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The role of public services, the challenges of solvency, infrastructure and capacity (by Ana Hajduka)

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  Ana Hajduka CEO Africa GreenCo The lack of creditworthy buyers is a key factor deterring investment in renewable energy RE in the SADC region creating a vicious cycle of falling investment higher cost of capital and poor power system performance This slows and limits the portfolio of RE Independent Power Producers IPPs in the region and limits the share of commercial finance for RE IPPs which is needed alongside development finance to achieve the scale required to address the significant supply shortfall in the SADC region climate change and to meet the Sustainable Development Goals SDGs However the growth of renewable power generation is a challenge for most markets particularly with intermittent generation such as solar Traditional energy projects have generally sought to isolate themselves from factors external to the project itself Thus RE integration is done suboptimally and the onus of managing the integration falls on host utilities and fixed contracts that neither reward nor incentivize more efficient behavior and can create tension with the weather In a future in which the share of renewable energies within the energy mix is increasing the flexibility of the national and regional system becomes increasingly crucial Introduction to GreenCo GreenCo through its operating entities in SADC acts as an intermediary buyer and supplier of renewable energy purchasing power from renewable IPPs and reselling the power bilaterally to utilities and private sector buyers i e commercial and Industrial C I and the Southern African Power Pool SAPP Competitive Markets as the first member of the SAPP under the newly created Market Participant category GreenCo mitigates the risk of buyer default on payments through its liquidity facility and an operational capability to secure alternative buyers or by using SAPP Competitive Markets trading if such a default exists Through its participation in SAPP Competitive Markets GreenCo promotes cross border energy transactions and a more dynamic and liquid energy market Ultimately such a market stimulates the supply and demand for financing for energy projects facilitating the more efficient mobilization of private sector capital towards the addition of critical and transformative capacity Recognizing the challenges faced by national utilities in SADC and the unsustainable burden placed on national governments in providing sovereign guarantees regarding their national utilities obligations to IPPs GreenCo aims to facilitate the evolution of energy markets in southern Africa towards a dynamic multi vendor multi buyer model In addition as a way to catalyze access to clean electricity through private sector investment for projects in which GreenCo acts as a buyer the sovereign guarantee requirement for power purchase payment obligations is eliminated since GreenCo does not need fiscal guarantees for energy purchase obligations GreenCo s vision is to lead the sustainable transformation of renewable energy markets in Africa with its innovative approach to addressing buyer creditworthiness the most significant hurdle to unlocking private sector investment in new renewable power generation capacity in the world continent GreenCo Regional response to the problem GreenCo is an exciting investment opportunity that takes a market based approach to support renewable energy generation in southern Africa In doing so GreenCo helps with the continued development of the energy markets in southern Africa to offer a more robust and efficient electricity system and market GreenCo is aligned with national and regional electricity sector developments that seek to improve open access regimes to encourage greater private sector investment in the electricity sector On June 20 2022 Africa GreenCo announced its intention to purchase an additional 80 MW of renewable energy from Zambia and up to 500 MW of renewable energy from other SAPP countries while accelerating its regional development plans Through such acquisition programs GreenCo is responding to increased activity throughout the region where many developers are seeking opportunities to sell energy from their projects to SAPP to avoid single buyer risk Additionally banks are looking at GreenCo as a way to reduce liquidity risk for C I focused developers The announcement that South Africa will buy energy from SAPP has also demonstrated the potential benefits for early adopters GreenCo has been involved in South Africa where it commented extensively on the Electricity Act published earlier this year The company aims to build on its regional model in the country purchasing power from multiple IPPs and selling it to municipalities and large C I clients GreenCo Power Services was incorporated in South Africa in July GreenCo hopes to provide access to the SAPP markets for South African clients and other players in the South African ESI Importance of market development GreenCo has already impacted certain market developments through its activities particularly in Zambia Namibia and more recently South Africa to ensure that brokers traders such as GreenCo are recognized in market developments that have recently occurred The Pilot Project in Zambia is also driving the development of many underlying arrangements that the market requires to enable open access While such activities have benefited GreenCo they will also benefit other players who will hopefully follow GreenCo s pioneering work Over time the SAPP Competitive Market has shown that it is a viable option for the sale of energy with a market risk within acceptable levels SAPP requires members who purchase from SAPP Competitive Markets to make an advance security deposit in SAPP clearing accounts prior to trading The market operator has complete visibility into these accounts and continuously monitors them so that members continue to trade Any Buying Member whose account balance falls below the level required for their trading activities will be suspended until the account is replenished This mitigates the payment risk of SAPP Competitive Markets GreenCo was established to address the key hurdle of risk and bankability GreenCo s solvency as a long term buyer stems from the significant liquidity cushion it provides linked to its practical and operational ability to diversify and mitigate risk by adopting a portfolio approach selling to both bilateral C I clients and through SAPP Competitive Markets
The role of public services, the challenges of solvency, infrastructure and capacity (by Ana Hajduka)

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Ana Hajduka

Ana Hajduka, CEO, Africa GreenCo The lack of creditworthy buyers is a key factor deterring investment in renewable energy (RE) in the SADC region, creating a vicious cycle of falling investment, higher cost of capital and poor power system performance.

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This slows and limits the portfolio of RE Independent Power Producers (IPPs) in the region and limits the share of commercial finance for RE IPPs, which is needed alongside development finance to achieve the scale required to address the significant supply shortfall in the SADC region.

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, climate change and to meet the Sustainable Development Goals (SDGs).

However, the growth of renewable power generation is a challenge for most markets, particularly with intermittent generation such as solar.

Traditional energy projects have generally sought to isolate themselves from factors external to the project itself.

Thus, RE integration is done suboptimally, and the onus of managing the integration falls on host utilities and fixed contracts that neither reward nor incentivize more efficient behavior and can create tension with the weather.

In a future in which the share of renewable energies within the energy mix is ​​increasing, the flexibility of the national and regional system becomes increasingly crucial.

Introduction to GreenCo GreenCo, through its operating entities in SADC, acts as an intermediary buyer and supplier of renewable energy, purchasing power from renewable IPPs and reselling the power bilaterally to utilities and private sector buyers (i.e., commercial and Industrial (C&I)) and the Southern African Power Pool (SAPP) Competitive Markets as the first member of the SAPP under the newly created ‘Market Participant’ category.

GreenCo mitigates the risk of buyer default on payments through its liquidity facility and an operational capability to secure alternative buyers or by using SAPP Competitive Markets trading if such a default exists.

Through its participation in SAPP Competitive Markets, GreenCo promotes cross-border energy transactions and a more dynamic and liquid energy market.

Ultimately, such a market stimulates the supply and demand for financing for energy projects, facilitating the more efficient mobilization of private sector capital towards the addition of critical and transformative capacity.

Recognizing the challenges faced by national utilities in SADC and the unsustainable burden placed on national governments in providing sovereign guarantees regarding their national utilities’ obligations to IPPs, GreenCo aims to facilitate the evolution of energy markets in southern Africa towards a dynamic multi-vendor, multi-buyer model.

In addition, as a way to catalyze access to clean electricity through private sector investment, for projects in which GreenCo acts as a buyer, the sovereign guarantee requirement for power purchase payment obligations is eliminated, since GreenCo does not need fiscal guarantees for energy purchase obligations.

GreenCo’s vision is to lead the sustainable transformation of renewable energy markets in Africa with its innovative approach to addressing buyer creditworthiness, the most significant hurdle to unlocking private sector investment in new renewable power generation capacity in the world.

continent.

GreenCo Regional response to the problem GreenCo is an exciting investment opportunity that takes a market-based approach to support renewable energy generation in southern Africa.

In doing so, GreenCo helps with the continued development of the energy markets in southern Africa to offer a more robust and efficient electricity system and market.

GreenCo is aligned with national and regional electricity sector developments that seek to improve open access regimes to encourage greater private sector investment in the electricity sector.

On June 20, 2022, Africa GreenCo announced its intention to purchase an additional 80 MW of renewable energy from Zambia and up to 500 MW of renewable energy from other SAPP countries, while accelerating its regional development plans.

Through such acquisition programs, GreenCo is responding to increased activity throughout the region, where many developers are seeking opportunities to sell energy from their projects to SAPP to avoid single-buyer risk.

Additionally, banks are looking at GreenCo as a way to reduce liquidity risk for C&I-focused developers.

The announcement that South Africa will buy energy from SAPP has also demonstrated the potential benefits for early adopters.

GreenCo has been involved in South Africa, where it commented extensively on the Electricity Act published earlier this year.

The company aims to build on its regional model in the country, purchasing power from multiple IPPs and selling it to municipalities and large C&I clients.

GreenCo Power Services was incorporated in South Africa in July. GreenCo hopes to provide access to the SAPP markets for South African clients and other players in the South African ESI.

Importance of market development GreenCo has already impacted certain market developments through its activities, particularly in Zambia, Namibia and more recently South Africa, to ensure that brokers/traders, such as GreenCo, are recognized in market developments that have recently occurred.

The Pilot Project in Zambia is also driving the development of many underlying arrangements that the market requires to enable open access.

While such activities have benefited GreenCo, they will also benefit other players who will hopefully follow GreenCo’s pioneering work.

Over time, the SAPP Competitive Market has shown that it is a viable option for the sale of energy, with a market risk within acceptable levels.

SAPP requires members who purchase from SAPP Competitive Markets to make an advance security deposit in SAPP clearing accounts prior to trading.

The market operator has complete visibility into these accounts and continuously monitors them so that members continue to trade.

Any Buying Member whose account balance falls below the level required for their trading activities will be suspended until the account is replenished.

This mitigates the payment risk of SAPP Competitive Markets.

GreenCo was established to address the key hurdle of risk and bankability.

GreenCo’s solvency as a long-term buyer stems from the significant liquidity cushion it provides, linked to its practical and operational ability to diversify and mitigate risk by adopting a portfolio approach, selling to both bilateral C&I clients and through SAPP Competitive Markets.

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