Advancing Angola’s energy transition

Angola

Jorge Salvador Nunes, executive director and co-founder of Greentech – Angola Environment Technology, talks to The Energy Year about the company’s work on solar projects in Angola and the factors that would advance the country’s energy transition. Greentech is an Angolan company developing projects in energy and in environmental technologies.

What scale and type of renewables projects are you pursuing?
We have three business lines in renewables. Our main focus is on utility-scale solar projects, which we’re deploying in the southern region of Angola. The public offtaker, RNT, receives all the electricity produced. We have a good pipeline of projects prepared for this region. The grid needs clean electricity. The southern region in particular needs solar PV electricity in order to reduce the consumption of diesel and to integrate with hydroelectricity when the centre and south systems get connected.
Another business line we have is solar home systems for houses in off-grid areas. We are the first company in Angola to provide this solution and currently we are deploying the project in more areas. Our target is to deploy 50,000 such systems as part of Angola’s target of installing 100,000 by 2022.
Our third business line is industrial and services. We are also one of the first companies to deploy solar PV to medical facilities in Luanda, as well as in Luena and in Menongue, in Moxico province. Of course, we aim to expand, to have more customers, but we are doing well at the moment.

What factors could accelerate the energy transition in the Angolan market?
Energy is very much dependent on the regulatory environment and that is getting better year by year. We are very confident that the regulatory environment is going in the right direction – in a direction that will generate confidence among investors.
However, as a local company, we need to have much better conditions to access capital to compete with big players. Multinationals and big players have access to capital on very favourable terms, 3% or 4% or even less. We cannot access capital at that rate, so it’s a big disadvantage for us.
So as we develop projects we are looking for competitive ways to access capital, which will then allow us to compete. Our goal is to attract foreign capital to our projects – foreign capital that doesn’t put more of a burden on Angolan accounts, the Angolan debt-to-GDP ratio.
In terms of securing better access to capital for local companies, we already have projects that are reliable and that should generate confidence. We only need to reach investors and create awareness among them. We are doing this and we know it’s possible, but it’s a process. This is going to be aided by the improvement in Angola’s image that we see happening over the next few years. There is a new political scene taking fantastic steps and there are institutions doing great work here.

What was the strategy behind launching Greentech?
In launching Greentech, our idea was to identify market needs and partner with strong companies to fulfil them. When we started in 2012, we partnered with APR Energy, a power solutions company with worldwide recognition, on our first energy project, which was 40 MW of thermal generation in Luanda [for state-owned utility ENE]. The project was to supply emergency power, so we chose thermal as the best solution. One year later, we added another 40 MW of thermal generation.
At the same time, the company was working in the area of environment, starting with waste management. We call ourselves a “modern energy and environmental company” – it’s a mix.
In 2015-2016, we entered the renewables sector. At first we were quite dependent on our partners, but today we originate the projects, do the development and then partner equally with other companies to deploy them.

How do you see your role long-term in Angola’s energy journey?
The long-term vision is for Angola to become an exporter of electricity, which we aim to contribute to as a private player. To get there, we need to combine hydro with solar PV. We are working towards achieving net electricity exports in the next five years.
We want to be recognised as a reference Angolan market player that has the ability to identify projects, build strong teams and work with other strong partners and deploy clean energy at the best price possible.
In off-grid areas, our work on solar home systems could have a great impact. But we are in the very beginning of the process and we face some challenges. We presented a model to the government that features a subsidy for customers to make this energy affordable for rural communities. We need an “intelligent subsidy” that strikes a balance between our commitment to generate returns and the need to maintain a low price for customers. We are working with the government on implementing this model.

Tell us about your partnership with Total Eren on the solar farm in Lubango in Huila province.
This project will install 35 MWp in the first phase. It will be one of the first projects to inject solar PV electricity and reduce diesel consumption. The aim is to generate clean electricity in the south region and achieve immediate economic and financial impact for the State of Angola, and in the broader perspective, support that goal of exporting.

What are the challenges in injecting solar PV electricity into the grid?
We need to start with what we call the “grid impact study,” as we might generate some vulnerabilities and impacts on the grid. We can inject different amounts in different areas, and this will depend in part on the presence of power plants in the area. For example, right now, the most suitable place to inject solar PV electricity is in Lubango. Another factor is the coming interconnection of the country’s south and centre grids, which will take place over the coming two to three years. That will allow us to inject a much greater volume.

What sort of regulatory framework is needed to support this goal of Angola becoming a net electricity exporter?
That’s a very good question. The regulator [IRSEA] has been working since 2015 on creating a new regulatory environment. In the beginning, you didn’t have specific companies doing production, transmission and distribution. But now, those activities are separated; that was the first step.
Next we needed regulation allowing private companies, the so-called IPPs, to step in. But if private companies are stepping in, they need to have some sort of guarantees from the State given that RNT financials are not solid yet. Those guarantees will be needed for the initial few years.
After this initial phase, the Angolan electricity system will be more efficient, with sufficient customers for companies to see good revenues and more interconnection between parts of the grid. In turn, those revenues will lead to the funding of more projects given increased financial robustness from RNT (the company that has the scope to acquire all electricity generated by IPPs and then transport that electricity in the transmission grid).
Right now, we see very good steps in that direction, including the creation of efficiency policies. Overall, we are confident that the regulator [IRSEA] and Ministry of Energy are doing a great job at the pace that is possible.

What are your goals for the next 12 months in Angola?
For 2021, in the area of utility-scale projects, we want to have that under construction within the year. As for solar home systems, over the course of 2021 we want to get the conditions aligned for their rollout.
In the industrial arena, we want to expand our base of clients. The Covid situation caused some delays in this expansion as clients postponed or delayed their initiatives, but we want to keep the momentum in that area because we have a very good position there. We are targeting clients in the areas of logistics, agriculture, mining and oil and gas.
As for oil and gas, we are looking for opportunities to work on gas flaring in onshore activities, capturing that gas and using it to generate electricity. We can also mix such projects with PV. It’s all about timing, but we are here, ready for these opportunities. We want to be part of the solution in Angola.

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