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Monica_55905 Jul 16

Building Resilience in Live Energy Projects

Building Resilience in Live Energy Projects image
Our esteemed panel led by moderator Dimitri Papaefstratiou, Partner, DLA Piper, discussed how the public and private sector can work together to restart projects and maintain momentum with current projects, and as well looking towards creating a resilient energy project framework moving forwards. 
While energy consumption is running artificially low in 2020 due to a halt in activity, the IMF is forecasting a bounce-back of 4% growth in 2021 for the continent. It is important to identify the exact impact of Covid-19 on energy projects before considering solutions to mitigate this impact. Mike Scholey, CEO of Globeleq, highlighted that a separation of the project lifecycle is important. Projects under construction have been significantly impacted by COVID-19, and responses must be packaged differently for projects in development or under operation. With significant supply chain issues, in-country lockdowns causing workforce issues, projects under construction have essentially been on hold for the past three months. Resulting in cost increases, and challenging contractual negotiations with stakeholders involved in projects, especially given to the novel nature of the pandemic.  

International travel has been curtailed across many countries and the impact of this is profound on project development, in which the inability to meet face-to-face and push projects through has caused delays, however as Miguel Arrarás, Business Development Director, Acciona Energia highlights a three-month delay in project development is not a significant nor uncommon issue. 

We were also privileged to have John Lewis, Managing Director of Aggreko, Bhatvik Vallabhjee, Head of Power, Utilities and Infrastructure at ABSA Bank, and Neside Tas Anvaripour, CEO at Neo Themis join the panel and the conversation soon moved towards issues around financing. With the economies of many states globally suffering the role of DFIs and lenders in supporting energy projects will be critical. Energy after all is the thread running through a multitude of industries essential to restarting economic growth. Despite this it seems that commercial banks are being more prudent when it comes to financing energy projects, arguably with Governments under stress it is not the time to remove sovereign support and other guarantees, to act more brazenly in order to facilitate energy projects. It is agreed that we need innovative and creative financing models to get projects of the ground.

Looking to the future our panellists wrestled with the notion of resilience, what this means, and how the sector can be better prepared for a scenario such as COVID-19. As highlighted earlier in the discussions it is the conservatism and prudent financing that holds projects together during times of crisis, if short term motivations and relaxation of such measures occur then future projects may not be as resilient as they are now.  

As the conversation moved to towards a close our panellists gave their opinion on the future of the African Energy market in 5 years’ time, here are the takeaways:
  • Renewables will be at the forefront on energy developments, including utility-scale and distributed energy. 
  • There will be continued growth in the demand for energy that needs servicing.
  • Solutions taking the energy closer to the end-user, decreasing reliance on the grid will become more cost-effective and the fastest means of serving this growth in demand.

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