During the 2nd Renewable Energy and Power Infrastructure Investors Conference held at the GICC on Thursday, RMB’s Tiago Almeida considered the merits for sourcing solar power in Botswana and related hurdles and possible financing solutions to fund the green energy source.
With its high number of clear days in a year, Botswana provides an excellent solar resource, so a logical conclusion is that solar could provide a meaningful contribution to Botswana's energy demands. The increasing cost and unreliability of power from Eskom in South Africa provided the impetus for the Botswana government to research renewable energy, with the most obvious contender being solar. In early 2017, the Botswana Power Corporation (BPC) decided to start a programme to procure 100MW of solar energy and exploit the plentiful natural resource.
Solar power solutions have also become far more affordable and commercially viable over the past few years. Many issues that plagued solar have also been resolved. The introduction of hybrid systems using more sophisticated battery technology and diesel generation to store energy and boost production at peak times has resolved a constraint that solar power could only be generated during the day.
A key stumbling block to funding solutions of renewable energy in Africa is a possible currency mismatch, which is created when investors invest in USD and the collection of tariffs is done in the local currency. Almeida believes that solutions should be considered to originate the financing solutions in the local currency, which prevents countries being exposed to potential harmful swings in the dollar related exchange rates.
"Being the largest commercial bank in Botswana and with our experience in structuring these Power Purchase Agreements (PPA), we believe we could assist to provide expertise in defining the "bankable" risk allocation for the PPA, boosting investor and banks appetite for the programme and also create solutions in underwriting the deals in Pula," noted Almeida.
Based on the pivotal role RMB played in South Africa's REIPPP, the team is further well positioned to assist BPC to move their renewable energy programme forward. Almeida believes that with the buy in of the Botswana government to procure some 100MW of power through solar and innovative funding solutions, the country could forge a path to a sustainable energy source for thousands of homes.