Ep120: Ana Hajduka "Enabling Africa's Green Energy Revolution"

Michael Liebreich So, Ana, great to see you here on Cleaning Up and have a chance to catch up.

Ana Hajduka Indeed, it's been a long time. Thank you for inviting me, Michael.

ML No, it's a great pleasure. And of course, this is International Women's Day that this will be aired, and so we'll talk about that perhaps a little bit at the end. But where I'd like to start is, can you describe in your own words what Africa GreenCo does? Because if I do it, I know I'll mangle it, and I haven't caught up with the latest nuances. So, give us the short version of Africa GreenCo.

AH No problem. So, Africa GreenCo, is the newest buyer and trader of renewables in the SADC, Southern African Development Community region. Africa GreenCo's core existence is in order to facilitate new generation in SADC, because there is a lack of creditworthy counterparties, in terms of those who are able to buy from independent power producers in the region. The state utilities are heavily encumbered; the country's fiscals are heavily encumbered. And therefore, a new business model was formed, whereby Africa GreenCo becomes the new buyer and trader, in order to attract new generation and de-risk it by being able to access and trade across the Southern African Power Pool. The region has a Power Pool, but normally, the Power Pool has been ignored over the past 10 years, from the perspective of utilizing it as risk mitigation, which is a shame, because the Southern African Power Pool is pretty liquid; it's based on the North Pool; it utilizes pretty much the same software as the North Pool; and it has a competitive market. They had week-ahead, intra-day, and a recently introduced balancing market, all required for a very systematic approach to delivering new generation in the region.

ML Fantastic. Now, what we're going to do is we're going to unpack that, okay? Because you got quite a lot in there - my respect, you always do. There's quite a lot in terms of the overview of... there's some assumptions in there about the continent of Africa, and what it needs. There's some stuff about the business, in a sense, the value chain; you talked about IPPs, and normally, I have a klaxon, and I say, sorry, we need to explain all of the acronyms. And then you talked about trading and liquidity. There's also, I think there's another assumption about what sort of power plants you're trying... When you talk about generation, you're talking about power plants you want to get built. And I'm assuming that these are probably not large coal-fired power stations? So, let's start, perhaps, with what is the power situation, the electricity situation in Africa? I've worked on this, going back to before Sustainable Energy for All. And there was, at that time, we're talking 2007/8, there was 1.4 billion people globally, who didn't have power; that's now about 700 million, but a lot of them are in Africa. So, if you could explain, where are we, give us an update? Because I'm not up to date, and some of the audience won't be either, on Africa's power requirements, and where is it?

AH Right. So, Africa's power requirements are... I mean, we look at it very systematically, not only from the perspective of generation needs, but also from the perspective of transmission and distribution needs. And when you collect all of those, you're looking into trillions of dollars of effectively annual investment requirements. To give you more specifics, we as GreenCo are specifically focused on the Southern African Development Community. In the Southern African Development Community, which is mainly the countries in southern Africa, we are looking at an extreme deficit when it comes to generation at the moment. So, we are talking about, with the current load shedding in South Africa, we're talking about a regional deficit of 5000 to 6000 megawatts; we're talking about a regional deficit increasing to almost 14,000 megawatts, because of the decommissioning of the coal-power stations in South Africa. So, the situation is pretty dire when it comes to generation capacity in Southern African Development Community.

ML Can I ask how you're defining that? Is this saying, right, we have a grid, we've got the pylons and the wires, but we actually don't pump enough electricity into it? So, this is separate from the hundreds of millions who don't have any electricity at all? This is where the wires exist, but the generation doesn't? Is that correct?

AH That is correct. However, the two come together at one stage. The more we want to bridge the deficit gap, the more there will be a subsequent requirement in the transmission and distribution space: transmission space in order to sufficiently bring on new generation that is required to support the increase in industrial activity in the region; and of course, distribution space, when it comes to facilitating direct access on an on-grid basis to the wider population, and smaller scale communities. Because we're talking about, over-all, around 36% of all people in the SADC region having no access to electricity whatsoever.

ML Okay. And that's a really important explanation that, you know, yes, there's been tremendous, fast progress on rooftop solar, which is - how can I put it? - better than nothing, and probably very, very good for a lot of rural areas. But it doesn't deal with the larger energy demands; it doesn't deal with industrialization; it doesn't deal with the sorts of electricity that businesses quite often would need. Or, it does... I'll get people saying, oh, micro grids, and so on. But this is the other side of the balance, where you're talking about cities, and you're talking about industry. And also, you are talking about pushing out into the larger communities that have got - even if they've got solar roofs and micro-grids - they still should be balanced, and that will reduce their costs significantly, to be part of a bigger system.

AH 100%. We have to see all of it within the path of the bigger system, it's a piece of the same puzzle. Meaning that, for too long, these two camps - the off-grid and on-grid camps - are seen as two camps, which is really not very beneficial when it comes to systemic planning across both, on the required distribution, transmission, energy access and wider needs. Because as you say, it's not only about electrifying, it's about providing the communities, the schools, the hospitals, and the businesses in rural and other areas with the potential to grow; because we are looking at an average population age of around 18 to 19 years of age. So, we are looking at a population boom, meaning the potential is huge to actually capitalize on that demographic dividend. But to do that, we need to plan systemically the required growth in relevant industries and businesses on the ground.

ML That's a project that I've worked on, that you and I have not actually spoken about, but you may have noticed I was doing, which is Project Bo in Sierra Leone. That's a neo-natal intensive care unit in a hospital in a city, which actually does have grid power. The problem is, it's unreliable, and as soon as there's a power cut, the babies who are on - they need heat, they need oxygen - they start to die because of a power cut. So, as you say, if you just say the answer is rooftop solar, well, you haven't really solved that problem. So, that's really important background that there is, at one end, there's where the grid already exists and is working pretty well. But that's relatively... there's not that many areas like that in Africa, in southern Africa. And then usually South Africa, but not this year. And then there's this gap in between that, and the solar rooftops in rural Ethiopia, where that's clearly the right solution, because they'll wait forever for pylons to arrive. And you're working on the first half of that, and out to the rural areas. Let's talk about that value chain, because you started throwing words around like generation, IPP, power pool. So, let's start with: what sort of projects? What sort of generation? What does the hardware look like that you're trying to get built?

AH We're actually building nothing.

ML No, that you're trying to get built, you're trying to enable. Let's be very clear, I know your model, right? We'll come onto why I know your model quite well. But you are trying to enable more hardware, more projects, more capacity, more generation to be built. What sort of generation will that be?

AH So, let me take you through, first of all, what sort of generation will there be; that's generation, on-grid generation of any renewable energy kind. So, we are looking at solar, wind, geothermal, hydro of a smaller scale, a little bit of biomass, but it's not quite cost reflective at the moment. So, as the core name GreenCo kind of gives out, we are looking at aggregating, as a trader, a renewable energy portfolio across the region. Now, that is no to say that GreenCo sits, again, in a camp that is only pro-renewables. We really do not, even though probably some of the respondents, or your participants, might be surprised by me saying that, because of course we are capitalized by funding that is focused on climate mitigation, and that is focused on bringing on more renewables. And we absolutely support that renewables are a very important element of new generation capacity anywhere in Sub-Saharan Africa. However, we are not saying it's the only source of generation that one should support. We need baseload. And we certainly need baseload, gas baseload, that should be developed in order to make those systemic challenges, when it comes to integrating renewables, easier from the perspective of the wider grid, in terms of...

ML So, your point of entry, though, is improving the credit worthiness of the off-takers - and we'll come to the model - and also the ability to trade, so, the liquidity in the markets. And I think I can see that there will be things like batteries, grid-connected battery projects, I suspect, and there will be gas. I would argue that it's not baseload that is ever needed, it's actually flexibility. What you need the gas to do is to fill in in-between the renewable. So, I don't like the word baseload, I'm kind of allergic to it, I'm in the "baseload is dead" camp. In fact, I may have actually founded it. But the question, would you actively support... If you succeed, and there are these liquid markets and trading happens to balance the markets, it would enable those projects, but would you give an actual guarantee to a gas project?

AH No. As GreenCo, no. But that doesn't mean that there won't be other entities that might be happy to do so. But as GreenCo, no.

ML Okay. So, it is renewables. Presumably, if I asked you the same question about batteries, grid-connected batteries, I might get a different answer?

AH No, I'm afraid that you will get a different answer. Yes, grid-connected batteries are extraordinarily important. We are actually developing a project at the moment on the grid-connected batteries side. Because the way we see grid connected batteries is not so much from the perspective of storage, but from the perspective of transmission frequency control...

ML And would you back a battery project? So, you wouldn't back a gas project? When I say that, would you get a different answer... So, you would back, you would help to guarantee a battery project but not a fossil fuel project?

AH We would, absolutely.

ML All right. Now, what is an IPP for those listening? Because you did infringe the no acronym rule, you now have to explain that.

AH Absolutely, and thank you for saying that. So, IPP is an Independent Power Producer. It means a generator, or a producer of new capacity, and that can be fossil fuel-based or non-fossil fuel. In our case, we only look at renewable energy. New, independent power producers, meaning independent; it's usually not a state-owned developer, it's normally a private sector developer that is looking to commission a power station, and looking to sell the capacity from that power station on a 20 to 25-year basis to a buyer. Up until literally almost a year or a year and a half ago, the only buyers anywhere across Sub Saharan Africa were state utilities. So, most utilities in Sub Saharan Africa are fully owned by their respective governments. And then what happens [is], these long-term supply agreements from the independent power producers need to be off-taken or bought by the state utilities. So, they give those 20 to 25-year so-called power purchase agreements, or PPAs. Now the problem with that is, whether the utility in question is credit-worthy or not actually doesn't matter, unfortunately. For another topical word -bankability reasons - they are presumed not to be credit-worthy. Meaning that the only way these projects have happened to date is if the state - the fiscal of that particular country, whether through the Ministry of Finance, or through its national treasury - guarantees all power purchase obligations of their state-owned utility. What this means is that, not only does the state utility get the whole impact of a 20 to 25-year capacity supply on its balance sheet; it also transfers that same impact onto the balance sheet of a country. And if you look at IMF indebtedness calculations for contingent liabilities across Sub Saharan African countries, you can see the debt ceiling has been breached. There is no way that we can achieve the electrification targets under any of the SDGs, or any of the national development plans, through that model anymore - the model is dead. Meaning we need new business models, whereby the private sector buys, either through new buyers like GreenCo, or new traders or aggregators, or either through corporates. Some large corporates have now been procuring power directly from independent power producers in South Africa, for example. Those new models are absolutely key. But the most important element when setting up those new models is that we shouldn't forget that it's not about locking in capacity from a supplier to buyer; it's about creating a wider market for those electrons. Electrons are commodities. So, this is what we want to promote, is the creation of competitive markets for that supply, where the risk sharing is across the whole value chain.

ML Let's come to the market piece in a second... I really want to make sure we don't lose the audience, because, you know, you work on this, I've worked a lot on this, so we can go at any speed, that's fine. But we need to... There are people out there, a lot of the audience are very, very smart, and they'll get this, but there are some people who don't work on project developments; they're in civic society, or they're maybe technologists, and so this is all pretty new. So, the developer: this would be a relatively small team, an IPP - independent power producer - and they have identified a project; they've identified some land where you could build a wind farm, or you could do some solar. And to make that work - the issue, the one word you've not used yet is debt, I think you haven't used it - they need to have debt. They need to borrow. Because if you do it all with equity, the resulting power price is so high, you're out of business, it doesn't work. So, you need to borrow money. But for that, you need to be - and you used this word - bankable. In other words, you need to give the impression to all of the debt providers that you've got - not the impression... - you've got to analytically prove, that you will be able to pay back the debt. And if you're selling to a company - in this case, a state-owned utility - which may or may not be credit-worthy, because there may be a regime change, or there may be some debt crisis in the country or whatever, or there may be a foreign exchange crisis, which means that that utility, which is buying all its supplies in dollars, and selling electricity in the local currency, suddenly they can't pay... So, you need a national guarantee, but you can't get that because all of these countries are heavily indebted. And that's sort of a summary, in different words, I think of where we've reached.

AH In much better words, and I fully agree. And just to confirm what you were saying: 75% of the cost of new generation, for example, in solar PV, reflects the cost of debt. So, the input into the overall price, noting that we need to make these electrons more affordable, in order to make them more scalable, and more widely distributed to match the needs, we need to decrease that cost of debt. And the only way to decrease it is through appropriate risk mitigation, credit-worthiness, financial support, etc.

ML And in fact, the cost of debt in the developing world is one of my five big challenges with the transition.  There's only five things I worry about... I'll be doing lots more writing and speaking about what those five are, I'll leave people guessing, but one of them is the cost of debt. Because otherwise, a wind farm, or a solar farm somewhere where the cost of debt is low as the cheapest form of electricity in the world. But if your cost of debt is high, it's not. And that's the problem that bedevils Africa and a lot of the weaker economies in Southeast Asia and Latin America and so on. So, you've got... part of your model is a risk guarantee. And we'll maybe come back to that, because the other part is developing these markets. So, you started to talk about the power pool, the Southern African Power Pool. What is the role of the power pool? Because we're not talking here about wires, are we? There are some wires, but there's also some trading, some markets, correct? Can you try and pick that apart for us?

AH Yeah. So, the Southern African Power Pool is the most liquid of the, effectively, three power pools in the region. There is the West African Power Pool, East African Power Pool and Southern African Power Pool. It connects most of the countries in the Southern African Development Community through physical wires. Now, in order to then facilitate competitive market creation, it has developed, based on the Norwegian and Nordic Power Poles, a system whereby you can sell and buy electricity through their competitive markets. So, the day ahead, the week ahead, the intra-day, or the balancing market. Meaning that if you are a buyer in Zambia, you can buy from a supplier in South Africa. It's all matched on a day ahead basis, it's a pretty liquid pool, it works very transparently; all payment obligations have to be pre-cash collateralized through Standard Bank. There is almost no, therefore, payment default risk whatsoever. And this power pool has been in existence for a number of years now, but has never really been considered as a pool through which new generation, independent power producers, can look to de-risk their payment obligations. Meaning, when going back to that example that you said: when we have an independent power producer, instead of them having one utility off-take risk, and one utility payment risk, through the power pool, when that utility or buyer defaults, you are looking at a competitive market of a power pool with an increasing deficit in the region - you will always find an alternative willing buyer. Which de-risks your payment risk, therefore decreases the cost of debt, therefore makes the power price more affordable. And most importantly, by looking at a regional power pool, you are no longer looking through a single country, ceiling risk, from the perspective of the credit rating, which also impacts on the cost of debt.

ML Therefore, just to paraphrase, it started as a way of the different countries saying well, we've got low hydro, and you know, we're going to buy some power from South Africa or... Which countries are in the power pool? Don't give us the full list if you haven't got it, but how many countries we talking about? What are the main ones?

AH Yeah, so the main ones are absolutely Zambia, Zimbabwe and South Africa. Zimbabwe actually hosts the Southern African Power Pool. Why they're the main ones is because they're the so-called Control Area Operators for some other smaller-scale countries and utilities, meaning that they take charge of the overall balancing, frequency and other issues on the overall regional network under their control area zone. But also, we have... Malawi is a member, Lesotho is a member, Mozambique is a member, DRC is a member. Tanzania is a member, but not an operating member because they are not yet interconnected, transmission-wise. Angola is a member, but not yet interconnected. Namibia is a very important member. So, really all the countries except for those in southern Africa that either can't be interconnected like Mauritius, or are not yet interconnected fully, like Tanzania and Angola.

ML Okay. So now, these countries are using this mechanism, and then, it's got a certain level of liquidity; it can cope with a certain volume of transfers. And you now want to use it as almost like an insurance? So, you're saying that these projects, the green projects, the new wind farm, new solar, new geothermal, they can sell their output, but if that buyer goes bad, they then have access to that whole market to remarket their power to, is that a fair summary?

AH That's absolutely a fair summary. So, that seller can become a member of the Southern African Power Pool in their own right if they want to be. So, they recently changed the membership category, whereby effectively, the Southern African Power Pool is encouraging independent power producers and others to become members. We are the first member, under the so-called Market Participant category. So, we can trade on behalf of our portfolio of independent power producers. Because not every independent power producer, especially if they don't have the required scale, will invest as much money, effort and time as we have, as a trader, to set up the relevant energy trading and risk management software, to have the traders certified as traders etc. So, that's effectively the role that we play in the market: when we buy, we can diversify their risk by selling to the power pool.

ML Now, so what you're going to do, or what you are doing, is somebody builds a wind farm, and then you guarantee their sale of electricity, is that right? You're giving a guarantee, and then you will trade it into that power pool. But do they... is that a backup for them? Or do they just give you all of their output? Or do they try and sell it to the local utility, but if they don't pay, they say, right, we're gonna stop serving them, can you help us?

AH You are asking all the correct questions! So, let me give you an example right; we can do the following, let me tell you what we have done. There was an existing brownfield power plant in Zambia. And that brownfield power plant had excess capacity at certain times of year, depending on hydrology conditions. So, for the past five years or more, whenever they would have excess, they would just effectively dump it into the grid, it's not much that they could do with that excess. So, since third of August last year, we started selling that excess and a little bit more - whatever they could do, contractually-wise, taking into account their previous buyers - into the day-ahead market on their behalf, fetching them a fantastic price, and really monetizing something that has never been monetized before. What does this result in? This doesn't result in a huge amount of volume for us, but it's a huge demonstration impact, because now their investors are confident that if they invest into a new expansion of that facility, whenever they may experience a payment default challenge, or whenever they may have excess, they will be able to find a route to market through us. So, this is so-called a pure trading service that we provide on behalf of brownfield or greenfield IPPs. Our core role, just to get to your question, is to facilitate new generation. Meaning, where we give a 20 to 25-year power purchase agreement to the generator, that that banks it with those banks, and debt is calculated on the back of our risk. And that risk looks at the following: at us as a buyer, and it asks, how much credit support are we giving to that project? But more importantly, how do we mitigate the depletion of that credit support by [being] able to tap, or sell into the southern African Power Pool markets, whenever we experience a payment default from our underlying customers. What I'm trying to tell you in, a very convoluted and long way is, we need both. We need long term customers, and the Southern African Power Pool, to match and bring onboard as much demand as we want to.

AH And there's a third thing that you'd need, which is a balance sheet. Because you want these debt providers to feel very comfortable. So, if you say, right, we're working with a wind farm in in Zambia, or a solar project in Zimbabwe, and don't worry, because we're good for the... look at our credit-worthiness, don't worry about the off-taker in Zimbabwe. To do that, you have to have a balance sheet, or you have to have... So, who stands behind you? How much have you raised along the way? Or, how do you assure... Because, okay, you've got some off-takers, and you look good, because you can sell the power that you end up buying. But nevertheless, a debt provider will look at that and go, well, you know, but if there's a real crisis, people are going to stop buying the power for six months. And then we're reliant on Africa GreenCo, on Ana's balance sheet. So, how big is your balance sheet, and who stands behind it?

AH Yes, I mean, that's the core question that you are asking. This is why it's important that we have raised funding from development finance institutions. Because not only do they look at how much money we have; and at the moment, we have raised around 15.5 million US dollars, with substantially more to come, only to back around, initially around 100 megawatts, because we are cash-collateralizing the first PPA obligations. But more importantly, the question is, who is this funding coming from? And when they look through us, they look at development finance institutions, from the government of Denmark, being the IFU, their investment fund for developing countries. Then the second major shareholder is effectively the government of the UK, through FCDO funding to InfraCo Africa, part of the PIDG group. And then the third equity funder at the moment is ElectriFi, which is part of a group funded exclusively by the European Commission. Why those initial shareholders are important [is] because they bring that credit-worthiness, and that patient capital that is required, because we are a volume-based business. We will start walking and talking in a commercially sustainable, financially sustainable way, only when our volumes increase. But it gives a lot of credit, and a lot of confidence to the market, that they're willing to put their capital in such a way as to support us directly through equity, instead of just through risk-mitigation instruments from abroad.

AH In preparation for this conversation, I pulled out some of our early correspondence, including an email from January 2016.

AH Oh, my! Of course, you are the... As I call you, and you know, Michael, you are the godfather of Africa GreenCo. It wouldn't have happened without you, and Bloomberg New Energy Finance's FiRe competition that the idea was submitted to.

ML Well, you're very kind to say it wouldn't have happened. I suspect, knowing you, and knowing your personality, it would probably have happened anyway. But I'm delighted if I could have helped. Let's get back to FiRe in just one second, I just want to read... Because what you're describing is an energy trader. With some bells and whistles and some guarantees from the multilaterals. But I wrote... we were discussing your business model, and I wrote, okay, let me see if I've understood. And I wrote 12 points, which were essentially the conversation that we've just had, more or less. And then I wrote, I know it's tempting to think of this as part of the MFI community - in other words, the multilateral finance institution community, the World Bank, the African Development Bank, and so on - but I would totally resist the temptation. If the idea works, it will be profitable. And if it's not profitable, it won't work. So, it's sort of interesting. To what extent do you think it is going to be a very profitable commercial enterprise? Or will you always need concessionary finance? And will it always be very closely affiliated with the MFIs?

AH I think if it's very closely affiliated with MFIs for much longer, we're doing something wrong. It's very simple. I would fully agree with you on that. But it's a timing issue, it's a stepping issue, you know, who can facilitate... Why that capital was so instrumental to making us happen is because of this delay in timing. Imagine a region where we are starting with, what is effectively.... We are working so closely with the regulators. How to issue the best trading licenses? How to set up the best precedents? Someone has to put capital in before the market even allows participation of those very entities. So, it's really a credit to IFU, InfraCo and ElectriFi to have come so early on to say, through so-called high risk, high impact capital, to say, not only are we going to support it from the perspective of you becoming a new buyer; we will support it from the perspective of you working with the governments in order to facilitate that model in the first place, which not a lot of private sector participants will have such early patience to do, because it's not immediately commercially and financially viable. However, what you say still stands. As soon as possible, when we can attract proper private sector capital, which has actually happened sooner than we even envisaged it might happen, it needs to transition. Because no one is looking to rely forever on development finance institutions, because that will be almost the creation of another dependency of its kind. So, that level playing field will come, we believe, sooner rather than later. Just because the market changes have been so immense over the past, even year, especially in South Africa, Zimbabwe and a few countries which overnight effectively said, we can't do it anymore; it's being opened to the private sector; right, who is the best service provider out there? Please come onboard.

ML Presumably, the scale of it also would overwhelm if it was just the World Bank giving a guarantee for this project, and then African Development Bank giving a... And we had on this show Alain Ebobissé whom I'm sure you know, Africa50. If it's just restricted to the balance sheets of those institutions, they seem very big, but when you look at the trillions that are required, they're not big at all. And so, we really do need this opening up to private capital. Now, another participant on this show, however, was Yanis Varoufakis. Who said, the electricity system, it is outrageous to have private - I'm paraphrasing here - outrageous to have private players, it's fake competition, and it all should be nationalized, because it's a rent-seeking, fake competition enterprise, by wealthy people extracting money, nationalize it all. So, what do you say when you come across people who make that argument?

AH As a former Yugoslav and as a former Pioneer, I must admit somewhere deep inside my soul, I think, hmm, maybe he's a bit right sometimes. So, I wouldn't dismiss him automatically. I don't think truth is black and white. I don't think markets are an ultimate tool that is the only route through which we can deliver, certainly, development. I believe that from his perspective if you look at it, and if you look at what happened in Greece and other countries, you know, truth is in the eyes of the beholder. So, I wouldn't necessarily like to attack his own assumptions on this. Nor would I like to make it as simplistic as to say that we are some kind of Chicago economic School of Law proponents that only say that the market is the ultimate tool for efficiency, and for price, transparency, etc. I think we, in the context of Sub Saharan Africa, who live here, who deal with the load shedding on a daily basis, need to be cognizant of the realities and the hurdles that the state sector is experiencing. If they were stronger, if there were more powerful in terms of their fiscal, if they had less challenges, maybe I would be sitting here and promoting certain economic development tools done in some countries in Southeast Asia or China, that were more of a public sector, state dominant route to market. We just are not in that position at the moment. So, I'm not saying that what we are preaching is the only way out. I'm just saying that what we are preaching is one of the best tools that I can see at the moment for everyone to actually, contrary to what he's arguing, to participate in both the gain and the pain. And through markets, and through the ability to commoditize electrons, both the buyers and the sellers - not only the state of a country - is going to participate in that gain and pain. To give you an example, my husband runs, is an energy director for a very large limestone quarry in the UK. And you can ask him - he lost the little hair that he had left over the past year, due to the commodity and electricity prices in the UK. And because they haven't fixed for a certain period of time, they were effectively hemorrhaging, as most other industries have. And you may argue that therefore the market and the electricity markets in the UK are evil. However, the UK has the cheapest electricity prices almost of many other countries in the world during normal conditions. But what would be the alternative? For all of that pain to get onto the state balance sheet? Well then the people would realize how much more difficult it is to actually afford the little that many people can afford at the moment in the UK, due to all sorts of macro-economic and other reasons. So, what I'm trying to say [is], I wouldn't dismiss him outright. I think GreenCo, and me personally, I'm not an ideological person. I believe that the best and [the] pragmatism from all systems in the world the best. Nor are we dogmatic about only renewable energy and nor are we dogmatic in terms of our, pro capitalism, market is the only way vision. I would say absolutely not. It's just what will work at the moment in the best manner, taking into account the circumstances here in southern Africa.

ML I guess on this I'm a little bit more ideological, or maybe not ideological...

AH I know you are! We had many of those debates.

AH It's not ideological. I'm going to argue that it's not ideology, I'm going to argue that it's practicality. Because the fact is that we're going to need trillions of dollars invested in the African energy system. Which countries, even in the world you describe, where the fiscals would be stronger, still trillions are really hard. When I started New Energy Finance, my guiding light was, it's a transformation, it's going to cost trillions, governments don't have the money, so it's got to be private, but we need the right policy. So, where does the money come from? And then you still need the ability to allocate and to trade somehow. Even if everything was state bureaucrats, they would still have to telephone each other and say, we've got a problem; tomorrow, can you supply... There would still have to be some kind of a market mechanism. It wouldn't be called that, but it would essentially fulfill those functions. So, I can't really see how else you can do those things efficiently, other than through opening it up to multiple players and getting all the incentives aligned. And you know, markets do that. So, there you go. That's the end of my Chicago school...

AH I couldn't agree more, and that's what we are doing. But let's say yes, not maybe because of ideological reasons, just because it makes sense at the moment.

ML But practicality. Exactly. One of the other things that I wrote in that email in 2016, January 2016, was, get some experienced power traders on your board, folks out of EDF, E.ON, RWE, Vitol, and the like. And have you gone that route? I mean, you are going in that power trading route. So, who do you hang out with that gives you that DNA?

AH Oh, what a wonderful question. That's indeed what we've done almost immediately. Haakon Olafsson was with us and still is, now as a consultant, and he has started his trading career in the North Pool, and then for many of the largest trading commodity firms in the world. And he was instrumental in helping us set up all our internal systems. But more instrumental - actually, equally, very importantly - GreenCo's co-founder is a gentleman called Lovemore Chilimanzi, and he was one of the founding fathers of the Southern African Power Pool. And his expertise, from the perspective of understanding the power pool, understanding the regional utilities, the way trading is done, has been done, and the forward-looking picture, was an instrumental part to link to Haakon's international experience, because otherwise, you're introducing an experience from a much more liquid market into a more increasingly liquid market, and the two might mismatch. So, in a way, what we've done is, really, through our local team and colleagues, who have had experience trading for a number of utilities, such as Lovemore Chilimanzi, now Lion Mashiri, and a few others, we are learning then from the best precedents in more liquid markets, and contextualizing to what we see here. So, our energy, for example... I'll give you a more detailed example. Our energy trading and risk management system is first of its kind, we believe, in the region. It's a very comprehensive trading system that has been developed for us by capSpire, checked for us by Baringa; international, best consultancies, but really done in conjunction with local knowledge and context. Because otherwise, it really wouldn't be usable to us at the day and the stage where we find ourselves at. But we absolutely did what you recommended, and have gained, got the best brains from the Western and other international trading markets, but then built up the local team who are delivering it here, because they understand context better than anyone.

ML And I think that's one of the key takeaways, to my mind, from this episode for people: that Africa is not a bunch of people waiting around, just for solar on... They've got power markets, you've got IPPs, you've got regulators, you've got financiers, you've got traders, you've got... One of the key takeaways is, like everything I think around Africa is, don't make assumptions. Don't assume that... because what it was like maybe in the 1970s, or even the 80s, is not the way it is now at all. To go back, I said that we will look at the history of FiRe and so on... I'm actually going to pull out... I never delete an email.

AH Nor do I! I have I don't know how many emails that are now in the cloud from 16, 17, 18, because I don't delete any of them. So, my inbox gets big...

ML 2012, though. 2012, I have an email from someone called Ana Catarina, who at the time was working for Trinity LLP, and who approached us to ask us to have input into a questionnaire. And that was the beginning of your journey, was it not, around Africa and the approaches to credit guarantees and trading and pools? But that was even three years before you really formed Africa GreenCo.

AH Absolutely. And I remember it very well, because you see, 2012, when I was a lawyer for Trinity, I met in Addis Ababa, a wonderful gentleman called Dr. Lawrence Musaba. He was then the Executive Secretary of the Southern African Power Pool, and he was an absolute visionary in terms of what power pools should represent in the region. And we met and he said, Ana, please, you know, all these projects are not happening. Can we think about something? Can you start incorporating more thinking into the power poles? And can we just keep on a dialogue, where I can tell you more about what we do as the Southern African Power Pool? And we started a dialogue then, and in 2015, we also met, I think in Addis or somewhere and he said, Ana, can we have something concrete, an idea or something? And I said, you know what, Dr. Lawrence, I promise you, I will give you an idea. And that coincided with literally a week later me finding out about FiRe, shutting myself, during my holidays for three weeks reading thousands of pages, and coming up with a three-point PowerPoint presentation called GreenCo, to present to FiRe, and to present to Dr. Musaba.

ML FiRe was something that I came up with. FiRe stood for finance for resilience. It was really about finance for climate action. But that would have been FiCa, whereas FiRe worked much better, so finance for resilience. And it was an incubator program. At the time, I was still running New Energy Finance, Bloomberg New Energy Finance. We had this conference, the BloombergNEF Summit, and these amazing people in the room. And then my idea was the last half day of the summit, which at the time was two days long, so an extra half a day, we locked the doors, we changed the branding to FiRe, everything turned red, and we said now you, this audience, help brainstorm and choose ideas that could shovel a lot more money towards climate action, clean energy, and so on. And we solicited business plans, and we ran it like a business plan competition. We ran it like Y Combinator or something like that. And it was all based on a theory of commitment were the people that were locked in that room - not literally locked, but kind of locked by me, demanding they stayed - those people having been involved in choosing an idea or a set of ideas to back, that they would then feel committed. So, if somebody who was a CEO of one of those ideas, or backer of one of those ideas, if they later called up and said, I need some thinking on a regulatory change, or I need an introduction to a big debt provider, or I need that introduction to a ratings agency, that those people in the room who are all our BloombergNEF clients, would feel obliged to help. So, that was the idea behind FiRe. And you were by far one of our star applicants. I still have the first application, 23rd January, when we had a list of who might come in, I think, May 2015, to present. And you were on that list.

AH Yes, yes, indeed, which is why you are the godfather of GreenCo. And we were a complex animal because we required as a business model a lot of support from the local governments because their legislative and regulatory framework wasn't yet there. So, notwithstanding that, you personally didn't shy away, and some of the other godfathers through the Bloomberg New Energy Finance network that we obtained, that May; mainly Abid Karmali from the Bank of America, and Chris Knowles, then the Head of Climate Finance for the European Investment Bank. I will never forget, I will never ever forget Michael, I flew that May with about 100 flyers on GreenCo, that was it. There was just you know, me, myself and I and 100 flyers. And you facilitated a meeting with Chris, and with Abid and they sat me down, they both gave me their time. And [inaudible] from OPIC back then also was one of them. And we sat down, and they literally took some of my flyers, in particular Chris Knowles, went to the dig drinks reception in May, and I saw him handing out my flyer, saying this is a great idea, can you help, can you facilitate etcetera. That was instrumental, that really was instrumental.

ML What's really impressive, I think, is I've worked with a lot of startups, a lot of entrepreneurs, a lot of startups. And there's this thing called the pivot, where the entrepreneur starts doing one thing and realizes it won't work and then goes off and does another thing. And the successful ones that... I pivoted, not quite actually, New Energy Finance, we pivoted in terms of the sectors that we approached; we went from hedge funds to utilities and governments and oil companies during the big Lehman crash, the great financial crisis. But you didn't pivot. The name of your proposal was, create renewable energy off-taker for southern Africa Power Pool, right? 2015. So, eight years later, you are a renewable energy off-taker for southern Africa Power Pool. It's extraordinary. That focus is unbelievable.

AH Have you seen the movie Big Fish?

ML I have not, no

AH Ewan McGregor. Oh, please watch it. I saw that movie in... what was it? Gosh, first time, I don't know, 2010, or 2009, or maybe even earlier, gosh maybe even earlier. And I saw in that movie, my past, my present and my hopefully future. And everything was in that movie. And he says at one point when he gets a job in a circus - long story - he says I may not have much, I have no talents, but I have more determination than any other man you will ever meet. Well, when I saw that movie, I thought this is a movie about my past, present, and future. And I absolutely relate to the fact that I have quite a lot of determination, except I'm a woman and not a man, as was in his case in that movie.

ML I'm actually that brings me to the final topic that I want to cover, or that I promised that we would come back to. It's International Women's Day when this will air, and you are a woman entrepreneur. What is it, more determined than any other woman...?

AH I wouldn't say more determined than any other woman! But certainly, very determined.

ML And the context here is that on Cleaning Up, we have had extraordinary women leaders from the climate movement, Rachel Kyte Christiana Figueres, Teresa Ribera.

AH Sorry to interrupt, I would say Rachel Kyte is also in the godmother category, because she gave me a lot of person support when it was just an idea, and very few people had time for me.

ML Indeed, she's one of the one of the real... I mean, she is pretty much the godmother of clean energy investing throughout the developing world, from her role at the World Bank to Sustainable Energy for All and now at the Fletcher School, just extraordinary contribution. But the question would be, I suppose two questions. What has it felt like? Has it been an advantage or a disadvantage to be this extraordinarily different figure in the African power markets world? And the second question would be, advice to younger women who are watching or listening to this podcast? What are the things that you would want to pass on that maybe you didn't know that you wish you'd known? Or did you just, you saw your future and you knew it all right from the beginning?

AH Right, so in terms of the first question, I think it probably is helpful, to be honest. Helpful and unhelpful. Being a woman and being a foreigner, in the context where I work and live in Zambia helps from the perspective of: I, perhaps, get away with things a little bit more easily than a man would. I'm from the Balkans originally. You can't take my nature out of me. So, I am often considered very assertive, potentially sometimes moving into the aggressive category. People in the southern African Development Community are very diplomatic, very kind, very culturally patient. That is perhaps not my strong nature, which can backfire very, very often. But it can also be a benefit, because some people are too polite to tell me no, even when it's a no. And that then buys time, and I might be able to convince them otherwise. If I was, I think, a man, and as assertive as I am by pure nature of my character, and my upbringing, I think I would rub people even more the wrong way, and there would be potentially a bit of a more increasing clash. Whilst being a woman, a few things are really forgiven to me. The environment of the power sector in Sub Saharan Africa is predominantly male-oriented, so in a way, I'm excused, sometimes, some of my assertiveness. I can put a smile on, and I can apologize for it, because it's purely my Balkan nature. But it can definitely benefit.

AH I want to come in just with an example of what you're talking about, because I have it right here. November 2016, an email from you. You had raised some money from Rockefeller, and you were doing a panel, it was a high-level panel on Africa in the pavilion, and you wrote, you emailed me and you said, this is quite a cheeky request, but with the best intentions. And so, that's an example where you know, and you wanted me to tweet this event, because I had some Twitter followers. And you asked me very, very strange, very direct, but with a very nice intro line. So, that I think is an example of what you're talking about. I couldn't say no.

AH Thank you. Thank you, Michael. But I think it's a benefit, and it's not on certain occasions, because, yes, I’ve encountered both. In terms of what I would tell young ladies out there... I feel very passionately about that, we actually have an internship program within GreenCo that specifically caters for young female engineers, and we have some wonderful examples and young female legal interns, in order to help them get into the energy space. So, I do feel passionate about helping other women get their... The only advice I would give them is, be careful who you marry. That's the only advice, because that's all it depends on. If a man accepts you for who you are, which is sometimes difficult if you are a career-driven and focused woman, and he's willing to accept that, and you're willing to work in partnership in your own relationship within your own family commitments. That's the only really way that you can you can succeed, if it is that you want a family, and that you want that marriage and those values that come from that. So, I would say that's the only piece of advice if you have...

ML Is that specific, do you think, or conditioned by the environment you work in in Africa? Because I'm surprised, because in Europe now, surely there aren't men who say, well, now we're married, you have to stay at home, or not do this, or not travel or whatever. But that may be more common in other cultures, or is that across the board?

AH I would say that's across the board. I've lived in the UK for 20 years; my husband is British. And I would say our relationship is unique in the way of how much compromise and how many personal sacrifices he has done, as compared to anyone within our age group in the city of London or in the UK that we are aware of. He's moved to another continent for me; he has done childcare 50%/ 50% for two children with me; he has put his own career on hold due to me. Not many men are willing to go to that extreme, it's more on paper. But when it comes to real true commitments of that type, which require personal sacrifices on the career-front and his own objectives-front, they're very few and far between, I believe.

ML That is incredibly interesting, it's important advice. It's interesting, and it's also very personal, so I really thank you for sharing that. Because very often in these sorts of forums, you get quite anodyne advice, you know, always believe you can do it, and make sure that you find good mentors and all those sorts of things. But that's a much more personal note, and I thank...

AH I couldn't have done it without that. I couldn't have done it without him.

ML And I'm going to be honest, I couldn't do it without my wife and my family around me. Because, you know, I’m enabled to do even what I'm doing today, let alone you know... Actually, when I was building New Energy Finance, I was still single, but for a reason, because the compromises would have been absolutely impossible to build a business in that environment. I hear you, I hear you. And I'm sure lots of women, younger women, but maybe not only, will be listening and will think, wow, that's a really important conversation, important contribution and maybe an important conversation that can grow out of it. So, I thank you very much for that.

AH You're very welcome.

ML Ana, it's always so fantastic to catch up with you. It's delightful to see you doing so well. You said that things are changing so rapidly over the last year, year and a half, it's been eight years. I would love to check back in with you. Keep me informed, keep sending those cheeky emails asking for favours. And I wish you all the absolute best on this International Women's Day.

AH Thank you very much, Michael, and come and visit us in Lusaka. Our headquarters and operational hub are in Zambia, Lusaka, come and meet our traders come and see our trading desk, come and see us do what we talked about doing. And that will be wonderful.

ML That's a great invitation, I'll see you there.

AH Thank you very much.