2021-11-10 11:45:00
BRITAIN'S CLEAN INVESTMENT FOR AFRICA $13 BLN
PLATTS - 10 Nov 2021 - The UK is interested in supporting green hydrogen and renewables development in Africa amid an investment pipeline of over $13 billion in clean energy, a government official said Nov. 9, as the country halts overseas assistance for fossil fuels projects in the continent.
UK started last year reducing its support to overseas investments in fossil fuels and totally halted assistance this year amid the clean energy transition that country has embarked on.
Nearly all of the current UK private sector investment pipeline in Africa, which is supported by the government and exceeds GBP10 billion ($13.6 billion), is dedicated to clean energy projects, Alastair Long, the UK's trade commissioner for Africa told S&P Global Platts. The UK will no longer support hydrocarbon projects in multilateral lending institutions as well.
"We have managed to switch the scale and level of oil and gas investments for renewable investments (in a year), which partly is about the speed of change," Long said on the sidelines of Africa Oil Week held in Dubai. "What is interesting for the UK is how in Africa our contribution to renewables is considerably greater than other parts of the world because we have Africa specialized companies."
For example, the UK is the biggest renewables investor in South Africa. UK-based Globeleq is part of a consortium that won this year a preferred bidder status for a total 1.27 GW of solar and wind capacity in South Africa.
Offshore wind
The UK is particularly interested in supporting offshore wind farms in Africa, which remain few and far in-between, Long said.
Nearly 22% of Africa's 232 GW of installed power was in renewables in 2019, according to International Renewable Energy Agency.
The UK may still support some oil and gas projects, under certain conditions, Long said.
"There are a few caveats that allow us to support (hydrocarbon) specific projects where they are in compliance with a nation's Paris commitments," said Long.
One example is Globeleq's 450 MW gas-fired power project in Mozambique, which is in line with the country's clean energy goals.
Countries in Africa, whose access to electricity is estimated at less than 50% by the International Energy Agency, are counting on nascent development of their oil and gas discoveries to help bridge the power gap.
However, Africa has been under pressure from the international community to ride the energy transition wave, although the continent accounts for about 4% of total global emissions.
African ministers participating at the Dubai week expressed their frustration with the global community's pressure to switch to energy transition, with many speakers emphasizing the need for security of supplies and access to power.
Comfort with fossil fuels
The debate "worried" Long, who argued countries should not fight the change but instead adopt a twin approach of developing hydrocarbon assets while embracing energy transition.
"One of the things that worries me ... is the growing comfort people were giving each other around let's all continue using oil and gas," said Long.
"There are still ways to have gas in the energy mix, but like the Mozambique project, to be using it very targeted to provide energy in a smaller timeframe and also to invest revenues in renewables and have a clear map and process around it."
Senegal and Mozambique are examples of countries that are adopting a two-pronged approach to energy that fits in the climate change debate, Long said.
The two African countries, which are developing a joint offshore LNG project that will produce first gas in late 2023, are also investing in renewables to balance their energy mix.
For example, Senegal's share of renewables was 19% of the total installed capacity in 2019, according to IRENA data. Electricity generation from renewables more than tripled in 2018, as compared to 2016, according to IRENA.
"There is risk that [gas] demand will fall drastically and then you will have a stranded asset," said Long.
"We can optimize hydrocarbon production to support the transition, that's the message."
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