Green grids in Southern and East Africa, Dinokeng, 19&20 February 2023

1. Parallel session: Climate Change in Southern and East Africa

In this opening session, members of parliament (MPs) discussed the climate impacts that they are witnessing in their home countries and constituencies. Extreme weather events, diseases, animal and human migration, famine, civil unrest, and economic collapse are some of many manifestations of climate change. In Botswana, extreme heatwaves and floods have become unmanageable. Villages are being submerged in water, droughts are causing human-wildlife conflicts, especially with large populations of elephants. The mining of nickel and copper is causing sulphur dioxide emissions and affecting the health of populations. In Malawi, rising temperatures, late rainfalls and floods are having serious effects on the country's economy. Water is now an increasingly unreliable source of (hydro) energy, and the country is experiencing more and more frequent load-shedding. Tanzania is also suffering from the unreliability of hydropower, it used to have two distinct seasons but there is now only one with either very low or no rainfall, or very heavy rainfall causing flooding. In Zambia, agricultural productivity has been so impacted by floods and soil erosion that in some parts of the country, people aren’t able to harvest enough food for consumption let alone export. In Uganda, between 2010 and 2011, the GDP growth rate decreased from 5% to 3.5% because of the extreme droughts the country experienced.

Sergio Missana, Executive Director of the Climate Parliament, highlighted that we shouldn’t see these events as singular emergencies. What we are witnessing is a continuous process that requires a sustainable approach, and the abundance of renewable energy resources in Africa can allow the continent to leapfrog to a carbon-free economy. Besides reinforcing their cooperation on the Paris Agreement, the MPs expressed interest in exploring efforts to meet the targets outlined in the 30 by 30 Declaration which was adopted at the COP on biodiversity in 2022. The Declaration is an agreement between signatories to make 30% of all land and oceans as areas of conservation by 2030. They also suggested using the readiness funds of the Green Climate Fund (GCF) to raise awareness on climate impacts and build capacity among policymakers. They reiterated that it is vital to move fast, as the cost of inaction is ever increasing.

2. Parallel session: Parliamentarians for the Paris Agreement

In this session, Sanjay Kumar, Deputy Secretary-General of the Climate Parliament, and Julian Popov, Fellow at the European Climate Foundation, presented ways in which MPs could use their country Nationally Determined Contributions (NDCs) in their day-to-day work in parliament. NDCs are sometimes difficult to understand even for climate professionals, written in technical language and with obscure targets. They are revised by governments on a regular basis and MPs can seize that occasion not only to request for more ambitious NDCs, but also to request clearer and more consumable, accessible NDCs which can be shared with private sector players to attract investment. In Egypt, the NDCs are broken down into an introduction accompanied by one-page summaries on specific topics, such as energy, transport, or agriculture. This structure makes it easy for any MP to exercise oversight and hold the responsible ministry accountable for the specified targets.

Studying the case of South Africa made even clearer the reasons why renewable energy should always be presented in the perspective of an economic opportunity. As Hon. Dave Bryant MP, South Africa mentioned, unemployment is a key concern for 65% of the South African population, as opposed to climate change which is only 9% according to a recent poll. The best way to enhance public acceptance is to emphasise the potential for job creation in the renewable energy sector. Julian Popov highlighted that renewable energy creates much more jobs than fossil fuel industries, and that coal regions have an enormous potential, since they are well-connected on the grids with a high density of engineers and qualified workers, to become centres of the green transition. In addition, the current situation with load-shedding prevents many companies form hiring more people and working at their full speed and potential, thus the economic cost of not having power is getting increasingly high in South Africa.

3. Green grids in Southern and East Africa

An electrical engineer by profession, guest speaker Grant Muller introduced his company, Zhero, a developer of green energy projects building green hydrogen and solar PV plants. As he explained, Africa, with its vast and diverse renewable energy resources, has the potential to become a global leader in sustainable energy production. Grant Muller explained that significant challenges prevent green energy project developers from working as fast as they would like, such as slow bureaucracy and unfavourable frameworks. Zhero is required to follow the public procurement act in Namibia to procure projects. Getting the necessary grids built, to be able to link renewable energy generation centres with urban and industrial centres, can take no less than 5 years, which is highly problematic because grids are urgently needed to fully leverage the potential of green electricity generation and therefore decarbonisation.

As Hon. Lawrence Songa MP, Uganda pointed out, many African countries report an excess of power, simply because electrification is low and there aren’t enough grids to get the power to people in their constituencies. Transmission is crucial to close the gap between supply and demand: in some cases, countries may have a lot of renewable energy resources but not enough domestic demand to consume it all. For instance, Namibia is a vast desert country with abundant solar resources, which can produce much more energy than its yearly domestic consumption. Transnational green grids would make it possible to export the excess energy to countries unable to meet their own demand. It would also provide a solution to the intermittency and variability of renewable energy. From Cabo Verde to Mauritius and the Seychelles, Africa stretches over 6 time zones and countries have peak energy demand at different times.

The African continent is presently covered by five autonomous regional power pools: the Southern African Power Pool, the Eastern Africa Power Pool, the Central African Power Pool, the West African Power Pool, and COMELEC (the North African Power Pool). Each pool has varying levels of integration and is responsible for its own interconnectivity. The African Union is spearheading projects, such as the African Single Electricity Market (AfSEM) and the Continental Power Systems Masterplan with the objective of linking the power pools together to create a unified grid. This would enable all 55 African nations to trade energy across borders at the lower prices and with increased reliability.

The experts were asked by MPs about how parliamentary action can speed up the deployment of these infrastructure projects. Moeketsi Thobela, Chief Renewable Energy Investment Specialist at the African Development Bank, emphasised the importance of getting governments to invest initial capital in grids projects to give confidence to private investors and multilateral agencies, and therefore reduce the cost of investment. Infrastructure projects require a substantial amount of upfront investment, but the operational expenses are comparatively lower, making borrowing at a good interest rate crucial.

4. Finance and the role of the private sector

Seithati Bolipombo, Senior Manager for Asset Ownership in Sub-Saharan Africa at Scatec, provided insight into how to manage various types of risk when looking for project funding. Foreign exchange risk is a common challenge inherent to currency floating rates, which multilateral banks can help mitigate, by providing hedging instruments to control exposure to the depreciation of local currency. There is also the risk of shortage of liquidity, which can arise when there is a limited amount of USD in a country. To cope with the political risks, a general support agreement or concession agreement with the senior lender can help reassure investors. On the question of land rights, transparency of information with the project sponsors is key. Finally, localisation is an imperative to debunk the narrative that a project is bringing in foreigners to the detriment of the local value chains in the country and the people working in it. It is crucial to demonstrate that the project will benefit local small to medium enterprises (SMEs) and foster job creation. A percentage of the project’s turnover can be invested in corporate social responsibility to further increase the benefits on community development. Anticipating all these challenges and implementing de-risking mechanisms can help reduce the cost of debt and make it more profitable both for the project developer and local consumers.

Building on these recommendations, Tremayne Stanton-Kennedy, Regional Climate Lead for Southern Africa at the UK Foreign, Commonwealth and Development Office, raised three areas where MPs can play a role. The first one is promoting enabling environments for investments; legislators have the power to create favourable frameworks, modernise their standards to become more flexible and innovative, and make sure laws don’t negate each other. Secondly, parliamentarians have knowledge of what happens on the ground and in their constituencies and should base their work on local realities. Only with a pragmatic and down-to-earth approach can laws and frameworks be truly adapted to local contexts and circumstances. Finally, accountability systems are everything: processes, methods and information should be completely transparent for private investors to have the confidence to come forward. The private sector accounts for only 14% of climate finance in Africa today, and focusing on these three areas of work will be crucial to increase this number.

It was mentioned that when sitting down with governments to propose the construction of a solar power station which would provide affordable and reliable electricity, many project developers are faced with skepticism and reluctance. Not only is it hard for developers to obtain the government's backing, they too often have to deal with openly uncooperative and hostile officials, who deliberately make the process even more difficult. As Nick Dunlop, Secretary-General of the Climate Parliament pointed out, when supplied with the right studies, analyses and recommendations, parliamentarians can be a legitimate and powerful force to push for a long-term strategy on attracting investment. Not only to build the new energy system, but also to raise their people out of poverty. Hon. Gladys Ganda MP, Chair of the Budget Committee in Malawi, concluded the session raising questions that MPs should keep in mind when working on such frameworks: is our fiscal framework aligned to our green transition targets, when we set the budget? What sort of finance mix are we considering? Will investors get a good enough return on their investment? Is the pricing attractive enough for our consumers? How can our government provide security and stability, guaranteeing that prices and policies stay consistent over time?

5. Closing session: The role of MPs to accelerate green grids for renewable energy in Southern and East Africa

During the closing session, the MPs summarised the roadmap they will take home to accelerate the renewable energy transition in their countries:

1/ To put into action the Parliamentarians for the Paris Agreement initiative: start working on an NDC implementation monitoring framework, to inject a sense of urgency and political will in international climate negotiations, hold their governments accountable for their commitments, track progress and oversee implementation.

2/ Support the channelling of GCF readiness funds towards capacity-building of MPs on climate finance. After Climate Parliament has applied with a proposal, MPs should either individually or as a group, get in touch with their NDA to express their interest in being part of this multi-country capacity-building exercise.

3/ Replicate the model that India put into place a few years ago to help fast track private investment. African countries share a very similar socio-economic context to India, which achieved tremendous results in a few years with a simple 4-step model:

- The first step is mapping: identifying and designating resource-rich areas, with the least competitive use of land, to produce renewable energy at the lowest cost. If that data is in the public domain, it will satisfy the needs of investors and the financing community, to be reassured on profitability.

- The second step is transmission: it is important to make sure that the energy harnessed in those areas can be dispatched to demand centres. Investors need to be confident that there will be a stable market for the electricity they produce.

- The third step is tariff setting: the ideal tariff will be high enough to assure investors they will be making a profit and recovering their capital, while at the same time being affordable for end consumers, to make sure there is enough demand. Regulators and utility entities have to set this tariff in a transparent manner.

- The fourth and last step is about risk-reduction: governments should use the limited budget they have at their disposal to reduce the risk for investors and operators. Many countries have their budget in deficit, and putting a new demand on that budget can be difficult for finance ministers, but minor efforts like creating a risk guarantee fund can have a big effect on the confidence of investors.

4/ Finally, the participating MPs identified a series of low-hanging fruits and simple measures to increase awareness on climate change, enhance the efficiency of public policies and frameworks, and improve dialogue and cooperation between all relevant stakeholders. They include:

- Expanding capacity-building of MPs;

- Recruiting more MPs to the Climate Parliament groups, paying attention to party and gender diversity;

- Raising national awareness on the dangers of climate change, through television and radio;

- Engaging with various Ministers, including those of Finance, Environment, Energy, Natural Resources, on implementing more effectively the legislation and regulations that already exist;

- Engaging with regulators and utility agencies to raise the pace of electrification;

- Coordinating with NDAs on all sectors of climate action;

- Interrogating PPP and IPP frameworks to give them more flexibility and efficiency;

- Integrating climate change education in school curricula;

- Working on the 30 by 30 Declaration, to establish 30% of all land and ocean as conservation areas by 2030

- Lowering or waiving taxes for solar equipment and clean cooking appliances;

- Taxing the imports of second-hand petrol and diesel vehicles;

- Promoting regional collaboration on green hydrogen.