemm.
They call them high-temperature gas-cooled reactors (HTGR); a generation IV reactor that uses helium instead of water. It means that nuclear can produce energy without the need for large amounts of water to cool uranium pebble beds.
“Nuclear is the cleanest, safest and most reliable form of electricity. This is proven… work done at North West University has shown that nuclear power is cheaper than coal in South Africa, if you look at the lifetime cycle and you apply the same interest rates. What tends to happen is that in loans for coal you get a certain interest rate and then suddenly when you get a load for nuclear they up it, because suddenly it’s nuclear and it’s more risky. It isn’t more risky.”
Unlike South Africa’s 2,000MW-Koeberg Nuclear Power Plant, which was completed 30 years ago, the HTGR can be built a lot smaller at 100MW, according to Kemm.
“I am not advocating that a small African country tries to embark on a massive project, because those need to be on the coastline or on the side of very large lakes to utilize the water for cooling,” he says.
Nuclear projects loom large for South Africa. The government is at an advanced stage in its plans to build at least three plants that will produce 9,600MW by 2023.
“To my mind that’s not enough. We should be looking at 12,500MW,” says Kemm.
He believes that the waste produced by the plants is in safe hands.
“It is time for people to think and not get swept into the emotion in the press. The waste problem is not a technological problem, it is a public relations problem. The technical problem is solved. The public hasn’t been solved.”
Low and intermediate level waste from Koeberg – the gloves, paper or anything else that goes into a nuclear zone – is transported by road in steel and concrete containers to a remote disposal site at Vaalputs, 600 kilometers away in the Kalahari Desert.
High-level waste is stored on site in special pools equipped with high-density racking.
“High-level waste is spent fuel. They are balls, with uranium, that can kill in one minute. All the high-level waste that has come out of Koeberg for 30 years is still on the site. There is no legally determined thing to do with it. Only two countries in the world have a permanent plan. That is Sweden and Finland. They both dig underground tunnels, in very wet conditions, pump all the water out. Put in copper cylinders that are about a meter diameter and slide the fuel in and weld the cylinders shut. [They then] slide these cocoons down the tunnel. When the tunnel is full, they release the pumps and move up a level.”
“Their solution is to bury it in water logged tunnels. I would like to see South Africa be the first country to come up with a dry storage solution. You can very easily. South Africans are the best hole diggers in the world with a hundred years of mining to draw on.”
“Sometimes there is this offensive element where overseas people say, ‘they are only a country in Africa with African type standards and these are the same people that have never been here. How can they expect to run nuclear?’”
Kemm answers there is nothing in a reactor that South African scientists do not understand. After all, they’ve run a nuclear power station for 30 years without a hitch.

Nuclear  is the way

Wind, solar and hydro energy have all been highlighted as sources of energy that help meet Africa’s growing power needs. Ghana’s Dela Wosornu is using garbage.
Decomposing organic material, known as biomass, releases gas that can be used to create energy in the form of biofuels. In Ghana, a country with a vast amount of degradable material, it is a viable option for alternative energy.
In Ghana, energy is costly and scarce; this hinders economic growth.
Biomass, such as wood and charcoal, is Ghana’s main energy source, supplying around 60% of the total energy used in the country. Biomass resources cover about 20.8 million hectares of land mass in Ghana. Most of this land is made up of crops and plants that can be converted into solid and liquid biofuels. Wosornu, a renewable energy entrepreneur, is taking advantage of this by transferring landfill gas to energy.
He is involved in the Oti Sanitary Landfill Gas-to-Energy Project, which eliminates the emission of harmful greenhouse gases as well as the spread of disease from the waste. The project reduces the reliance on producing power from fossil fuels by producing energy from the waste that would have otherwise been buried in the landfill.
The solution is quite innovative.
When organic material, such as food waste, is buried in the landfill, it is deprived of oxygen. In this condition, the organic material will decompose and turn into methane gas. The methane will slowly be released into the atmosphere, causing global warming. The project at the Oti landfill doesn’t let this happen. They cover the landfill with soil and drill holes into it. Pipes are then inserted and the gas is sucked out into a generator which makes heat and electricity.
“It’s really a matter of just bringing pipes to where the gas has collected and pumping it out through a vacuum process and then directing that gas to a generator,” says Wosornu.
According to Wosornu, the project is the first of its kind in Ghana. As cities grow and produce more waste, the environmental impact from open dumps becomes increasingly intolerable. The conversion of dumps to engineered landfills like the Oti project is essential.
“Our solution can be applied at any landfill that has received at least 400 tons a day of municipal solid waste and is in reasonably good shape. As there are many landfills in Africa and around the world that are not capturing gas, the future for landfill gas to energy projects is bright,” says Wosornu.
Landfill gas to energy projects have underperformed relative to projected gas and power output. Bearing this in mind, the projected output of the Oti project has been discounted by 70% so that its actual output will meet or exceed the projected output. The Renewable Energy Act in Ghana ensures that there are set prices for each class of renewable energy. It also offers an opportunity to redirect future investments into green energy.
The challenge for Wosornu, is finding reliable buyers for the project’s output. The high cost of doing business in Africa also makes the development costs of these projects higher than the rest of the world.
“There is no doubt that, if properly exploited, renewable energy resources in Africa can make a significant contribution to the continent’s energy supply. In particular, the potential of biofuels on the continent is huge. Within the context of the current financial crisis, stakeholders including policy makers, international partners and the UN should lead the debate on and collectively seek strategies for scaling up renewable energy use so as to increase access to energy and enhance energy security among the many potential benefits of these technologies,” says Kandeh Yumkella, Director-General of the United Nations Industrial Development Organization (UNIDO).
Wosornu is playing his part.

Full Steam Ahead

From Junk To Power

When Luke Callcott-Stevens, Gavin James and Doug Jenman first talked to FORBES AFRICA in 2012, they struggled to imagine what their $274-million 100MW wind farm in Dorper, South Africa, would look like. A big project with big risk.
“We built a wind farm, we installed it. All those are effectively at the cost of capital. Now it’s done… Every three days a wind turbine is being installed in South Africa,” says Jenman.
Forty wind turbines and two and a half years later, this trio from Rainmaker Energy can not only take pictures of Dorper, a tiny town in the Eastern Cape province, they are now imagining that they can cover the rooftops of London with solar panels.
“The cities of tomorrow will produce their own electricity. We won’t need power stations,” says James.
With this bold idea, the trio set up shop at 81 Rivington Street, an old electrical showroom, in London’s tech hub Shoreditch, and also, by coincidence, labeled with a fitting coat of arms “More Light More Power”.
“A lot of our growth is happening in the solar field, and it’s out of South Africa. We’ve set up a separate company in the UK, Solar Stone Energy; effectively we are trying to create a utility scale solar project on rooftops. So we are aggregating a bunch of rooftops to build a big solar power plant,” says Callcott-Stevens.
It gets even more pie in the sky – especially when we are talking about a city where the sun doesn’t shine often – the trio want to give solar panels for free.
“We cover the costs of the installation and on-going monitoring and maintenance. There is absolutely zero cost to you. You then get to enjoy the immediate benefit of reduced energy costs because the electricity, which is produced on your property’s roof is yours to use, for free. By generating electricity on your roof, we receive a Feed-in-Tariff (FiT) through a government-backed subsidy program. This is how we fund the solar installations and make a return on investment. It’s a win-win for everyone.”
They feel it could find favor with London’s 8.3 million people.
“If you look at what’s happening in the States and in Europe, in solar and wind energy, people are putting solar on their roofs and creating their own power. That is not a total solution, but it cuts back on the need to create new power plants, it changes the game. The utility business is now losing out on its most profitable market. That demand is now gone,” says Callcott-Stevens.
“Solar has gotten cheaper. Next storage is going to get cheaper. That’s not to say you won’t have coal or nuclear power stations. It just changes the game. It changes the dynamics,” says James.
Back home in sunny South Africa, where 39 renewable energy projects contribute 1,800MW to the grid, the trio’s 100MW wind farm in Dorper has been humming for more than a year. Although James says it will take another 16 years to see a profit, it couldn’t have come at a better time. Eskom, South Africa’s power supplier, regularly cuts the power – a legacy of under investment and delays in coal-fired power stations, such as Medupi and Kusile. The work of renewable energy dreamers has been a saving grace.
“Eskom’s troubles are our blessings in the whole [renewable] industry. It’s been good. The government has put its weight behind the program,” says James.
“They are seeing results and they are happy with it, so the whole fear that renewables is erratic and unreliable actually is false. Apparently the first projects have reduced power cuts by half. We would have double the power cuts if it wasn’t for the renewable projects,” says Jenman.
The competition for new projects is stiff. Last year, Eskom announced that 77 bids were received for Round 4 of the program, for a total of 5,804MW. Of these, 13 were accepted as preferred bidders, for a total of 1,121MW installed capacity at a cost of R23 billion ($1.8 billion).
“By the fourth round, the tariff prices have halved. The game’s changed. The perception of risk is gone. In Round 1 there was no market in South Africa; people were taking a lot of risk without knowing if there was going to be a market. They needed higher returns. Where we are now, the return expectation is lower, as it should be, as the market grows and matures,” says Callcott-Stevens.
“Without getting those high returns in the beginning we wouldn’t be in a place where we are established,” says Callcott-Stevens.
Hope of more business in Africa is in the wind. The trio has a further 330MW of wind and 290MW of solar photovoltaic (PV) projects under development in South Africa.
“Africa is the future – solar is all over. There is potential everywhere. Sub-Saharan Africa is obviously closer to home so it’s easier to look at. The [solar rooftop] model works really well in a deregulated market. In South Africa, we are still highly regulated,” says James.
“The rest of Africa is highly regulated. Either badly regulated, or highly regulated. We don’t want to just get on a plane and go find a site. We like to have an angle before we choose a market. There needs to be a reason before we can just go into that market. We can’t just go into a country and just say we are building a solar plant. We need to have relationships, we need to know people, we need to understand the market first,” says Callcott-Stevens.
From the dream of a small windy farm in the middle of nowhere, in Africa, to the reality of free solar panels on the rooftops of London where the sun hardly shines. What next?

The Cities Of  Tomorrow  Won’t Need Power Stations

She is the fresh face of renewable energy in Africa. By a twist of fate, this young lawyer, who grew up with her grandmother by candlelight, is now spearheading Africa’s dash for energy.  Sometimes it hurts.
“It feels like I haven’t slept for four years, I have been so busy working on deals. But it was the deal of a lifetime.”
So says Linda Olagunju on her deals to put two wind farms and two solar photovoltaic (PV) farms onto the barren landscape of De Aar in the Northern Cape. Two deals she patched together that will contribute 254MW to South Africa’s energy grid.
“The wind projects reached financial close and are currently under construction. It’s a partnership between China Longyuan, Mulilo and DLO Energy Resources in De Aar. It’s been almost one year of signing documents. The legal fees on these sorts of transactions can go up to R20 million ($1.57 million) if you are lucky.”
It’s the fruit of the Renewable Energy Independent Power Producers Procurement (REIPPP) program. In short, Eskom, the country’s power generator, attracted bids for private business to apply for tenders. Under it, investors generate electricity for sale at a tendered rate. This brings the total committed private sector investment in the REIPPP, since 2011, to $13.25 billion (R168 billion). It is fierce competition.
“There about 85 solid IPP [independent power producers] developers in South Africa. In Round One to Four, there was 5,200MW on offer, the next rounds are 6,300MW. It’s a bloodbath. You are competing with international companies that are coming in dirt cheap,” says Olagunju.
This may be a drop in the ocean but it’s a very important one. Renewables have been a saving grace. According to Olagunju, 39 of these projects are up and running, supplying 2,050MW to the grid.
“It’s the first successful program since democracy. It’s not that there haven’t been any independent power producer programs on the continent. It’s just that this one is the largest one of its scale and being backed by government.”
Olagunju’s childhood was far from electricity. She grew up in Matatiele, a village in the Eastern Cape 782 kilometers from the boardrooms of Sandown where she now works and lives with her Nigerian-born husband.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-3955" src="/wp-content/uploads/2017/04/IMG_5178-300x200.jpg" alt="" width="300" height="200" />
“It was rural, like candle rural… [My grandmother’s village] only got electricity in 2005,” says Olagunju.
This was in time for the power cuts of 2008, when Eskom admitted that it had run out of capacity to supply electricity. At this time, Olagunju had left home to follow in the footsteps of her father and study law. At the University of Cape Town she studied laws governing fossil fuels rather than green energy.
“I’ve always known I was going to go into resources. I just didn’t know if it was going to be mining or oil and gas. The biggest thing for me is why Africa, which is so well endowed in resources, remains the poorest continent. I always hated injustice, growing up in apartheid South Africa,” she says.
Olagunju struggled to find her niche and ended up as a lawyer for Mulilo, a startup renewable energy company in 2008.
“Mulilo needed a lawyer, but couldn’t afford any. So I said I would do the services in return for shares. I still had to pay for them. At the time, the company [owed] R11 million ($870,000) and the company is now valued at R5 billion ($394 million)… in three years,” she says.
This sparked her idea of entrepreneurship.
“I always felt the way to change things is through entrepreneurship. Through law I had the opportunity to see how government makes these decisions on large scale projects… I said ‘hang on a minute, we have a lot of wind in South Africa and we have a lot sun in South Africa, so why haven’t we put renewables on our grid?’ I started doing research,” she says.
The business of renewables can take years to see a profit.
“There is a lot of risk, anything can go wrong. You are in a contract for 20 years, governments can change and I know there are laws to take care of that risk. The wind may not blow for as long as you thought it would. Your sun may not shine as brightly as you thought it would. They are long-term projects.”
“You identify the land. You go into lease agreements. Do an environment impact assessment (EIA) process that can take three years if you are lucky. You then bid your process with a construction period. If everything goes right, [a farm] will be up in 20 months.”
“Then you start seeing a trickle dividend. A trickle dividend at connection in the first seven years is very minimal. It’s nothing to write home about. It’s not even enough to pay your operational expenses.”
Then, there are the hiccups.
“We have existing infrastructure. And then we have the [REIPPP]. The grid infrastructure hasn’t been expanded to accommodate the increasing demand on that particular infrastructure. It’s not Eskom’s fault necessarily. It’s a matter of planning.”
“One of the points we raised before we began these projects is getting the grid contacted properly before you have a program. But it’s always difficult how you spend on infrastructure not knowing where those programs are going to be awarded.”
“Eskom said that they have developed a map where they now know where the hotspots are for energy projects and where now they are doing their best to upgrade in those regions in anticipation of the other [REIPPPs] being built.”
Olagunju believes gas, coal and nuclear could all go the same way.
“You can go and leverage an asset and try and participate. The key thing about these deals is to learn from them. Once you do one, you have built a portfolio. You can go and knock on a door in Nigeria, rather than say you have an idea,” she says.
If you are Olagunju, at the tender age of 31, you could also argue it’s good to have a foot in the door.

A Bloodbath In The Wind

From the boardwalks of Cape Town to the streetlights of Kigali, billions are being made out of renewable energy. It brings business and government together; it could end the days of smoke-belching coal-fired plants. It could answer Africa’s most burning question – power.
In 2011, many experts scoffed at the thought of Africa running on towering wind turbines and miles of solar panels. It was too expensive; it was inefficient and couldn’t stay charged. But, armed with new technology, a pack of young entrepreneurs dug deep to harness the wind and the sun of Africa, to power future generations.
In this continent, South Africa’s Renewable Energy Independent Power Producers Programme (REIPPP) has moved the fastest. In a few short years, South African entrepreneurs have invested $13.25 billion to sell electricity back to Eskom, the country’s hard pressed power generator.
It is fierce competition. According to South Africa’s President Jacob Zuma, 1,800 megawatts (MW) are on the grid and in the next two and half years, 92 projects will generate up to 6,327MW. Further investment into hydro, gas and nuclear power are also on the cards, says Zuma.
The faces driving this investment are fresh. Thirty-one-year-old Linda Olagunju who grew up in an African village by candlelight is now calling the shots in boardrooms. Homegrown entrepreneurs Luke Callcott-Stevens, Gavin James and Doug Jenman threw in their safe jobs for the cutting edge of renewable energy generation. These are a few of the young and restless generation of investors who are taking risks to charge Africa.
It’s a story that breezes through the wind turbines in South Africa to the landfills in Ghana to the underground heat of Kenya.
Some old heads, like nuclear physicist Kelvin Kemm, say that nuclear may yet have a bigger say. He believes three quarters of African countries can become nuclear within the next six years.
It all adds up to an exhilarating story of youth, vision, risk and reward. This month, FORBES AFRICA dedicates our cover story to it.

Power For The People By The People

The sharpest minds in world business are in Africa to take stock of the last quarter of a century and help unravel the great knot of economic problems of the continent. The future of our grandchildren depends upon it.
At the heart of the issue is how the continent is going to get Africa’s fast growing working population to work. The World Economic Forum estimates that working population will double to one billion strong – that’s more than three times the population of the United States – by 2040.
Many of these young workers will be young, restless and savvy; they will be plugged into social media and will know what they are missing out on. Few in Africa will need a reminder that the devil makes work for idle hands; those who remember the death and violence of the Arab Spring in North Africa or the xenophobia in South Africa.
<img decoding="async" loading="lazy" class="size-medium wp-image-30065 alignleft" src="http://www.forbesafrica.com/app/uploads/2017/05/CHRIS-BISHOP_006-200x300.jpg" alt="" width="200" height="300" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/CHRIS-BISHOP_006-200x300.jpg 200w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/CHRIS-BISHOP_006-300x450.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/CHRIS-BISHOP_006-600x900.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/CHRIS-BISHOP_006-768x1152.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/CHRIS-BISHOP_006-683x1024.jpg 683w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/CHRIS-BISHOP_006.jpg 682w" sizes="(max-width: 200px) 100vw, 200px" />
The only way to mop up this growing lake of unemployment is through economic growth. Regional growth in Africa has remained steady at around 5% – at a time when most of the world has struggled with poor growth.
But double-digit growth is needed now to help draw the young, bright and talented into the workforce. Given Africa’s fight for foreign investment, with the rest of the world’s emerging economies, this growth rate, is likely to prove a mountain to climb.
“Even the world’s fastest growing economies are struggling to grow at 7.5%, so the chances of double digit growth for Africa are almost zero. I think the continent is more likely to be looking at 4.5% to 5%,” says George Glynos, an economist with ETM Analytics in Johannesburg.
For growth to happen, infrastructure is needed in Africa like a drink in the desert. Broadband, rails, roads and ports; a list that trips off the tongue, but the reality is more complicated.
In May 2013, all of us in Cape Town for WEF Africa heard how the World Bank estimated Africa needs $93 billion a year worth of infrastructure. Even at the time, most people in Cape Town thought this figure was a drop in the ocean and they were probably right.
Raising that kind of money may prove difficult with a shallow investment pool and institutions short of money. The Development Bank of Southern Africa admitted in Cape Town that it could only hope to raise 5% of the infrastructure bill, even though it predicted the BRICS nations would invest $50-75 billion over the next decade.
Furthermore, African states have to compete with nations around the world, who are also suffering from crumbling infrastructure, for investors. The exception may be the Chinese who are prepared to pour money into African infrastructure in return for resources and business.
The three magic letters to bring in the necessary billions, according to the experts, are PPP. In English, that is Public-Private Partnership, marrying investor’s money with state coffers to build the infrastructure that economies need. It sounds easier than it is. Many have the romantic idea that governments can sit down with private business, shake hands and agree. Not so. Governments and private business tend to work at different speeds. Governments in Africa can take many months to pay bills and their approach to business can differ.
“Private enterprise always needs to make sure the financing is sound before going into a project with government. If you look at the attempt in South Africa to boost the electricity grid by using PPPs it has proved difficult because the pricing is low. With all the will in the world, nothing will happen until you get the pricing right,” says Glynos.
Most agree that the governments of Africa have to work harder.
First, transparency in processes enables swifter decisions and execution; second, shared value and clear understanding of incentives across the value chain drives buy-in; and third, building a culture of trust between stakeholders is paramount, enabling bottle-necks to be addressed as they arise,” says Euvin Naidoo, a South African banker and strategist who is a WEF Global Young Leader.
Power, or the lack of it, is likely to be one of the big issues at WEF. South Africa, the largest power generator, has been struggling through the winter because of maintenance and breakdowns.
Linda Olagunju, the CEO of DLO Energy Resources who will be a speaker at WEF, believes it is time to integrate Africa’s power business by region.
“It is time for us to stop thinking about what each country is doing individually and start thinking of the progress of investment in power as a region,” she says.
Olagunju believes this could be helped by a legal framework for each region to ease cross-border power transactions and set up uniform bidding processes to help attract private money. She also believes renewable energy should be encouraged.
One of the big issues to be discussed at WEF Africa, is the pledge that the continent’s regions would agree to integrate infrastructure by region. That is, one country has the best airport; while its neighbors have good ports and roads so, between them, they can move trade through. This makes sense but it could be fraught with conflict as each country, naturally, wishes to have the best of everything. At WEF Africa 2013, leaders agreed to negotiate; this year’s gathering will hear back from them, I am sure many people can’t wait.

The Devil  In The Detail

If South Africans had more electricity, they could see him on TV. Chris Yelland, the electrical engineer turned energy journalist entrepreneur, is the scourge of Eskom, South Africa’s nationalized power utility. His voice is critical, outspoken and more consistent than the electricity supply from Eskom.
“When I started Energize magazine [1997], a lot of doomsayers said to me ‘what the hell do you want to start a new magazine for?’ they also said ‘what more can you say before you run out of hot stories?’. Energy at that time was a boring subject. There was not a lot of interest. People just assumed when you switched on the plug and flicked the switch, electricity would come out the wall. Fortunately for us, and by chance, energy has become a hot topic. It actually affects everybody. Not just industry, not just commerce, but the man or woman in the street. We’ve had to learn that behind the plug lies a multi-billion-rand industry,” says Yelland.
Yelland has had a lot to talk about over the last 10 years. Eskom has the capacity to provide 41,194 megawatts (MW). Its aging fleet of power stations, many built 30 years ago, runs at 33,000MW, and cannot match the current demands of 38,000MW.
For many years South Africans have been smug towards electricity. A common joke told locally was: What did Zimbabweans use before candles? Electricity. Now, that joke, and the smugness, has come home to roost.
The short term solution is ‘load shedding’; in English, this means scheduled power cuts. They are words that mean shops close, mines shut down and computer nerds cringe at losing their unsaved data. According to Yelland, load shedding is a vicious circle; as the power utility pleads with the country to use less energy, it hampers its operations.
“Electricity consumption at this moment is at a seven-year low. Ever since 2008, [when load shedding first was implemented], it’s been going down. This means Eskom’s sales are going down. Their revenue is going down but their costs are going up. In the last six months of 2014, Eskom declared a profit of R9.3 billion (around $800 million), but that was over the winter period, when their prices are nearly double the summer period because demand for electricity is high. In the second six months of 2015, their projected profit is going to see a loss of R9 billion ($780 million). It’s going to wipe out the entire profit for the first six months of the year. Why? “Because they haven’t got enough electricity to sell. They are throttling the economy telling people to use less,” says Yelland.
A four-year delay in coal power plant projects Medupi and Kusile has made matters worse. The projects which were due to be completed in 2013 and 2014 were expected to bring around 10,000MW to alleviate the grid. The delays mean their price tags, estimated at R69.1 billion ($6 billion) and R80.6 billion ($7 billion) in 2007, have now nearly doubled to R154.2 billion ($13.3 billion) and R172.2 billion ($14.9 billion). Alone, they amount to an annual loss of R30 billion ($2.6 billion) in electricity sales.
“All 12 units will be online by 2020 at the earliest, if nothing further goes wrong. They are not a short term solution to South Africa’s needs,” says Yelland.
The power crisis has also meant Eskom spends around R1 billion ($86.7 billion) on diesel every month to run open-cycle gas turbines. Ironically, the country doesn’t have the infrastructure to run on gas, which the turbines are designed for and which would be a cheaper, cleaner alternative to diesel, says Yelland.
There is light in the gloom. A thousand megawatts is generated by renewable energy projects, built by private companies and then sold back to Eskom at set tariffs.
“The success stories are not government success stories, they are private: private capital; private technology; built, owned and operated privately; and then generated into the grid,” says Yelland.
What’s more, a study by the Council for Scientific and Industrial Research (CSIR) in South Africa, found that the cost of the renewable energy projects was less than the cost of the blackouts, and didn’t cost the tax payer a cent.
“In fact, it’s contributed towards reducing costs, meaning we had to spend less on diesel. Of course that’s only valid on shortages like the wave we have had at the moment. If we weren’t using diesel, if it was a normal country with a surplus of energy, [renewables] would cost us,” says Yelland.
Renewables do have a downside and are not the solution to Eskom’s crisis. The sun and wind are not constant. At any given time the 1,000MW of energy supplied will most likely produce 250MW.
“This is rated output, that is what is expected when the sun is blowing full blast and when the wind is blowing full ball. For every 100MW of renewable energy of capacity, you have to build an equal amount of conventional, mid-merit plants, to back up and provide power when the wind is not blowing or the sun is not shining. If you are trying to deliver 100MW and the sun goes behind a cloud, you can’t just switch off half of your customers,” says Yelland.
In the short term, Eskom’s crisis is further threatened by a R3-billion ($260 million) bailout to enable it to purchase diesel for the next month. Yelland believes Eskom needs to restructure.
“Eskom’s structure is the same structure as when it was set up 80 years ago. The world has changed since then. Other organizations like Sasol are not state-owned enterprises any longer. I believe if Eskom took on strategic equity partners, and listed on the stock exchange, it would raise significant capital resources without the need to raise tariffs. We need to inject new blood into something that is currently something akin to that of a dinosaur. [Eskom] is slow moving, ponderous and unable to adapt to the changing environment. If things carry on like this, it will go extinct just like the dinosaur did,” says Yelland.
You could argue that dinosaurs, when they were around, had more power.

The Scourge  Of The Dinosaur  In The Dark

At the beginning of August, Africa’s richest man according to FORBES, Aliko Dangote, signed an energy infrastructure partnership with the world’s two largest private equity firms, American-based Blackstone Group and Carlyle Group.
Dangote made a commitment to invest a combined $5 billion by 2019 with New York-based Blackstone in power projects in sub-Saharan Africa and formed a joint venture with Carlyle to invest an unspecified amount in Nigerian oil and gas ventures and other African projects.
This is one of many examples from the continent, showing a step in the right direction in the private equity space for companies hoping to implement projects that require copious amounts of capital.
Private equity refers to shareholder capital invested in private companies. Firms seeking private equity funding often want to finance business expansions, develop new technologies, and complete acquisitions of other businesses among other reasons. The size of the private equity market has grown steadily since the 1970s. Africa accounts for around 1% of private equity investment worldwide, says the Chief Executive of the Carlyle Group, David Rubenstein.
Patrycja Kula, a Business Development Manager at the Johannesburg Stock Exchange, says private equity is also good for the stock exchange. She gives Alexander Forbes, the pension fund giant that delisted in an R8.2 billion buyout in 2007, as an example. It was a R9.7 billion-company when it relisted, showing that private equity helps a lot.
Although the South African private equity industry is small in comparison to those of the United States and Britain, it is well established and locally significant. It may be argued, according to the Southern African Venture Capital and Private Equity Association (SAVCA) Industry Performance Survey in 2013, that the country has one of the most sophisticated private equity industries among emerging and developed markets, with different funds at all stages of business development, from start-up venture capital funds through to late-stage and buy-out funds.
According to the World Bank, African nations need an extra $50 billion a year to ease energy shortages and transportation bottlenecks. Since the mid-1990s, financing for African power projects has averaged around $1.2 billion a year. This is split between public and private money.
In South Africa, the report on the Economic Impact of Venture Capital and Private Equity in South Africa in 2013 emphasized the benefits of private equity and venture capital transactions to the development of the country’s economy. It stressed that they are not confined to investee companies. Besides providing access to capital, Aubrey Shabane, the Manager of the Development Bank of South Africa’s Private Equity &amp; Direct Equities unit, says these investors bring dynamism, a depth of operational experience, huge financial acumen, strategic partners and foresight.
“As we face several economic challenges, including exceptionally high and persistent unemployment, it is rewarding to note the effect of this type of investment on job creation,” says Shabane.
“Companies with private equity and venture capital investors clearly do create employment and those in our survey indicated they have grown their staff by around 40 percent in the two-year period covered by this research.”
According to the KPMG and the SAVCA survey on the industry’s performance in the country over 2013, the private equity industry has R162.2 billion in funds under management, an increase of 16.9% from 2012. It adds that R58.6 billion of the funds under management are in undrawn commitments at the end of 2013, meaning that R46.1 billion is available for future investments in South Africa and R12.5 billion for the entire African continent.
This report also notes that private equity is an important source of Foreign Direct Investment, both indirectly via the raising of offshore money by local fund managers and by direct co-investment by foreign investors.
Speaking at the SAVCA Gordon Institute of Business Science for Private Equity in Illovo, Johannesburg, Stuart Bradley, a Senior Partner at Phatisa, a private equity fund manager investing in Africa, says that private equity is the most expensive way of getting funding or capital and should be a last resort for any business. Bradley adds that it is advisable for businesses to try other avenues first, like internal cash generation, family and friends, banks, mezzanine finance or even defer projects.

An Expensive Necessity  For Africa

It took the prestigious, New York City-based Columbia University two years to snag Wale Tinubu as keynote speaker at their annual Africa Economic Forum. Not surprising, Tinubu maintains an extremely busy schedule running Oando Plc, the first Nigerian company to list on the Johannesburg Stock Exchange as well as the Nigerian Stock Exchange, with a market capitalization of $1.4 billion and more than a thousand staff.
The forum, in its eleventh year, was held at the Ivy League school’s sprawling campus on the Upper West Side of Manhattan. It highlighted the rise of Africa and provided perspective from various industry titans from the continent. Tinubu, the group chief executive officer of Oando, the sub-Saharan African indigenous integrated energy group, joined Raila Odinga, the renowned politician and former prime minister of Kenya, Rosalind Kainyah, the managing director of Kina Advisory Limited and Emmanuel Nnadozie, the executive secretary of the African Capacity Building Foundation (ACBF) to discuss the continent’s economic rise.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-2893" src="/wp-content/uploads/2017/04/IMG_1777-200x300.jpg" alt="" width="200" height="300" />
It has been more than two years since the African oil magnate featured on the cover of FORBES AFRICA. Back in November 2011, Tinubu ended his first interview with the magazine, saying &#8220;Africa is a challenging continent; you fight for water, you fight for food, you fight for shelter. We compete by nature, so it&#8217;s always difficult but we don&#8217;t always know it is difficult because we have a spirit of survival. Here at Oando, we deliver on the tough things.&#8221;
Fast-forward to 2014, it seems that Tinubu still has that philosophy.
Standing in the lofty hallways of the university, dressed in denim jeans, crisp white shirt, dark-colored suede blazer and his signature horn-rimmed glasses, one could have easily mistaken Tinubu for a professor; fashionably modern but unassuming even though he sits at the helm of a $1.7-billion energy conglomerate.
During the chat with FORBES AFRICA, Tinubu discusses his company’s acquisition of the Nigerian upstream oil and gas business of ConocoPhillips, an American multinational energy corporation, in a $1.7 billion transaction.
“We were looking to acquire a company that was three times our size. We had to do several rounds of fundraising, which we successfully did. We did a rights of issue first, then we did a private placement, and then we organized a corporate facility. We had about five or six work series running simultaneously in an environment where we were deemed not to be able to do the transaction because anybody wanting to do a $1.5 billion or $1.7 billion transaction in such a short space of time is unheard of. Finance is still a challenge; it’s always been a challenge in Africa.”
The London-trained attorney-turned oil baron is known for being innovative in identifying funding opportunities from across the globe as well as from different classes of institutions. In 2012, Oando’s upstream business, Oando Energy Resources, became the first Nigerian indigenous company to be listed on the Toronto Stock Exchange with a market capitalization of $184 million.
His company started off as a trading company in oil and gas. It then went into downstream marketing, where they filed registration and diversified into gas, built three different gas fire systems, 130 kilometers of pipelines went into the services industry and now they are finally in the upstream sector.
“Our ultimate goal was to diversify our business to the upstream — exploration and production of oil and gas — because there is a substantial amount of profitability that exists and there’s an incredible value that we can add towards our indigenous participation in our oil industry.”
Tinubu explains that Nigeria is producing around 2.3 million barrels of oil a month but should be producing 4 million barrels. He also says that 65% of the reserves are on land but most of the focus is offshore because of the better return it offers.
“It is not unrealistic for us to build a $10 billion exploration and production indigenous company. When we started 20 years ago, we had no money. Today, we are probably an enterprise of $3.5 to 4 billion and by the time we complete this acquisition we will be around $6 billion and that is with zero equity.”
This is the result of delivering on the tough things.

Tag: Energy

FORBES AFRICA SOCIAL MEDIA

How Buffett’s $10 Billion Pipeline Deal Is Doing Environmental Double Duty Helping Dominion Energy Turn Acres Of Manure Into Clean Power

Op-Ed: Promoting The Growth Of Women In The Energy Sector

Here’s how Mariam Kane-Garcia is leading the way at Total South Africa

Going Green To Light Up The Continent

The Fracking Future Fades

Nuclear is the way

Full Steam Ahead

From Junk To Power

The Cities Of Tomorrow Won’t Need Power Stations

A Bloodbath In The Wind

Power For The People By The People

The Devil In The Detail

The Scourge Of The Dinosaur In The Dark

An Expensive Necessity For Africa

The Nigerian Oil Baron Buying Up America