Enel Green Power is currently the largest privately-owned renewable energy player in Africa, operating in South Africa, working on projects in Morocco and Zambia and now analysing both East and West Africa, Lamberto Dai Pra’, head of Sub-Saharan Africa, Asia and Australia, tells Renewables Now in an exclusive interview about Enel's plans for investments in renewable energy and the unique challenges of the emerging markets on the continent.
Q: In November 2016, Enel unveiled its strategic pillars for business development, targeting to add 6.7 GW of renewable energy capacity over the next 3 years and apply more widely the build, sell, operate (BSO) model. How is this going?
A: Enel’s 6.7 GW renewables growth plan over 2017-2019 includes 3.2 GW through the BSO model. In 2016 only, Enel’s total renewable capacity grew by around 2 GW, of which 400 MW were added in the United States under the BSO model.
Between 2016 and 2017, Enel Green Power has entered 7 new countries: Peru, Morocco, Germany, Indonesia, Australia, Zambia and Russia. Our attention to emerging markets put us in the position to enter Indonesia and Zambia in 2016.
Today, Enel Green Power, the Group’s company fully dedicated to the development and management of renewable energy sources, has a balanced mix of renewable technologies (hydro, geothermal, wind, biomass and solar) of around 38 GW of managed capacity and a diversified presence all across Europe, Americas, Africa and Asia-Pacific.
Q: In your opinion which markets (countries or regions) will attract most of these investments in renewable energy?
A: As of today, Enel Green Power has a strong project pipeline of around 18 GW diversified across 28 countries and in the main renewable technologies, such as wind, solar, hydro and geothermal. When it comes to studying new potential markets, there is no area of the globe we do not consider, assuming that 3 conditions are met: growth of electricity demand, abundance of resources and a stable regulatory framework.
Africa already represents a significant market for us, both in terms of natural resource potential and demand trend. Enel Green Power is currently the largest privately owned renewable energy player in Africa. We have an operational presence in South Africa, where we operate 5 photovoltaic solar parks and 2 wind farms for a total capacity of 523 MW and are currently working on projects in Morocco and Zambia. We are also analysing both East and West Africa.
Besides emerging markets in Africa, Asia and Latin America, we are also interested in mature markets such as Spain, where we recently won 540 MW of wind projects in a public tender. We want to enter markets where we are already present as Enel Group but not yet as Enel Green Power, aside from Russia where we have recently won 291 MW of wind we are also eyeing Argentina, and we also want to consolidate our position in Mexico, India and Australia.
Q: Earlier in May, UK-based renewable power producer Element Power said it sold its 25-MW battery storage project in Newcastle to Enel. What's Enel's strategy for business development in the energy storage market?
A: Enel is developing worldwide a portfolio of energy storage projects focusing on:
- utility-scale, stand-alone projects supplying a range of services aimed, among other things, at balancing power demand and supply in power grids. One example is given by the Newcastle project in the UK that you have mentioned.
- storage projects coupled with generation plants with the aim to enhance the power generation process. Integrating storage with large renewable plants can enable solar and wind to be more predictable, therefore limiting intermittency. One example is in Catania, Sicily, where Enel integrated a 1 MW/2MWh stationary storage system into a 10 MWp photovoltaic plant.
- behind-the-meter energy storage, installed for on-site use in a home or commercial space. Towards this end, the Enel Group has purchased Demand Energy Networks, a US-based company specialised in intelligent software and behind-the-meter energy storage systems.
Q: Africa is often considered a frontier market for renewable energy development. In your opinion, what are the distinctively unique challenges and opportunities faced by entrepreneurs in the power sector there?
A: The African continent has great potential in terms of renewables growth but is also facing great challenges.
Africa has plenty of natural resources such as solar, wind, hydro, geothermal and biomass, a young population and one of the world’s fastest urbanisation rates. Cost competitiveness, scalability, modularity, fast time-to-market and sustainability make renewables very attractive especially in developing regions such as Africa. In these areas electricity needs to create a unique situation for scaling-up renewables as they can make a fundamental contribution to fast access to electricity (in Sub-Saharan Africa 600 million people currently live without electricity) and to job creation.
On the other hand, the adoption of sound regulatory frameworks is necessary to help overcome a range of investment challenges. The limited technical knowledge has been identified as another barrier for developing business in the continent, specifically shortcomings in know-how regarding plant construction, operation and maintenance, as well as grid integration and so on.
Q: In your view, what are the ingredients that make a project a success, both for the investor, in terms of profitability and the community, in terms of affordable power prices? Can you give a few examples of success projects, supported by Enel?
A: Clear and stable regulatory frameworks are key to encouraging private investments: over 20 countries in the African continent adopted dedicated regulation for renewables development mainly through competitive tenders.
Our large South African footprint (523 MW) was achieved through the Renewable Energy Independent Power Producer Procurement Programme (REI4P) developed in 2011 by the South African government.
Zambia’s Scaling Solar Program developed by IFC is a clear example of what governments and multilateral organisations can do together to improve the business environment in Africa. The Scaling Solar Program has been under implementation in Zambia since January 2015 and is set to be adopted soon in other African countries such as Senegal, Ethiopia and Madagascar: its main features are transparent rules, robust and competitive tendering processes, risk management and credit enhancement tools to lower financing costs. Enel Green Power took part in the programme’s first phase, winning one of the two projects tendered: the Mosi-oa-Tunya 34 MW PV power plant, located close to Lusaka.
Especially in Africa, energy projects must be linked to sustainability and to the improvement of quality of life for local populations: building strong, positive and sustainable relationships with the local communities living next to the power plants is fundamental.
To promote sustainable development for Africans, Enel Group’s strategic plan is in line with the United Nations’ Sustainable Development Goals. Such goals include expanding access to electricity, improving education, increasing social and economic development and taking action against climate change. As a matter of fact, we have many of such projects in South Africa – i.e. helping seropositive mothers take care of their children, and helping communities to light houses and streets through the innovative use of recycled plastic bottles.
Q: What are the current trends in clean power investment. Would you say that privately-driven community projects and distributed energy are taking over utility-scale development?
A: The electricity system is in the midst of a transformation, as technology and innovation disrupt traditional models. In particular, driven by the sharp decrease in costs of distributed energy resources like distributed storage, distributed generation, demand flexibility and energy efficiency, decentralisation is becoming one of the principal trends of the transformation making customers active players of the energy system.
In this context, Enel is focusing more and more on the needs of end users, providing services and products that complete and expand the energy offering by leveraging on digitalisation, innovation and tailored commercial approach. Hence Enel is currently moving in two different directions: proposing Power Purchase Agreements to large private customers and developing systems for the supply of power in remote areas through mini-grids in order to solve the issue of electricity access for rural populations.
Another factor that is making the renewables race even faster and more competitive is digital, which helps to define new business models, expands the opportunities of integration between renewables and other industries, while increasing the central role of the consumer. As part of this new digital scenario, for example, is Enel Group’s ongoing acquisition of EnerNOC, a US company specialised in providing commercial customers with smart energy management systems.
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