Author Archives: GCPSolar

Social Impact Investing Creates Value

Impact investing can mean a diverse range of investments, ranging from housing development in the US to renewable energy in BRIC countries and agricultural cooperatives in Africa. Investment can be crowded fund or private equity.  The table below shows the spectrum of different impact investment business models and traditional investments.

Impact Investment

Social impact investing is not a new trend; it has been around for several decades through philanthropic investments, in areas like community and social development, infrastructure and gender equality. However, a fairly new type of bond to finance social wellness is the Social Impact Bond, which the Social Finance UK describes as a “public-private partnership which funds effective social services through a performance-based contract.” Unlike social impact bonds, however, social impact investing is a large field that include any social benefit from the underlying business model. The combination of social impact investing and bonds is the new form of business model that is emerging in many developing countries around the world. The HBR wrote several articles about how social entrepreneurs are typically held back by traditional financing processes and structures, but in new markets where risk and opportunity are intertwined, innovative business models are capable of driving new areas of returns for investors with an open mind. This is currently the case with green bonds and has been with impact bonds.

Impact Investing in Different Markets

In the world if impact investing, The impact sector is growing, in a study conducted by the Global Impact Investment network, respondents in impact investing reported they grew their impact assets from USD 25.4 billion to 35.5 billion from 2013 to 2015. The report, found here, shows many trends in the sector by respondent types and tracks the growth of the sector. Some American examples include Goldman Sachs’ investments in community and urban development across the US including New Orleans , Chicago, and NYC.

While globally, Africa is seeing many similar impact investments. One being The Just Shea Program , a program that helps women shea harvesters of Ghana with several areas from providing safety gear that can be repaid through harvest shea nuts, to providing equipment to protect form poisonous snakes, and finally and importantly for economic reasons,  the creation of cooperative silos to increase the price per kilo paid to the harvesters.

In Africa, one of the value creation tools that African private equity can contribute to social impact businesses is the ability to bring their portfolio companies up to above-market standards of compliance and transparency, which in turn raises their value at exit. Investors can also help influence the political climate by investing in areas with strong legal standards and compliance thus creating reasons for government to create more favorable investment climates.

It seems that while impact investing may be difficult for traditional investment, there is a space in portfolios for this type of model, and as data emerges on the results, the potential for ROI is very viable as well as the potential to create positive socially responsible returns.

What are the Costs of Energy – Costs and Trade-offs for Renewable

 The topic of renewable energy costs is a hotly contested topic that touches on many politically sensitive areas. Over the years what has become clear however is that it is not a simple answer as to what is the best alternative for energy production.

There are country specific strategies and policies effecting every source of energy production. It is obvious however that the trend of renewable energy production is on a massive rise and this is set to continue.

“Renewable energy is a key component for energy access in developing areas as it offers a long term sustainable and currency-neutral supply. In African and global markets, we are seeing increased interest in this work and we will continue working with development agencies and institutions as well as investors as a part of a commitment to be socially impactful in our investment strategy.”

Sidney Yankson , Trustee, GCP Foundation

Global

The International Energy Agency (IEA) reports that 2014 saw a record 95 GW of new wind and solar projects, and forecasts that it will account for 25% of power generation in 2018, a figure that’s up from 20 percent in 2011. Among other startling predictions were the following:

  • 72% of the over $10 trillion forecasted dollars spent on new power generation worldwide to 2040 will be invested in new wind and solar PV plants.
  • Solar is price comparable to coal in Germany, Australia, the U.S., Spain and Italy.
  • By 2040, the levelized cost is set to drop up over 60%, and as soon as 2021, it will be cheaper than coal in China, India, Mexico, the U.K. and Brazil.

In most countries, renewables must be supplemented by a basic supply of oil and gas. As gas becomes more plentiful and available, industry analysts posit that gas will be one of the flexible technologies needed to help meet peaks, and provide system stability of non-depletable energy sources.

What may contribute to this trend are the quickly declining installed costs for solar PV, as shown in the table below:

USA

According to the Energy Information Administration (EIA) and the University of Texas, from 2010 through 2013, US federal renewable energy subsidies increased by 54%, from $8.6 billion to $13.2 billion, despite the fact that total federal energy subsidies declined by 23%, from $38 billion to $29 billion. The sponsoring government’s agenda of energy independence and renewable promotion has been effective in creating long-term industry investments.

 

Germany

In Germany and in much of Europe, the government has long subsidized and promoted renewable energy. German renewable energy based electricity generation almost reached the 30% mark in 2016.

Africa

Africa is seeing a huge influx of solar and renewable projects due mainly to two related factors: need and economics. As foreign oil and gas supply costs are related to currency values, many countries face pricing issues. While the current oil prices are beneficial in that regard, the need for a sustainable infrastructure is present, so as economies in Eastern and Southern Africa rebound, many nations have subsidized the development of many projects through foreign and local investment to that end. Thus the levelized cost lower due to subsidies and low interest project debt.

Asia Pacific

In many countries, solar power is a lower cost alternative and is also heavily subsidized by the government in their purchase agreements. Thus, this region may have typically lower than average total costs. China and India lead the way with overall investment not only in the region but among many developed and BRIC nations in solar/renewable energy.

Subsidies, or Technology?

Logically speaking the cost of any energy project is directly related to not only the existing technology costs, but also macro policies and subsidies from governments. As both are changing the shift in new energy projects is making itself clear. Utility-scale batteries are now capable of competing with natural gas in terms of availability and flexibility to provide surplus generation for peak demand. When added to small micro grids, EIA estimates that by 2040 renewables will reach 74% penetration in Germany, 38% in the U.S., 55% in China and 49% in India.

As for subsidies, fossil-fuel consumption subsidies dropped in 2015 to $325 billion, from $500 billion This reflect both lower fossil-fuel prices as well as a subsidy reform process that has gathered momentum in several countries as they look at new strategies for long term infrastructure.

Investment Trade-Offs

Its clear that renewable energy will not completely replace fossil fuel as it alone can’t meet the baseload generation needs anytime soon. However, an optimal solution is to use a combined approach of both traditional and renewable, and most governments are shifting their subsidy policies accordingly.

CO2 Emissions are another major plus for solar, not only do solar production facilities produce relatively lower environmental maladies than coal and gas production, but with no emissions in the burning operations process, this can make a major impact.

New job creation from solar and renewable is projected to add net new jobs to the economy. Rising automation in extraction, overcapacity, industry consolidation, regional shifts, and the substitution of coal by natural gas in the power sector are resulting in minor job losses in regions. Globally, the renewable energy sector employed 9.8 million people in 2016 – a 1.1% increase over 2015. In 2016, jobs in renewables, excluding big hydro, increased 2.8% to  8.3 million. This is a replacement of labor force to some extent, as well as net new jobs in many countries.

 

SOURCES:

https://www.lazard.com/perspective/levelized-cost-of-energy-analysis-100/

http://www.ren21.net/wp-content/uploads/2016/06/GSR_2016_Full_Report.pdf

https://www.irena.org/DocumentDownloads/Publications/IRENA_RE_Jobs_Annual_Review_2017.pdf

http://www.mckinsey.com/industries/oil-and-gas/our-insights/lower-oil-prices-but-more-renewables-whats-going-on

2016 was the year solar panels finally became cheaper than fossil fuels. Just wait for 2017

https://www.irena.org/DocumentDownloads/Publications/IRENA_Solar_PV_Costs_Africa_2016.pdf

https://www.nrel.gov/analysis/tech_lcoe_re_cost_est.html

http://www.irena.org/DocumentDownloads/Publications/IRENA_Renewable_Energy_Statistics_2017.pdf

China Emerging as Leader in Investment in Africa

It is estimated that by 2050, some 25% of the global population will be African, and in the below 30 age range. For this population to reach a sufficient level of prosperity to fully evolve into a consumer economy with strong GDP growth and trade relationships, a strong focus on infrastructure and economic sustainability is vital. In the recent past, many investments in Africa have not focused on this form of investment and rather on resource extraction. However, this tide has and will continue to shift hopefully.

 

China’s President Xi Jinping’s made commitments in 2015 that directly relate to this strategy, as it targeted areas like industrialization, and agriculture modernization to poverty programs, and peace security investments. This proposal came with a commitment of $60 billion of new investment.

It follows therefore that there is a history and a reason why China made such a strong agreement, and its easy to see when comparing it’s commitments between US and Chinese Export Import Banks. From 2000 to 2015, China’s Eximbank issued $63bn of loans to 54 countries in Africa, while the US Eximbank made $1.7bn in only 5 countries.
And the investment trend extends to Chinese-owned firms as well. In 2014 alone, Chinese companies signed over $70 billion in construction contracts in Africa that will yield vital infrastructure, provide jobs, and boost the skill set of the local workforce.

Annual Investment from China Greenfield in Africa

However, not all of this activity is positively viewed locally. Some firms and organizations have received negative suspicious as some stories of resource extraction hoarding, immigration inequalities, and predatory loans have been circulated. For the most part these stories tend to be anecdotal and unfounded. The following examples taken from a recent article from Foreign Policy Journal are just some of the many fairly structured investments made from Chinese organizations.

  • In Kenya, where a state-owned Chinese company is about to complete a $4bn railway from the Indian Ocean to Nairobi. The line has been criticized for costing too much. However many Kenyans have a positive view of the efficiently built system which will extend transport and support trade.
  • Huawei established its West African training school in the Nigerian capital, Abuja. And it assists the skills of local engineers who are now developing cell phone networks that underpin Africa’s telecommunications system.
  • Hong Kong-based academics Barry Sautman and Yan Hairong surveyed 400 Chinese companies operating in over 40 African countries. The results showed that while the majority of senior positions remained Chinese, more than 80 percent of workers were local.
    Rather than predatory financing terms or resource extraction, the need to hedge financing risk for many countries was a main concern, and one overcome with hedged trade agreements. For example, Ghana secured a $562 million for its Bui Dam from China’s Export-Import Bank, with cocoa from local farmers.
  • As for aggressive exporting of agriculture, out of nearly 15 million acres that Chinese companies reportedly acquired, studies found fewer than 700,000 acres being used as such. The largest were used for rubber, sugar, and sisal plantations. None were growing food for export to China.

Clearly there are significant sustainable activities from companies and government agencies China in Africa, however its important to also clarify that the nation has many different organizations acting independently and with varying degrees of influence throughout the continent. It is therefore difficult to generalize their impact and actions.

What is clear however, is that investment institutions tied to archaic and largely ineffective Africa investment models are in danger of missing out on the major returns that successful African investments provide.

It is the hope that the significant and meaningful shift of investment that China has demonstrated can also impact Western organizations that can follow China with significant and sustainable projects, and long term investment strategies.

 

Ports and roads mean China is ‘winning in Africa’

https://www.ft.com/content/65591ac0-2f49-11e7-9555-23ef563ecf9a

Chinese investment in Africa: Beijing’s testing ground

https://www.ft.com/content/0f534aa4-4549-11e7-8519-9f94ee97d996

How China’s $60 Billion For Africa Will Drive Global Prosperity

https://www.forbes.com/sites/amyjadesimi/2017/03/14/how-chinas-60-billion-for-africa-will-drive-global-prosperity/#190f44f338a3

5-myths-about-chinese-investment-in-africa

http://foreignpolicy.com/2015/12/04/5-myths-about-chinese-investment-in-africa/

African and EU Partnership Framework Continues To Bolster Development Work

The recovering African markets are reopening the gateways not only for sustainable investment opportunities but also new impact investment, both for local players, as well as globally. This past July, The EU Africa Partnership  Civil Society Summit took place in Tunis to cover the ongoing priorities of the groups vision and roadmap. Among the top of this list of objectives were the focus on continued economic development, that includes policy and advisory support frameworks to help countries and investors with placements for projects throughout Africa. This can include process to help maintain transparency and identify and advise on financial risk mitigation.

As continued sustainable development assists in potential for commerce and trade, this means a better ability for strong performing sectors in West and East Africa to truly take the reigns of driving the future of their firms. Sidney Yankson, CEO of Ghana Capital Partners , who attended the EU Africa Partnership Summit in previous years, believes the following is true of this summit;

” Part of our firm’s objective is to not only drive investment opportunities, but to contribute to the ecosystem of society where we operate through sustainability activities. As we have seen fluctuations in the growth of markets not only here in West Africa but globally, we find the continued interest of such organizations very important to ensure sound investment and development support to local and foreign partners.”

 

GCP will continue to work with local and European partners in various sectors, in particular  with policy influencers and foundations across the region to share experiences and methods for success in this vital time for investment in renewable and infrastructure in Africa.

African Infrastructure Fund Adds to Positive Expectations on Growth

GCP is pleased to see continued significant interest in foreign investment from firms this August in developing African infrastructure through substantial investment commitments.

A.P. Moller Holding (www.APMoller.com) has together with PKA, PensionDanmark and Lægernes Pension launched a new infrastructure fund with a focus on Africa. The fund has received commitments of USD 550 million from anchor investors.

African economic development projects have both investor and societal impact

The investment ethos of the team mirrors that of GCP and other African-focused investment companies. Peter Damgaard Jensen, CEO at PKA: “PKA has for many years invested in infrastructure both in Denmark and abroad. We have positive experiences investing in Africa and we have for a long time wanted to invest more on the continent. With this new fund we will be making infrastructure investments in Africa and get the opportunity to provide a good return to the pension savers and at the same time make a positive difference in line with the UN Sustainable Development Goals”.

TThe fund will focus on infrastructure investments in Africa, with the ultimate goal of helping to support sustainable economic growth in the region. The companies’ aptitude in managing foreign emerging market investments will help ensure delivery of strong returns to its investors.

Original Publication Source Africa Newsroom: https://www.africa-newsroom.com/press/new-africa-infrastructure-fund

Creating Positive Futures and Social Impact

As far as Western Africa has progressed in implementing infrastructure, like many other developing regions, there is much work required ahead. Basic infrastructure in developing nations needs to be improved in many urban and rural regions to allow for economic development. For example, it is estimated that Ghana can save over 33 million USD/annually in already overburdened public sector energy grid-based costs by switching to solar street lights. (1)

 

 

Such innovative solutions not only help in developing nations, but also have come to play important roles in humanitarian crisis zones. Solar lanterns have been used in Syrian communities to provide lighting once grids have been destroyed by military activity. (2)

 

 

 

In a recent New York Times article, The Race to Solar in Africa, (3) the author traveled across rural areas in Africa to see first hand the impact that solar energy can have, and the author relayed the following:

  • Residents of a rural Ghana community could now safely store the vaccine for yellow fever,
  • Charge cell phones at home rather than walking to a bigger town,
  • Cold water was now available – solar enabled running of refrigerators, and so coldness was, for the first time, a possibility,
  • Electric fans which can squelch overwhelming heat.

Such uses can dramatically improve the living conditions as well as economic activities of communities. Farmers in some communities with new solar energy installations could now use advanced mobile phone and weather monitoring applications to help improve crop yield.

GCP and GCP Solar’s initiatives span across many sustianable charitable activities, including solar lanterns distribution. Like GCP, there are many other examples of active and dedicated foundations working in this area, and making excellent progress. Thus our aim is to be part of the shift towards sustainable and impactful investment and development of basic services supporting the growth of the promising economies in Africa.

  1. https://www.voanews.com/a/3938644.html
  2. https://phys.org/news/2017-02-ghana.html
  3. http://www.myjoyonline.com/opinion/2017/january-23rd/solar-street-lights-will-save-ghana-33million-a-year.php
  4. http://www.newyorker.com/magazine/2017/06/26/the-race-to-solar-power-africa

 

Keeping Ghana Alight – New Initiatives for Better Solar Coverage

As many African nations continue to evolve their utility coverage and infrastructure, many struggle to establish sustainable conditions and terms for such projects. Ghana’s

Africa Renewable and Solar Developments

Renewable Solar Projects Installation

recent new President Nana Addo Dankwa Akufo-Addo who came into office earlier in Spring 2017, has made clear a new positive agenda to commit to developing solar in the country. His position in a recent State of the Nation address was that it will resume Ghana’s renewable energy program, as well as implementing new initiatives to attract private sector investment in renewable.

The Ghanaian president has also stated that utility Electricity Company of Ghana (ECG) had signed 43 Power Purchase Agreements (PPA) by the end of 2016, and that over 20 more were under consideration. He added that there will be an attempt to enforce a new procurement law for more fair bidding processes, and that many of the countries existing PPA’s u

nder the last government may be under review for reconsideration.

In addition to these new initiatives, in mid-March the country’s Energy Commission launched a rooftop solar programme, originally conceived in 2015, which provides an initial investment to cover the cost of PV panels up to a maximum of 500 W. The Energy Commission aims at installing 200 MW of rooftop PV capacity in the medium term. The programme is to be expanded to cover non-residential facilities including ministries, departments and agencies across the country.

Sources:

MDAs to be connected to solar energy

Ghana’s new government relaunches solar program

GCP Solar appointed as official solar light supplier to Asa Baako Music Festival, Western Region, Ghana – 4 to 6 March 2015

 

 

In UN’s Year of Light, GCP Solar has been appointed the official solar light supplier to the Asa Baako Music Festival in Ghana, 4 March 2015.

In a sign of their commitment to helping reduce energy poverty and provide sustainable light, GCP Solar has partnered with the organisers of Asa Baako Music festival to distribute solar lights and solar mobile phone chargers at the festival over the independence day weekend in Ghana.

Asa Baako was launched in March 2011, in the spectacular fishing village of Busua in Ghana’s Western Region. It was here, where festival organisers from the UK and Ghana, joined together with local residents, to create a 2-day celebration of local arts and culture. Since then, Asa Baako has grown from one stage and a few hundred people, to a programme featuring the now legendary Jungle party, beach parties and a weekend of activities from surfing, art exhibitions, treks, tours, yoga, cinema for an audience of over 2,000 people.

Mr. Kofi Debrah of the Asa Baako organising committee said. “We are delighted to appoint GCP Solar as our sole solar light distributor. It is great that we can provide access to light for the 100 or so of the festival attendees that will be sleeping in tents. Also, there are many more coming from remote villages that also do not have lights.”

Mr. Sidney Yankson, founder of GCP Solar said, “ GCP Solar is happy to support this great festival of music and arts. Our solar light supplier, Nokero, has a distinguished track record in supporting the arts as they supported the Power The World concert a few years back during which Linkin Park performed. GCP Solar is looking forward to developing a long term relationship with the festival.”

About GCP Solar

GCP Solar is a leading solar company in Africa. GCP Solar is a distributor of hand-held solar lanterns and roof top solar systems. Our aim is to provide safe, sustainable and environmentally friendly light solutions to the 400 million people living in Africa without light. In Ghana up to 5 million people (approximately 30% of the population) do not have access to the main power grid.

GCP Solar is a distributor of the Nokero® suite solar products, such as hand held solar lights and mobile phone chargers.

About UN’s Year of Light

On 20 December 2013, the UN General Assembly 68th Session proclaimed 2015 as the International Year of Light and Light-based Technologies (IYL 2015). In proclaiming an International Year focusing on the topic of light science and its applications, the UN has recognised the importance of raising global awareness about how light-based technologies promote sustainable development and provide solutions to global challenges in energy, education, agriculture and health. Light plays a vital role in our daily lives and is an imperative cross-cutting discipline of science in the 21st century.

(Learn more at www.light2015.org)

About Asa Baako

Asa Baako is a music and arts festival in Western Ghana.

(Learn more at www.asabaako.com)

Didier Drogba holding - N200

 

Linkin Park - Power the World

Sidney Yankson (CEO) attends a special presentation by the African Development Bank, the African Economic Outlook 2014, at New York University

Sidney Yankson (CEO) was invited to attend a special presentation by the Africa Development Bank (ADB) on 13 October 2014. The main theme of the evening was the global value chains and Africa’s industrialisation.

The event took place at New York University Africa House an interdisciplinary institute devoted to the study of contemporary Africa, focusing on economic, political, and social issues on the continent. The Africa Development Bank was founded in 1964 and has fifty-three African country shareholders. Their mission is to promote sustainable economic growth and reduce poverty in Africa.

Sidney commented that, “The ADB’s report provides a fantastic overview of the opportunities in Africa today.  Most of the countries they review have projected annual GDP growth in excess of 7%. That is phenomenal.

The ADB suggested that there are challenges to overcome, but in the long term African countries and companies will prevail.

The NYU professor suggested that Africa is resilient and will bounce back from the current Ebola crisis.

Therefore, the future looks bright, but there will be challenges.”

Besides the ADB special presentation, Sidney has attended a few other conferences whilst in New York and Washington. On 15 October Sidney was at a meeting in Washington DC discussing commercially operating minigrid systems with the US State Department, USAID, World Bank and the UN Foundation. The meeting allowed participants to recap on the High Impact Opportunity initiatives, membership and co-ordination. There were discussions about focusing on High Impact Initiatives and the upcoming input from DFID, African Development Bank and the World Bank.

Sidney will attend a further event on the 16-17 October that will comprise of a workshop focusing on proven private sector business models that are already in operation and leading the way in mini-grid development.

Sidney Yankson (CEO) attends the West Africa Forum for Clean Energy Financing, 16 September 2014 in Accra, Ghana

Following on from the highly successful forum in Accra last October, the WAFCEF have convened again this month. At the last forum, WAFCEF showcased ten clean energy projects from the ECOWAS (Economic Community of West African States) region to investors and financiers. This second WAFCEF forum was looking out for the next generation of West African clean energy project developers and entrepreneurs. The forum was to enable selected clean energy projects to develop, construct bankable business models and facilitate investments for project implementation through the CTI PFAN (Climate Technology Initiatives Private Financing Advisory Network) global network of clean energy investors and financiers.

There were many key speakers during the day’s event, addressing the importance of sustainable, clean and renewable energies in the West Africa region. Sidney Yankson (CEO) met with many of the key speakers at the event, such as the Head of Renewables from the Ministry of Energy, Wisdom.

Sidney commented that, “it was great to connect with other stakeholders in the renewable energy space in Accra. We need more of these forums to share ideas. It was great to hear that the ministry of energy is promoting the private sector to focus on providing power generating assets, such as solar power plants and waste to energy projects. With this support from the policy makers, GCP is happy to move forward with its projects in Ghana.”