Yemisi Izuora/Agency Report
Global law firm DLA Piper has characterised the regulatory environments for renewable-energy projects in 12 African countries in response to developing markets on the continent, says DLA Piper Global cochair of the energy sector Natasha Luther-Jones.
Renewable-energy projects are becoming increasingly attractive investments and more generation projects are being planned or are in development.
The guide details some of the key policy objectives for national governments and provides insight into current market conditions and notes some of the projects anticipated to deliver these goals.
The firm will release a second draft of the guide in November and expand it beyond the initial twelve countries of Angola, Botswana. Ethiopia, Ghana, Kenya, Mauritius, Morocco, Mozambique, Nigeria, Senegal, South Africa and Zambia.
The current guide assesses each country separately, focusing on the regulatory frameworks and regulatory gaps in each. The second edition will examine regional regulatory environments and existing bilateral and multilateral agreements pertaining to or influencing renewable-energy projects, she says.
“The generation and distribution of electricity are fundamental to unlocking economic potential, with the development of renewable-energy projects and innovative electricity distribution strategies of central importance to the delivery of economic and sociopolitical objectives of governments.
With more African governments implementing legal reforms to stimulate renewable-energy development programmes, there are significant opportunities for investors, developers and operators across the renewable- energy sector on the continent, adds Luther-Jones.
“The current guide provides a valuable reference tool for anyone who has an interest in renewable-energy projects in these countries. Energy is a key sector for us and, combined with our long-established presence on the continent, it means that we are well placed to advise clients on this complex area.”
Additionally, liberalisation and the relaxation of regulations are helping to improve opportunities, albeit as part of a slow process. The commitment of large multinational companies to buy energy for their operations from sustainable sources worldwide is also expected to provide more demand for renewable energy in Africa, she says.
“For renewable energy to take off in Africa, legislative changes should be fostered by countries to allow for the direct sale and purchase of electricity, not only through a State electricity supplier, to ensure security of demand and supply.
This will support the development of the industry by lowering investment barriers, while the availability and security of supply of electricity will stimulate growth that will improve the market for electricity producers, explains Luther-Jones.
DLA Piper South Africa director Jamie MacDonald adds that energy trading holds great potential to firm up electricity supply and demand security, but that the industry must mature more to realise this potential.
“Certain capacities need to be reached within markets to allow for sustainable energy trading and the formation of regional power pools. However, there are many generating assets under construction and in planning that can contribute to this idea, which remains at a very early stage.”
Despite some uncertainty, interest from energy project developers in the 12 countries remains strong, as indicated by the cadence of questions DLA Piper receives on energy-related matters, he adds.
“Facilitating the development and growth of the energy industry will help to create a virtuous cycle of energy-linked development that reinforces itself. The guide provides a snapshot of the legislative framework in these 12 countries and highlights some of the commercial opportunities and opportunities to improve regulations in line with international best practice,” concludes Luther-Jones.