#EnergyAfrica Blog

"light it up"

Energy Data and the Mega Fund

This week there are two podcasts that make for very interesting listening. The first is a Columbia Energy Exchange discussion of the BP Energy Review 2019. There are many challenging thoughts in this chat. The review itself can be found here.
Take this information into account with the following
podcast from PrivCap and it becomes increasingly evident that risk reduction is even more about perception than actual risk. The rise of the mega fund offset with the current issues in energy investing today do not match up. There are pools of capital able to finance the growth required in efficiency and sustainability in the energy sector. It just is not for the sake of looking at past returns and objectives rather than forward looking needs. Not trying to get on a soapbox just acknowledging the massive investment requirement that is often overlooked by media, politician, and citizen's alike. Africa is not exempt from the need nor should it be criticized by OECD countries when growing at the rate it is. Investment in energy needs to manage the trifecta of needs, returns, and responsibilities. The informational analysis expressed in these two podcasts captures the diverse mindset that the investment community still faces itself today.

Data Discourse or Energy Efficiency

What is energy? It takes so many forms. From days gone by it was characterized by one resource primarily. Coal. The thing is that coal existed beside other forms of energy production as well. The waterwheel and the windmill where standard forms of "off-grid" energy generation. These forms of energy generation served a specific purpose for industrial use and domestic use. Why is it such a mental hurdle for society at large to get over the one size fits all approach to energy? Coal is being phased out. This is not a bad thing. Ramping up the off-grid solution though is pitched as new and innovative. Localized energy generation can be productive. It needs to be for the efforts/capital taken to install it. A transition to efficiency is uniform across all energy production. Electrical generation is necessary in the modern world so much more than in the past. Gas is a resource that was wasted for 100 years. It has an efficiency that exceeds coal. Solar has the capability, the wind has the ability, water has efficiency. Together these sources of energy will continue to transform the world as we know it. The one thing that power has not added to the mix in the past is data. The data collection available now from the gather, generation, transmission, usage, and waste is so massive that it makes one think where the actual efficiency needs to be. Energy technology is only just beginning. North America is not a leader. Europe is not a leader. Asia is not a leader. Only in Africa do we see the evolution of data and technology altering each other as the value perceptions change. Energy powers, transportation, personal and public. The data here has not even begun a discussion in the public discourse. Circling back around to the need for energy, it solves a specific purpose based on localized data. Herein lie a fascinating thought discourse and investment thesis for energy in Africa.

Going Digital in Africa

The headline " Going digital could boost Sub-Saharan economic - World Bank" caught my eye today. It has been something that I have been pondering for a while now. How does the energy sector benefit from a digital immersion? The very basics start to manifest themselves in subtle ways. Mobile banking is now back on the rise with M-Kesho. This creates a trickle down effect that can include so many things. If banking is happening then transactions can happen with greater clarity. Utilities can start invoicing through this system. Savings can happen through this system. Blockchain starts being a part of the whole ecosystem from the production all the way to the consumer and the on to the taxation collected. Pipelines and powerlines can start tracking molecules. Governments start having greater clarity with their financial book keeping. Credit agencies and investors start having greater clarity on a jurisdiction. FDI' s increase based on the transparency created by this new system. The consumer ends up having a greater stability in the energy consumption and the productivity increases. This will be the next event that separates Africa from its peers. #EnergyAfrica is looking for that company who will stand up and say we have solution for energy transactions. Is it you?

Transmogrification

Energy is undergoing such a transmogrification right now. From its modern-day genesis started over 100 years ago as the hydrocarbon wonder drug to the evolution of energy as a self-replicating experiment little has stood still. Investing in energy for 20 years has been a journey that has seen commodity cycles, Moores Law advances, excess and shortage, supply and demand. A definition of energy itself has morphed over the decades. More people need energy today than have ever required it before. The ongoing African expansion underway is lost on the willfully blind. Capital and energy have a symbiotic relationship that is acknowledged in hindsight. Looking back at the railroads and the automobile I am left wondering what will be the creation that alters the landscape next. Regardless of the cause or the result, energy supports every piece of the industrial and personal value chains. Energy creation is dynamic and responsive the needs f both the people and the capital. The projects we see now were unthinkable a decade ago. It is crazy exciting being amid the change that is Africa today.

Reformat your view

A population growth like none ever seen before is under way in Africa. At the same time investment risk is still seen as higher in Africa than other markets. Why is that? In many cases risk perception vs risk reality has a spread. The population growth is creating and endless supply of opportunity for investment growth yet perceived above ground risks in Africa remain high. This infographic video illustrates the magnitude of the change (http://tinyurl.com/y4ktahwy). Organizations such as the African Development Bank are working to drive that perception down closer to the reality. I have a belief that one event in particular has shaped an entire generations perception of Africa. This event happened on July 13, 1985. (http://tinyurl.com/y5l84prn) Live Aid. Beyond all the good it did it burned into the minds of Europe and North American youth an image of Africa. Beyond the short term good that it did now editors at national papers are these people and it affects the reporting accordingly. The cyclone Idai in Mozambique and Zimbabwe created a tragedy that creates click bait to sell news. What about the headway that countries such as Rwanda, Ethiopia, and Uganda are making in their industrialization. Did Africa's first electric train make headlines? No. Is the finch revolution happening on the continent being extolled as a future for those in North America. No we are subjected to the Apple Card as revolutionary while M-Pesa at 10 years old is still upheld as revolutionary cellphone technology.
Risk in Africa is how your are guided to see it. Energy in all its forms is in massive demand across Africa. Fin-tech partnered with utilities would have an impact that would far overshadow "Blockchain" revolutions. With 2 utilities in the black across the continent changes and evolution are required. The DFI's are supporting these innovations. PE/VC has the opportunity to capture these tidbits of genius and reduce the above actual ground risk. Therein lies the opportunity for
#EnergyAfrica investments. From the exploration, production, storage, and consumption of energy the market in Africa is not as it is in North America. Exponentially riskier it is not. Different yes. Above ground attention needs to be paid. African use of energy is evolving. The industrialization and growth of a new middle class is not to be overlooked. #EnergyAfrica will not.