ENGIE has faced a steep learning curve as one of the first movers in Africa’s renewable energy sector. However, the company and its African customers and partners are beginning to reap the rewards.
ENGIE Africa currently employs around 4,000 people across the continent from Morocco to Uganda. Many of them work in the off-grid sector. They design and install infrastructure and provide services for solar powered mini-grids and individual solar home systems. ENGIE however operates right across the sector. This is because the firm has invested substantially in grid-scale renewables and the expansion of its energy services business.
According to ENGIE Africa CEO Yoven Moorooven “Our approach in the last couple of years has been to say: we know Africa is huge and has a lot of challenges. However, we can develop the business in a way that makes the most impact. Both in terms of bringing economic value to us as a company, and to individual countries and their people”.
That approach has resulted in the creation of a diverse project portfolio both in terms of project type and geographical distribution and it is one that is growing fast. ENGIE now has some 3 GW of renewables and thermal generating capacity in Africa. This capacity can provide electricity to more than 4.5m people. Another 12 GW of capacity is in the project pipeline.
ENGIE’s Operation Centres
ENGIE has been operating for some years in two of the continent’s most dynamic markets, South Africa and Morocco. In South Africa, its portfolio of wind, solar photovoltaic (PV) and concentrated solar power projects has added some 1.2 GW of capacity. In Morocco, a joint venture with local partner Nareva Holding operates the 300 MW Tarfaya wind farm. ENGIE also operates thermal power plants in both countries.
Although the firm currently operates in these two countries; it has been able to expand to other countries. The continual growth of interest in renewables on the continent makes it easy for ENGIE Africa to expand into new markets. ENGIE and its partners inaugurated Egypt’s largest wind farm, the 262.5 MW Ras Ghareb project, in December 2019. In Tunisia, it is working on a 120 MW solar PV project. Also, in Senegal it is starting construction of two 30 MW solar PV projects. The company has also signed an agreement with the government of Djibouti to build a 30 MW solar PV project there in partnership with Électricité de Djibouti.
On the off-grid side, ENGIE bought home solar solutions pioneer Mobisol in September 2019 to complement its existing Fenix International home solar business and its ENGIE PowerCorner mini-grid business.
Building on the utility scale and off-grid renewables businesses, the company also runs an Energy Services business. The business provides installation, maintenance, facility management and other energy services across the continent.
ENGIE’s Tailored strategies
Making a success of these investments has required strategies tailored to the specific market segments. For smaller off-grid developments, Moorooven says they use a “plug and play” strategy. This strategy simply tests an approach to scaling up the business in one African country and, if it works, applied in other countries with suitable operational frameworks. This strategy has allowed ENGIE to expand its off-grid business for communities and individuals.
For utility-scale and larger off-grid projects, ENGIE is focusing on establishing activities in a relatively small group of countries with conducive operational frameworks. Rather than spreading itself more thinly across many markets where it may be more difficult to get projects done.
“It is important for us to build a stronghold in countries where we have a physical presence. We’ve scaled up our operations in South Africa and Morocco so now we would like to get scale in other countries, such as Egypt and Senegal,” Moorooven says.
ENGIE also adopts a “quick entry/quick exit” strategy. If things are not going well in a new market, the company would rather leave and look elsewhere for more productive opportunities.
Financial sustainability is another central plank of ENGIE’s approach to its African projects. The company believes it is better to invest in projects that can stand on their own commercially, rather than those reliant on subsidies for survival.
Better business environment
Moorooven is well placed to assess prospects for investment in the African power sector in an increasingly competitive global marketplace. He took over as ENGIE Africa’s CEO in April 2018, having originally joined the company as part of its Global Energy Management team in 2013. His experience before that included stints at Gaselys in Paris and then Macquarie. In Macquarie, he became Head of EMEA Energy Origination in 2010 when he was just 31 years old.
He remains positive on the investment outlook for African renewable energy projects. He has however expressed caution over the extent to which the impact of the Covid-19 pandemic will be felt in the sector.
Despite the challenges resulting from the pandemic, he believes the African power sector is still a good prospect for a company such as ENGIE that is seeking to scale up its operations.
“It’s getting better to do business on the continent, and with such a young population, demand is going to grow fast. The business environment is improving by the day”.