IR: There's a quote attributed to Albert Einstein. In the midst of difficulty lies opportunity. Africa's energy sector certainly has its share of difficulty, but it's arguably outweighed by the immense opportunity that its transition offers. It's an opportunity that not only has the potential to uplift education, healthcare and industry across an entire continent, but one that promises returns for those investors who stake a claim in South Africa’s energy.
BI: I think the reality is that the minority of commercially viable projects established PPP frameworks like we have in South Africa does not really exist as much on the rest of the continent.
In order to unlock that, I really think every party has a role to play and to get together and just making sure that where sovereigns do need to contribute, it happens in a responsible manner.
And I think that is where the world has got the capital to deploy. We need platforms like ACOE, we need banks and funds and aggregators to make sure that capital that is attracted is actually deployed into viable projects and making sure that they do happen. And I think it's a very exciting time, it's a huge opportunity.
ZS: As Revego, we're very excited to issue an upcoming white paper that outlines the total investment for renewable energy in Sub-Saharan Africa.
For the period 2023 to 2031, the amount is significant. It could reach about 193 billion US dollars over that period. And what it emphasises is that public funding alone is not sufficient to meet the need.
So it is necessary to come up with innovative mechanisms, particularly financing mechanisms, that can mobilise capital from various sources. So I'd like to leave you with this message, one of optimism and opportunity. Africa's energy sector is at a pivotal stage, offering various potential for growth and innovation.
By embracing renewable energy and efficient financing mechanisms, we can significantly advance Africa's electrification, economic and sustainable development goals.
AH: South Africa sits within the context of this incredibly fast-growing and evolving regional energy market environment.
And I stress that word regional. It's a market environment that has reached a convergence of economic interest between what is required globally, from the decarbonization side and what is required locally when it comes to achieving decarbonization target.
We believe that Southern African Power Pool market growth and imminent integration with East African Power Pool provides a unique opportunity for South Africa to leverage its access to the regional market for attracting more domestic investment. So taking that power ecosystem context into account is really key.
South Africa often looks internally and domestically only, because of its huge scale and size compared to its neighbours. However, that scale and size of required generation need is huge in the neighbouring countries as well.
That will allow South Africa to achieve investment not only in itself, but investment on an off-balance sheet basis. South Africa should not be replicating the REIPPP’s contingent liability impact for new generation and transmission investments because it cannot do so.
And the realisation that there is this limited country fiscal space is what necessitates linking the national investment plans with the regional demand.
Thanks for listening to this episode of The Current brought to you by Investec Focus Radio. In our final episode, we review the series for more insights into South Africa's energy transition.
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