From Africa to Australia, EGP Expands its Horizons

From the 156 MW of contracts won in 2012 to the 2400 MW recorded in 2016. In just five years, Enel Green Power has achieved unimaginable performance and entered into markets that until a few years ago seemed unthinkable for the world of renewable energy. Last June, the Group was granted the rights to build and operate the 34-MW Mosi-oa-Tunya solar photovoltaic plant, in Zambia, while in Peru, the Renewables Division of Enel will soon be the only company to operate plants with three different renewable technologies, thanks to the awarding of a total of 326 MW. “Perhaps these are the greatest achievements of 2016”, said Antonio Cammisecra, Head of Business Development of EGP, in our interview. “These achievements show that we are a competitive player beyond individual technological or geographical specificities”. What makes the entrance into Zambia and Peru so important? In Peru, we won the tender in two technologies with the so-called “greenfield” projects, which we developed from zero in a completely new market. In Zambia, we confirmed our capability of entering into new and remote markets and our risk assessment skills. EGP’s history has always been characterised by this courage: right now we are participating in a tender in Ethiopia, so we hope to celebrate another great outcome. 2016 also saw us in Morocco and Mexico… These two countries have given us great satisfaction. In Morocco, we obtained the rights to develop, build and operate five wind projects with a total installed capacity of 850 MW, in consortium with Nareva Holding and Siemens Wind Power. In Mexico, we were able to secure 1 GW of solar through a single tender, in addition to almost 100 MW of wind capacity in the second tender held in the country. Every country we look to obviously presents various complexities. How has our analysis of potential risks evolved? It’s the countries themselves that evolve, more than the companies. For example, our entry into Zambia is part of the Scaling Solar programme, one of the best projects of renewables expansion in Africa, sponsored by the World Bank. As far as risk assessment is concerned, I believe it is the experience gained over time and in different areas that has taught us to manage the two main aspects of each investment in a foreign country: local partners and the local institutional context, by placing ethical aspects, integrity and safety, which are priorities and indispensable requirements at the centre of Enel Green Power’s model. In the last few years, we have seen a positive development trend for emerging countries with regard to these aspects, especially the environment and sustainability. Is it really like this? It is, obviously at different paces, depending on the country. Some countries have taken giant steps. Ethiopia comes to mind, where we participated in a tender for 100 MW of solar at the beginning of February. Until recently, we were convinced that EGP’s story in the region would unfold mostly in Kenya. Our attention to factors like environment and sustainability is always high, so it’s normal to approach countries that are moving in the same direction. Going into detail, what model is proving most productive, between PPAs (Power Purchase Agreement), feed-in tariffs and other forms of incentive? Globally, there are very few cases in which feed-in tariffs are used. Competitive mechanisms are now prevalent and this has enabled a reduction of costs that could never have happened with the Feed in Tariff model. PPAs have generated competitive pressure in many countries to speed up technological improvements, cost reduction and the development of the sector: without this step, we probably wouldn’t have seen the boom in renewables, which in some countries are actually a more competitive solution than conventional sources. How are we moving through PPAs? EGP tries to adopt a very low merchant exposure in the development of new projects. Many PPAs already include the risk of exposure of this kind, and in this sense the work of our team of specialists, who study the contracts in detail in order to mitigate risks, is fundamental. How has the work of the BD department of EGP changed over time? Our work is now made up of two different cores: a traditional one, which consists in actual development of projects, and another, more recent, that is commercial. BD performs both these activities with the goal of creating new projects and selling the energy produced. The markets that attract our attention are especially, but not exclusively, in countries that are opening up to the liberalisation of large customers, the so-called Commercial & Industrial customers (C&I). For example? In Mexico, where the energy produced by one of the biggest wind projects we’ve ever made will be sold to Femsa, the largest bottling company for Coca-Cola. So, the world of PPAs is varied: there are state and private counterparts, complex realities, to fully liberalised markets like the USA. We no longer sell energy only to other utilities, but also to large industrial and commercial entities that allow us to create global synergies. Following the successes of last year, let’s talk about 2017: what should we expect? Geographically, we’re looking especially to Ethiopia, Australia and North Europe, and special mention must be made of India, a country we have already entered but where we must consolidate our presence and demonstrate our competitiveness. But the goals set by EGP are not only geographical. We must first of all become a supplier of choice for large C&Is: unfortunately, the level of our brand awareness in large populations of C&Is is low, so we need a strong effort of industrial marketing. I think it’s also necessary to aim to become equity partner of choice. In 2017, this role should add a third aspect to Business Development: equity placement in addition to engineering and commercial placement. Even markets where we do not want to sacrifice our returns but where the level of competitiveness is high, we aim to find entities that are willing to believe in us and invest in us. In this way, we can increase our value. Finally, let’s remember that we provide capacity of development, construction and operation of plants not only for us, but also for third parties: talking about the well known BSO model (Build, Sell and Operate) or about the equity partnerships that allow us to be more competitive.

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From Africa to Australia, EGP Expands its Horizons

From Africa to Australia, EGP Expands its Horizons