Green Investments in Africa to Fuel the Future with Ennis Rimawi, Founder & Managing Director, Catalyst MENA Climate Funds
- Tell us about Catalyst MENA Climate Funds and your strategic ambitions.
We launched the first catalyst MENA Climate Fund in 2016, to invest in climate infrastructure and mainly renewable energy across the MENA region. The (MENA) region was one of the last in the world to pursue renewable energy for power and it has one of the lowest percentages of renewable energy in the electricity mix, at less than 4% today. When we started, close to 1.5% of all electricity came from renewables; penetration is still very low and that’s why it is our focus.
- Which countries do you consider active for renewable energy activity and what should we look out for over the next 12 months?
Each country is at a different stage in terms of their renewable programs. Jordan for example, which was our core market, started to focus on this in 2012 with PPAs in 2014 for solar PV. Morocco started earlier in wind and CSP and these have been the two regional leaders in utility-scale programmes in MENA. Other countries like Egypt have progressed a lot in the last few years and there are still some countries that are close to zero — meaning they are very, very early stage and starting from a blank slate. Tunisia started very recently, and Algeria is planning to start soon. These are just some of the kinds of profiles of interesting areas in the region.
- What do you think African economies need to do to advance green investments?
The biggest challenge arises at the stage when a country is starting its programmes, a lot of awareness needs to be built. For instance, government personnel don’t typically have the capacity, expertise and knowledge base to address the fundamentals, especially if they haven’t executed private sector projects for fossil fuel plants, general power, or general water. To jump right into private sector partnerships for renewable energy takes time and a strong knowledge base of the necessary processes and agreements involved. It is in this space that we often find players like International Finance Corporation and European Investment Bank taking very proactive roles to help governments build that capacity and making sure their agreements are actually commercially viable to attract investors like us.
The bottom line is patience, you need this during this first phase and I’d say that’s the biggest challenge. Once a market has bankable agreements, like Jordan, Egypt, Morocco, and now Tunisia, then the challenge becomes more about execution and keeping the respective government(s) to honor the contracts. As you have changes in governments with successful private sector programmes happening (which are a win-win), someone may say the programmes have become too successful and we need to increase certain charges to make it more difficult. I think it’s a challenge we’re starting to see in some places and I think it’s an exciting time.
Sometimes you have a special opportunity to advance faster or to leapfrog in technology if you’re further behind, this can be said of most emerging markets. You have an opportunity to adopt something newer and better from the beginning. I think that’s what we need to be thinking about in our emerging markets and developing countries in Africa; that don’t have to go through the same path that older economies went through. We can potentially take some of the latest advances sooner than them because we don’t have all that backlog and baggage. With this in mind and in the context of Africa, I think we can jump to renewable energy that’s decentralised with storage prices coming down without having the conventional power plants, for example, and focus on getting a more competitive cost of storage. We can jump several paces ahead as opposed to adopting the old and then trying to transition and accelerate our progress. In many cases, it can cost less and make more financial sense to do that in place. That’s the challenge and the opportunity.
For example, many years ago in telecommunications, you had fixed lines before mobile phones came out. When mobile phones came out, some of the emerging countries jumped directly to mobile without having fixed lines everywhere. Fast forward to today, everyone just uses a mobile phone.