Cleaning Up Episode 120 Edited Highlights – Ana Hajduka

For Cleaning Up’s 120th episode, Michael's guest was CEO and Founder of Africa GreenCo, Ana Hajduka. Africa GreenCo are a trading operation and guarantee scheme for power producers in Sub-Saharan Africa to enable and sustain renewable energy investment and development in the region.

This episode coincided with International Women's Day, so as well as outlining Africa GreenCo's ambitions to promote renewable energy supply in Africa, Ana ended with some truly fascinating insights into what it takes to be a successful woman in the climate space.

Michael Liebreich Ana, can you describe in your own words what Africa GreenCo does?

Ana Hajduka So, Africa GreenCo is the newest buyer and trader of renewables in the Southern African Development Community region. Africa GreenCo exists in order to facilitate new generation there, because there is a lack of credit-worthy counter-parties 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.

ML And for some context, what is the power situation in Africa more broadly?

AH For Africa's power requirements, trillions of dollars of annual investment are needed. In the Southern African Development Community, we are looking at an extreme deficit when it comes to generation at the moment. We're talking about a regional deficit of around 6000 megawatts, increasing to almost 14,000 megawatts because of the decommissioning of the coal-power stations in South Africa. So, the situation is pretty dire. Overall, around 36% of all people in the SADC region have no access to electricity whatsoever.

ML There’s been tremendous progress in Africa on rooftop solar, which is very good for a lot of rural areas, but it doesn't deal with larger energy demands; it doesn't deal with industrialisation, with the sorts of electricity that businesses need...

AH We have to see all of it within the path of the bigger system. For too long, the off-grid and on-grid camps are seen as two camps, which is really not very beneficial when it comes to systemic planning for the required distribution, transmission, energy access and wider needs. 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.

ML Let's talk about that value chain. You are trying to enable more capacity to be built. What sort of generation will that be?

AH So, we are looking at solar, wind, geothermal, hydro of a smaller scale, a little bit of biomass. So, as the core name GreenCo suggests, we are looking at aggregating, as a trader, a renewable energy portfolio across the region. However, we are not saying it's the only source of generation that one should support. We certainly need gas baseload that should be developed in order to make those systemic challenges when it comes to integrating renewables into a wider grid.

ML And who are the independent power producers that you’ve referred to?

AH It's normally a private sector developer that is looking to commission a power station and to sell the capacity on a 20 to 25-year basis to a buyer. Up until almost a year ago, the only buyers anywhere across Sub Saharan Africa were state utilities, usually fully owned by their governments. The problem is, the utility in question is presumed not to be credit-worthy, so the only way these projects have happened to date is if the state guarantees all power purchase obligations of their utility. Consequently, the state utility, and the country itself, gets the whole impact of that agreement on its balance sheet. And if you look at IMF indebtedness calculations across the region, 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 through that model anymore - the model is dead. Meaning we need new business models that create a wider market for those electrons. Electrons are commodities. We need to create competitive markets for that supply, where the risk sharing is across the whole value chain. That needs to happen to decrease the cost of taking on debt, providing as it does appropriate risk mitigation, credit-worthiness, financial support.

ML The cost of debt in the developing world is one of my five big challenges with the transition. So, part of your model is a risk guarantee. What is the role of the power pool?

AH So, the Southern African Power Pool connects most of the countries in the SADC through physical wires. Now, in order to facilitate competitive market creation, it has developed a system whereby you can sell and buy electricity through their competitive markets, but it has never really been considered as a pool through which new independent power producers can look to de-risk their payment obligations. This means when we have an independent power producer, instead of them having one utility off-take risk, they 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.

ML So, somebody builds a wind farm, and then you guarantee their sale of electricity, is that right? But is that a backup for them? Or do they just give you all of their output?

AH So, let me give you an example. There was an existing brownfield power plant in Zambia that had excess capacity at certain times of year. For the past five years or more, whenever they would have excess, they would just effectively dump it into the grid. So, since August last year, we started selling that excess and a little bit more into the day-ahead market on their behalf, fetching them a fantastic price, and 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. Our core role, just to get to your question, is to facilitate new generation. Meaning, where we give a power purchase agreement to the generator, debt is calculated on the back of our risk. So, we need both long term customers, and the Southern African Power Pool to match and bring onboard as much demand as we want to.

ML I think one of the key takeaways from this episode is that Africa is not a bunch of people waiting around. They've got power markets, you've got regulators, you've got financiers, you've got traders. Now, it's International Women's Day when this will air, and you are a woman entrepreneur. What has it felt like? And what are the things that you would want to pass on that maybe you didn't know that you wish you'd known?

AH The only advice I would give them is, be careful who you marry, 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 you're willing to work in partnership 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 marriage. I would say my relationship with my husband is unique in how much compromise and how many personal sacrifices he has made. 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 for me. Not many men are willing to go to that extreme. But when it comes to real true commitments of that type, which require personal sacrifices on the career-front, they're very few and far between, I believe.

ML That is incredibly interesting, and it's also very personal, so I really thank you for sharing that.