Good morning. Welcome on this gray Monday morning at 9 o'clock.  My name is Robin West. I'm here with the Energy and National Security Program at CSIS, and it is my pleasure to introduce our speaker and moderate the panel. Our lead speaker this morning is Chris Smith, who is the Assistant Secretary of Energy for Fossil Energy with responsibilities for the Office of Operations, and he manages the oversight of Fossil Energy Research and Development and the U.S. Petroleum Reserves. He has been in the Energy Department now for six years, and he was in the industry. He was in finance, and I always thought he had suspiciously good posture, and I realized the reason for that is he went to West Point. Anyway, Chris is going to talk for about 10 or 15 minutes. He is going to answer a few questions, and then he has to leave. So get your questions in promptly, and then turn it over to our panelists, Jennifer and David Goldwyn, who will then talk about the substance of the report. Mr. Secretary. Well, thank you, Robin, for that really kind introduction. I'm going to have to pay particular attention to my posture as to not to disappoint. So thank you, and thank you to CSIS for inviting me here. It's a privilege to talk to this group of senior decision makers and subject matter experts about a topic that we think is really important, which is the engagement between the United States government and the governments throughout the continent of Africa. I also want to thank CSIS for the report, which was recently done, which David will hold up, which I don't have a copy of, nicely done. It's hard to overstate the degree to which we benefit from work like this that helps us think through some of the bigger fundamental issues about where we should be focusing, how we take our capabilities as government and end up making the right type of decisions and investments and commitments so that we can move the ball forward. So we really appreciate this type of clear thinking that helps us think about what we should be doing or what we should be working on. The continent of Africa, as all of you know, is a focus for us. It's a focus for this administration. It's a focus particularly for this president. You'll be all familiar with the Africa's leadership summit that the president sponsored here in Washington, D.C. last year and all the events throughout the United States that went on on the shoulders of that event, a really important engagement for us. We're aware that the president will be visiting the continent here very shortly. So a lot of our efforts as we circumnavigate the globe and work and all the things we're working on are being focused on the continent of Africa. Last year we had a seminal event, a really important event, which was the U.S.-Africa Energy Ministerial that was co-hosted by my boss, the Secretary of Energy, Dr. Ernie Moniz, and the Secretary of Energy, the Minister of Energy in Ethiopia. That was a really impressive event and one that made a really big impact on me. 30 countries throughout the continent participated. We had full ministers from 30 different countries. Great pent-up demand for that type of high-level engagement between the United States government and the governments of throughout Africa. So that was something that made an impression on me and it made a big impression on our Secretary. His instruction to me and to all of the department was you have one of these events where you get dozens of senior leaders throughout the world together. You talk about what you can do together. You realize some of your commonalities. You point out some things that you can do together more effectively. And without the blocking and tackling without the constant kind of hard work that comes right after that, what will happen is that this will kind of rise up like this desert flower. You'll do this beautiful thing and then three years ago, three years from now when we get back together, we don't want to make the main talking point that thing we did three years ago. We want to make sure that in real time we're moving the ball, that we are continuing with these engagements and we're finding ways that the United States government can be effectively engaged with governments throughout the country, throughout the continent. One of the themes of all the discussions we had was this pivot from a relationship of aid to relationship of true partnership. I think that was something that came through both in the comments that we heard from senior leaders throughout the continent and that was expressed certainly by our leadership as we had a lot of really fruitful discussions. And so it's an opportunity for us to see the potential of the continent in terms of commercial opportunities, the potential of the continent in terms of leaders throughout the continent doing all the things that they need to do to bring prosperity to their countries, and opportunities to create real meaningful bilateral partnerships between the United States government and the government of the various countries. I had the opportunity to share the stage with who was at the time the energy minister from Kenya, Mr. Davis Shearshire, and at one point in his dialogue, and this was to an audience of energy experts in Houston, he made the very emphatic statement to remind folks that Africa is a continent. It's a big place. There is lots and lots of diversity, and sometimes when we think about these engagements we forget about the incredible amount of diversity that you have between the societies. As I always spent time with our secretary of energy, Dr. Moniz, I went from at one point a bilateral engagement with the minister from Nigeria to a bilateral engagement with the minister from Uganda to a third bilad with the energy minister from Algeria. Three really, really different sets of challenges, three really different sets of opportunities, and we're having to make sure that we're focusing our efforts in a way that takes the unique things that we can do, the unique things that we can bring, and tailors them to each one of the opportunities. So there's no one size fits all approach. So I'm going to be headed to Africa here at the end of this month. I'll be traveling to Kenya, Mozambique, Tanzania. Our intent is to make this a true whole of effort, a whole of government effort. As I was having a conversation a few minutes ago before I came up on the stage, we're talking about this Beyond the Grid initiative that we're managing. I'll talk a bit more about that in a second, but Beyond the Grid involves 40 U.S. government agencies, 40 agencies. And there's a reason for that, because there's a lot of equities with lots of interest. That can be a good thing, right? Because we like initiatives that certainly pull these multiple agencies together, but that can be a lot of cats to herd in terms of getting 40 agencies, 40 separate entities aligned in one direction. So we're making a real effort in these engagements to make sure that as I travel, as other senior leaders throughout the U.S. government travel, that we do have a true whole of government effort, that we do have one set of talking points, and that we are representing each other's programs effectively. So I'm working very closely with the Bureau of Energy and Natural Resources from the Department of State, which David used to run. I'm working closely with TDA. I'm working closely with USAID and the Power Africa effort. And in that I'm spending time with Amos Hoxstein, with Andy Hershowitz, with Lee Zack. We've got one message of engagement, and it's our hope that as the four of us travel around the continent, we're not going to be in the same place at the same time, but we do want to make sure that we're delivering one message. So the focus for the Department of Energy and for my office I lead in particular, so I'm the Assistant Secretary for Foster Energy at DOE, so I handle the Foster Energy portfolio. The Department of Energy, as many of you know, is primarily a technical agency. We're not the regulator. We're not the rulemaker. We do primarily focus on research and development. We've got the Network of National Laboratories. We've got over 10,000 scientists and engineers dedicated to the the broadest swath of R&D for energy topics. So that gives us a unique capability. So the focus that my office has is really on emerging producers. It's on those countries that have significant resources in place, significant potential, but have not yet gone all the way down the road to commercialization. And in these societies, there's a tremendous opportunity to take that potential and turn it into real wealth creation for that society, real energy security for those countries, and therefore energy security for the entire world because it's a positive thing to see these barrels come into market. It's also a positive thing to see the stabilizing influence that prudent development can bring when that development creates prosperity that permeates the society. And so therefore that's the reason I'm traveling to these first three countries that I'm going to be focusing on, Kenya, Mozambique, and Tanzania. As I've had the opportunity to talk to leaders from throughout the country, throughout the continent, you do see that there's tremendous pressures, first of all, to get this right. There's, as I mentioned earlier, I think a lot of pent-up demand for meaningful high-level engagement with the United States. I think there's interest in trying to take some of the best practices that have been developed around the world and bring them to Africa in a way that assists those countries into putting forward the right regulatory framework, thinking about what institutional building that they need to do domestically, thinking about negotiating with the international companies so that they bring the right type of investments, and basically putting in place a framework so that when that money starts flowing, when the oil starts rolling, when revenues and royalties start coming into place, that they've set up a structure that accomplishes what they want to accomplish. And in that, you know, one of the things that we do emphasize is we can't go anywhere and tell people how to develop their resources. That's not our intent and that's not our interest. But we certainly do have some experiences here, some of which have been positive, some of which have been challenges. And one of the goals that we have is to ensure that some of the good things we've learned that we can share and some of the bad things that we've learned, we can ensure that they don't get replicated. I mean, I was the, you know, many of these resources are going to be developed offshore. I was the federal official for the commission that President Obama created during the Deepwater Horizon disaster. And so that's an experience that I lived through with, you know, very close to that very, very difficult situation. And I can say that that was an event that happened in U.S. territorial waters and in the Gulf of Mexico with, you know, in a U.S. context. But when something like that happens, it does just impact, produced in the United States, impact everybody in the world. Similarly, an event elsewhere, it's not just going to impact the country where that event happens, it's going to impact everywhere in the world. And so in that we've learned from some of our mistakes and in that we've learned from some difficult experiences we've had here, it helps us, I think, inform that debate internationally. And so we want to try to take that opportunity. I'll also have an opportunity to speak about our Power Africa initiative, and I think we'll hear some more about Power Africa here today, but the effort to put in place 30,000 megawatts, 30 gigawatts of power throughout Africa. That's been expanded to the entire continent. There's over a $7 billion commitment and loan guarantees and a lot of work going into place to not only find projects but also work with companies to take investments to Africa and work with local governments to help put in place those type of regulatory frameworks that will attract those investments. Again, part of that pivot from aid to partnership. With regard to the Department of Energy, we've got a great benefit or great assets in our national laboratories. That's a tremendous scientific resource that I think is of interest to countries throughout the continent. So we're going to continue to make the national laboratories available and look for opportunities to create partnerships. One thing that we see consistently as we talk to senior leaders throughout the continent is an interest in creating educational partnerships where we could send students back and forth between our countries. That's going to continue to area focus and there is I think an approach that we can create that will be relevant to many countries in the region. A last initiative I'll mention is the Beyond the Grid initiative. That's the one that I referred to earlier that's got so many government agencies. But our focus there on Beyond the Grid is developing technical expertise and so NREL, our National Renewable Laboratory in Golden Colorado, will be supporting that effort, looking at technical support for microgrids. As I'm sure we'll have an opportunity to talk about today, the as countries throughout the continent face a challenge of bringing electricity, reliable power to people throughout the continent who don't have access to power. Increasingly, those systems are going to be distributed power generation systems. They're going to be different from the systems that we've created here in the United States. And that requires not only some technical expertise, which I think we can partner on, but also the regulatory framework that will allow those investments to get input in place to be able to run efficiently. So that's going to be one of our efforts that we'll be supporting with the goal of connecting 25 million households throughout the continent to reliable power. So big topic and you'll hear I think a lot more detail from our subject matter experts. We crib I think a lot of our direction and our strategy from our reports like the report that was created here by CSIS about Africa's new energy producers. And so with that again, I'd like to thank CSIS not only for giving me the opportunity to be here, but also for this I think informative report that's really helping us to think about how to engage in some real challenging opportunities, but ones which are truly important to us. They're important for this president. They're important for this administration and particularly important for our secretary. So with that, thanks for having me here and I'd be glad to take a couple of questions if there are any. Are there any questions for Chris? Sir. Could you talk a little bit more about what the administration is doing in more of the frontier markets like Somalia and Putland, Smileyland, if anything? Yeah. So I'm not going to have too many details on that. I know that they as we've expanded Power Africa and beyond the grid to beyond the six initial focused countries to have a broader look, we're able to bring a lot of a lot more countries into the fold. When Power Africa was kicked off, you know, one of the obviously the countries that are initially included were happy, but the factories that were not initially included the first lead off on all those conversations will, you know, why not? Why not our country? And so this will give us an opportunity to focus normally those initial focus countries, but also some other countries throughout the region. So I had an opportunity to spend some time with Andy Herzewicz a couple days ago. And they've got a big goal, 30 gigawatts throughout the continent. It's enormous. And in order to get that to work, you need big, big projects in the place where you got lots and lots of people and potentially the ability to bring lots of money and lots of people to pay for projects. So it's difficult to get to that big goal by cobbling together lots and lots of small, say solar distributed power generation projects. But that said, there's a realization that's still really important. It's still critical to make sure you're not only reaching to the large countries, but also to to some of the smaller frontier areas where getting getting, you know, power out to those places is more challenging. And that's our hope that we can create, you know, some business models that we can replicate that might be able to get scaled up and you can get some big numbers out of them as well. So that remains to be seen. But it's, it's a goal that we have. It's something where we're endeavoring to accomplish.  George Warp from the Institute for Defense Analysis. When you travel to Kenya, Mozambique and Tanzania, what is your estimate of what you're going to hear from interlocutors there about their prospects for developing their new resources in an era of reduced prices and also building the infrastructure that they need? Yeah, so that's that's another big challenge. I mean, as we know, oil prices are where they are. And it's a, you know, naturally volatile commodity. So I when I get to talk to talk about oil prices, it's usually in in context of our R&D portfolio. And I try to make the point that, you know, we can't chase the commodity curve. You know, when I joined Texco back in 1998, oil is at, you know, $13 WTI in 2008 right before I came here is at 140. And then it whips it whips back and forth. So it's a more challenging environment now. It's more difficult, certainly, to get some of these products put in place at $50. And it was at $100. But it's our, you know, it's our belief that that companies do take this volatility into into account when they're doing the long term forecasting, the short end of the curve whips around. But, you know, over the long term, you know, we think that the challenges, you know, don't move the same way that the short end of the of the futures curve moves around. But it does make things harder, right? It brings a little bit more leverage to those companies that are bringing those investment dollars. And it makes it a little harder for countries that are trying to to attract attract those attract those investment dollars. I mean, the investors can be pounding the table about, well, you know, I need to make sure I'm bringing the return to my shareholder. So that's gonna be one of the one of our topics of discussion. In fact, I'm David and I are both headed down to Houston. I'm gonna be appearing on a panel where we're gonna be talking about that that specific topic about Africa and development in a in a low price, low price environment. So it's a challenge. And I expect to hear them tell me, well, gosh, it's really hard. And I think that's what they're gonna tell me. And I guess what you know, are sponsored to be that these are these are volatile commodities. But these are these are decadal investments. Right? These are investments are gonna be in place for 30 40 years in some cases. So you know, the countries, the companies are going to be bringing that type of investment to these these economies are gonna be thinking for the long term.  Mark Harrison with United Methodist Church office. How is it is an overall plan that you have as you do this work with Africa that addresses that the US role is to promote non fossil fuels or where are we on that one and climate change because you didn't mention that I didn't hear you were clear on that. You know, I know you work in the fossil fuel industry. And then as you travel to Africa and meet with governments, what is your strategy and outreach to meet with African civil society? Okay, well, thanks for the question. And actually, that's a real real big one. So most of our most of our programs. So again, we're primarily technical agency. And most of what we focus on is reducing the carbon intensity of our energy systems are reducing greenhouse gas emissions, try to get CO2 down to sustainable levels. Now, there are some challenges when you're and we have some other that's not our only goal are also all the goals are any security and economic prosperity, jobs, etc. So we do have to do both. And there are some challenges when you're trying to bring more energy to a greater population of people around the world at the same time be becoming sort of of issues dealing with greenhouse gas emissions. So some of the distributed power generation approaches will be lower emissions. And we think that's really important. We think that it's also important to get additional barrels on to the onto the market, be it oil and natural gas and natural gas is explicitly part of the solution, I think, for a clean energy economy, the future. So we have to figure out how to how to do both. In terms of engaging with civil society, you know, we're going to take our cues primarily from initially from the governments that we're that we're engaging with. But as we build relationships and and this is not a short term thing, getting deeper contacts I think with with different diverse areas of civil society will be will be increasingly important.  But thank you Chris. Thank you for getting this program started today. Thank you. I want to thank the sponsors for the conference which is Chevron, which supported the report Africa's new energy producers making the most of emergent opportunities, as well as the government of Denmark, which is supporting CSIS's work on power generation renewables in Africa. So let me now turn to our two panelists here. Jennifer Cook and David Goldwyn. They're both very well qualified on Africa and energy matters. And I'm sure you're I won't go into their bios but just say they are extremely well qualified. A lot of work has gone into this I think very thoughtful report. And so let me turn it over to you guys. Thanks Robin. And thank you all for joining us on this Monday morning. On the report I want to say big thanks to David Goldwyn, who's a senior associate of the Africa program who joined with us on this report. Sarah Ladislav, who's the director of the CSIS energy and national security program, who is in Sarah as we speak, could not join us as a co-chair of the project. And a working group of members of a that included corporations, that included members of civil society and non-governmental organizations, energy analysts and experts, development experts and Africa policy experts. And so it was a really great diverse group of people I think that brought a whole diversity of perspectives, which I think I reflected in the in the final report. We began the report in the working group sessions in late 2013 through to 2014. This was released in January. So prices were kind of plummeting as the thing went into the press. But I think most of the findings still hold, although there are some adjustments perhaps in the timelines and and so forth that we can talk about. So first of all the impetus of this report was really the great buzz about Africa's energy sector. The high expectations and the excitement around the new oil discoveries along the East African Rift, which stretch from Somaliland and Putland, that border that Elliot mentioned down through Kenya, Uganda, Eastern DRC, all the way to Madagascar. Deepwater discoveries off the coast of West Africa, of Mauritania, exploration going off of Senegal, Liberia, Sierra Leone. And then of course the world class natural gas discoveries off the coast of Mozambique and Tanzania. So Africa really seemed ready poised for a hydrocarbon boom and hopes and expectations of what that might mean for economies was permeating discussions from the very local level and you had Turkana communities in Kenya striking and shutting down Tullo's operations because of jobs and production was nowhere even near to beginning yet. You had debates in Tanzania over the placement of a refinery and a pipeline with local communities where the where the gas was closest to demanding that. So local debates, national parliamentary debates, you had practically the Ugandan parliament coming to blows practically over some of the legislation, electoral politics in places like Ghana and Mozambique, among development experts and especially among investors. And one of the things that the report points out is this kind of proliferation of new investors, a much broader array. You have the international oil corporations, the kind of long-standing traditional big players in Africa, but a growing mix of much smaller expeditionary companies that have been at the forefront of some of the fines. You have the Chinese, although they don't play quite as dramatic a role as is sometimes portrayed in news media, gobbling up all the opportunities. In fact, they've come in as a as a partner on many of these internationally structured deals. You have national oil companies in Angola and Nigeria and elsewhere likely to crop up and become more powerful and more assertive. And then you have a crop of indigenous African companies, particularly right now in Nigeria. If you've seen with external actors reluctant to go in, you've seen this crop of Nigerian companies, some of which are doing quite well, some of which are not, but that's life in the oil sector, I suppose. So with this task force and with this report, we wanted to ask a number of questions. First, we wanted to do something of a reality check. So with all this buzz and excitement, these big new resources, how real really is this opportunity? What is the resource base? What is the potential? And how does Africa line up with other global opportunities in oil and gas, elsewhere in the world? These resources are coming on stream at a time of big flux in both gas and oil markets and particularly for the US, for example. Second was, what is it going to take to move from these early finds in some places to production, getting the kinds of investment you need to get to production, to revenue generation, to successful and effective natural resource management that can drive the long-term inclusive development and growth that we all, I think, want to see within Africa? Third, what is it going to take to avoid the mistakes and the traps into which pretty much every single African energy producer has fallen, at some point or the other? The creation of an enclave economy with elite capture of rents, cronyism and corrupt deals within the sector, and disinvestment into other sectors of the economy. Nigeria wants the bread basket of West Africa when oil came, kind of like kids at a soccer match, they say, following the following the oil became the only game in town, meanwhile agriculture in the North collapsed, manufacturing and so forth. And that is something I think that Agana does not want to see, or a Tanzania or Uganda. And then finally, what does this mean for U.S. interests and for U.S. policy responses more broadly? What model, what models and what kinds of partnerships are out there, and David's going to talk a little bit about this, that hold promise in terms of creating shared value? How is it that the U.S. and others can help these countries? And that means help the governments, help investors, importantly I think helping civil society to understand the sector and help citizens to really maximize the benefits of this resource and avoid the resource curse. So what are some of the key just basic outlines? First of all, the traditional producers are not out of the game by any means. They still remain, particularly in oil, the big game in town with significant growth potential still, although we know and there are reasons in Nigeria that growth has slowed, but because of the petroleum industry bill and the failure to pass that, but there's still a great deal of growth there. And in terms of scale, really you're talking in 2014 Nigeria produced 2.4 million barrels per day Angola 1.7. Ghana is hoping to double its production by 2017 to 250,000 barrels per day. Anyone in the audience can correct me if I'm wrong on that, but we are talking kind of a very different kind of scale from the traditional oil producers to the new ones. Nonetheless, those resources for Ghana, for Uganda, for Kenya, for Somaliland, Somalia, God help us, could be very significant in economic transformation. In gas, Mozambique and Tanzania are the big story. The magnitude of the fines, the proximity to Asian markets, these fines are relatively close to shore compared to, for example, in Australia. So technically, not so difficult to recover if you can get the infrastructure in place. And then Africa is one of the last places where big international oil companies can really gain significant access. And they're coming, these resources are coming on stream at a time when energy demand, at least over the long term, is going to continue to grow in oil and gas driven in large part by the Asian market, even if short term uncertainty and demand and price stretch things out a little longer. In terms of the opportunity for producing companies, countries, if producing states can get it right, there are obvious benefits in eventual production shares, in the royalties and taxation, and the revenues that this can generate for those governments should they put it to good use. But there's also the possibility that the new investments draw major new investment in infrastructure, in roads, in pipelines, in deep water ports, in rails, that are going to have impacts for Africa well beyond the energy sector and can drive regional integration, can drive more global trade, to have deep water ports off the coast of East Africa can handle the kind of capacity that is not, that these ports are not able to meet yet is huge. Standard Bank anticipates that these new energy fines will drive $1.5 trillion in investment in coming years to Africa. In Kenya, for example, the discovery of oil in Uganda, in Ethiopia, and in Kenya has really spurred further development of the Port Lamu development and the broad corridor that they would like to build that includes port power rail across northern Kenya that will connect Uganda, will connect South Sudan, will connect Ethiopia, and even if they just get part of that project right, it doesn't, the full, the full fruition may be many years off, but even if they get part of that right, that means huge things in terms of potential economic development for northern Kenya and certainly for regional integration beyond kind of the traditional EAC architecture. Further Africa, we've heard from Chris Smith has a major power deficit. It generates, you can fit in terms of landmass, you can fit the United States, China, India, and Europe into Africa. And Africa as a continent produces about the same megawatts as Spain in terms of electricity. So there's a huge unmet need in electricity. That's a big part of US policy push in one of President Obama's kind of signature efforts is to try to address that, try to address that gap. So there are big hopes around these new resources in terms of gas to power projects, although that's very complicated and not quite so straightforward as it seems. And I think that's something we address to some extent in the report, but I think Lawrence a lot further exploration as well. And gas to industry projects. Nigeria has seen after kind of a slow start, it's seen real very positive trends in driving a petrochemical and fertilizer industry and kind of a small plastics manufacturing around the oil in the Niger Delta. So there are big opportunities that is there. But there are major caveats at each step of this. And I think one of the struggles of the task force was striking the right balance between kind of exuberant hope and despair. We did not want to say that this was doomed enterprise. But on the other hand, there are major challenges that need to be overcome. First, there are these big uncertainties in the energy markets. The oil price drop, as I said, is going to draw out timelines a very long time. Over the long run, that may not matter so much, but in the short run with expectations so very high that could be very problematic. And in natural gas, markets and prices are extremely uncertain. In natural gas, because of the high capital expenditures were right up front and the very long tail of returns, investors need real certainty around who's going to purchase this and at what price over the long run before they take these major decisions. So in gas in particular, I think the timelines become even more uncertain. And these are in places where there's great uncertainty over the sector as a whole. They're creating a sector on the fly. Regulatory frameworks do not exist. Political stability in a place like Mozambique is very much in question. It's emerged from civil war. There still had a contentious election cycle. There are other opportunities in the world, in the United States, in Australia, where you don't, you know, okay, even there it's uncertain, but you don't have to worry as much about the rule of law, political stability, and so forth. So over the long term, these resources will be developed. The demand is such that they will be development, but the timelines, the terms, and the returns on them will be very uncertain. And one of the points of this report is that African producers are going to have to work extra hard and extra fast to be attractive to the average investor. David's going to talk a little bit about some of those challenges kind of in greater depth and how best the U.S. working with producer governments and investors and citizens can create the shared value, but just one final word on U.S. interests. U.S. imports of African oil have dropped dramatically in recent years. We were one of the largest consumers of African oil, we, the United States, 25% or more of the continent's production was purchased by the United States in 2010. Since 2010, U.S. imports from Africa have been cut by 90% from 2 million barrels per day in 2010 to 170,000 today. So this is a dramatic drop, and I think many think, well, why do we care what happens in the African oil sector anymore? We're really not that dependent on it. Obviously, I think there's still a very strong interest in ensuring that these resources are developed in a responsible, sustainable way. We have a global oil market today. The U.S. is very much interested in a diverse supply and steady prices and uncertainty. So there's the basic energy security interest. U.S. companies still remain very much in the mix, even if U.S. doesn't purchase as much of the oil. The big international oil companies, but also, as I said, the smaller companies, many of which are U.S.-based, who are at the forefront of exploration. U.S. has a commercial interest in ensuring that there's a level playing field, that U.S. companies are well positioned to compete, that contract and procurement are fair and transparent, and that investment opportunities in some of these countries do not become overly politicized and become kind of political footballs on geopolitical interests and so forth. In development terms, as U.S. assistant flows are kind of under pressure and constrained, these new resources and the revenues they generate offer a huge new opportunity to kind of spur economic growth and if well managed drive the kind of longer term private sector led development, employment and beneficiation. I think that much of our development assistance focuses on. So there's a strong development interest as well. We want to ensure that these resources is used in a way that amplify private sector and create diversification and employment. Third, we want to make sure in diplomatic terms, the U.S. will want to be wary of the potentially destabilizing consequences of the this high value commodity and this kind of influx of new resources. As I said, in some places, you've already seen heightened political competition in elections, in parliament and so forth. You talk about the possibility of oil in Somalia that doesn't yet have a constitution and that just, you can just imagine that whole exercise which was difficult to begin with overlaid with possible oil resource and it becomes a big complex mess. Political stability at the national level, political stability and security at communal level. I talked about some of the protests that have been gearing up around this and in interstate content over conflict, over land, over maritime borders, over lake borders. In Somalia, unfortunately, the fines straddle the Puntland-Somali land border where you already have huge political tensions and you put a resource dispute on top of that and it deepens that even further. And then finally, and then in security as well, if you have these massive new infrastructures, a big corridor traversing Northern Kenya, do you have a high value target for potential militia or terror strikes? And that's same in the maritime domain. I think that's something that countries will need to be extremely wary of. And then finally, at the international level, the United States has an interest in championing successful, responsible investment. It doesn't want to be seen dragging its feet on standards of transparency, on responsible government, on environmental stewardship and the consequences that these energy resources could have there or on resource management. So at multiple levels in development, commercial, security, diplomacy, and at the global level, the U.S. has a great deal of interest in how these resources are developed. So I'll turn to David. Great, thanks Jennifer. And it's always a pleasure to partner with you and with CSIS. I think this is my third opportunity to do a task force and CSIS is really quite fortunate to have Robin West as a counselor who's had so much experience designing these kinds of systems and his service to the U.S. government and advising companies and governments in his prior life. I think Jennifer, you stated it well.  Long-term demand for oil and gas remains large, despite a great growth in renewables. Natural gas particularly would be important for conversion, for climate change, for conversion from coal and from diesel to something for baseload energy a little farther down the carbon chain, potentially over a trillion dollars of investment in sub-Saharan Africa. And we've learned a lot, I think over the last 15 years about how to do development better. We've learned about the importance of transparency, about disclosure, about having more sustainable bargains. And so the real fundamental question that we had for the new producers in this report is will this time be different? And the answer we came to is that it probably could be different that you might end up with having real progress on development and less corruption and more sustainable systems. But in order for that to happen, companies, donor governments and external governments are going to have to engage much earlier in the process, really before anything is drilled, and much more robustly than they have ever done before. And that's because all of the hard work of setting up the framework comes at the very beginning. When you let the contract, when you put the acreage out and when you invite your, your investors in. And so we looked at really three key challenges and whether this time could be different. The first one is this, this low price cycle. And that's, you know, a problem for, particularly for the big projects in Mozambique and Tanzania, because you have a lot of projects chasing a smaller amount of dollars. And so companies may be different in size, but they are the same in motivation. They're looking at return on investment. What do they put in? What percentage do they get out? How quickly do they de-risk the project? And is it, is it, is it secure to get their money out? And so in that sense, countries and their frameworks have to compete with each other for those dollars. And I think right now, the changes that we've seen in Mozambique and in Tanzania, looking for greater shares to go to the domestic market, having changes in taxation are making these frameworks less competitive, not more. And to give Tanzania as an example, you're talking about a $20 billion project to have this LNG capacity there. I think the GDP of Tanzania is $20 billion. So, as you may know, when companies invest, the early, they spend it, the curve kind of looks like this. Exploration, you drill a couple of wells that cost in the tens or hundreds of millions of dollars. But when you get to the point of development, we're going to drill your 20 wells and build your land base, then you're in the billions. And you have to make that final investment decision, which is, we know what the resource looks like, do we go forward? That's where they are now. And that's where the competition is. So it is frankly an open question whether or not African governments will win this competition or whether Mozambique and Tanzania in particular will be delayed. And you see Mexico adjusting its framework in mid reform and other countries trying to compete for these dollars. So I think it's a serious challenge not because prices are low and companies can't make money, but because the framework has to be more competitive to reach a final investment decision now. The second challenge that Jennifer alluded to is this new character of investor. The good news is that the mid-sized companies, the Tullos and Anadarkos, discovered resources that the big companies didn't find. Big companies are great at running projects. They seem to be not so great at finding oil and gas. And so were it not for these mid-sized companies, no one would know that the resources existed in Sierra Leone, Liberia, offshore Mozambique. But these companies are typically not the long-term operators of these projects. And so Anadarko is a fantastic company. I don't think it's ever run a large-scale LNG project. You see them selling a little to India, to ONGC, maybe to others. And that's the typical cycle of these is Robin can speak to better than I. They find it and then they flip it. But in order to have the kind of project management you need, that's going to change. And now the question is who's going to buy and at what price and will they sell at the bottom of the market? So that's another factor and for a reason I'm going to get to third which is the need for shared value. And I think this is really the big lesson that we've learned over the last 15 years that increasingly for a project to be sustainable and to survive multiple political administrations each of which want to extract some value from that project and show that they're able to deliver the goods, you have to have a kind of a framework that can last for 30 years or 40 years. And so on the front end, it means the investor has to show people who are not right in the neighborhood of the project that the country is getting some value out of this. And some of it as Jennifer's alluded to means that the country has to share those revenues and promise it will go to the whole country not just to the neighborhood. But some of that has to do with the company which is how far out do they build the road? If they're setting up telecom for themselves do they do it for the whole neighborhood? Where does the airport go? If you're bringing in gas how much of that gas is going to go to fund local electricity? And in order for the project to be welcome more of that value has to be delivered early when the company is in the spend mode rather than when it's in the profit mode and that is generally for the first eight or 10 years of the project. Well when prices were north of $100 there was a lot of chatter in the industry about shared value and delivering value and investing this. At $50 you're not hearing as much chatter about shared value and the mid-sized companies that I was talking about are not the ones that have the resources or the margin to deliver shared value. So what happens next I think makes a big difference. The other thing is that countries need to strike sustainable bargains. They need to have a royalty that varies when the price of oil varies so that the people don't feel like they're getting robbed when prices are going high and so the company doesn't walk away when prices are low. You have to have a kind of scheme that means when you have to spend more money on the tail end of a project in order to extract resources that it's not unprofitable so the company walks away. And it's complicated stuff. It's hard to get right. There are real questions of fairness and so the need for countries who are new to oil and gas development to have the lawyers, the engineers, the scientists, the economists who will give them the confidence that they are getting a fair deal for the country needs to come before anybody in the country is going to spend more on hiring more people for their version of the Department of Interior. We have a hard enough hiring people for our Department of Interior and we're a pretty wealthy country. And so this is the asymmetry is the value, the investment in needs to come early in the process but all the money comes later. So that leads us to our three pillars of sort of policy change that has to happen in order for this time to be different and the first most obviously is building government capacity early. And I think there has been great work here compared to 10 years ago. The African Development Bank, the IMF, the World Bank all have technical assistance programs. There are probably more consultants per capita in Mozambique than there are maybe even in Washington. So you have a lot of people in there giving advice. So donor coordination could be a little bit better than it is. The people have had the idea that you need to invest early. I started a little program when I was at the Department of State, the Energy Governance and Capacity Initiative which was just having feds. The US Geological Survey introduction to seismic processing. So the country knows what it's got but we could do eight countries. There are a lot more countries that need a lot more help. So building that capacity is early and because there are so many different donors doing this, donor coordination would make a big deal so that you could get different kinds of advice and go deeper. The second thing that we've learned is to really prioritize transparency and accountability. Now we have a lot more of these petroleum funds. We have a lot more standardization of contracts so that the contracts can be made more public so that the terms can be made more public. Mexico, you're talking about Africa but the system they have set up is probably best in class in terms of transparency from how the revenue gets published to how the framework works but also procurement matters because a lot of corruption happens in procurement and it happens in local content. And so every country wants to build up local content but if you set local content too high and all you need is a host government hat for that company to be considered local, you're basically manufacturing a rent seeking operation by giving people a license to own that local content. I need to look at some of the corruption in Brazil right now in the Petrobras scandal and some of that might be traceable to the fact that Petrobras had to be the operator for every new project and they had high local content and so everybody knows where they've got to go to shop. So it's hard to get the percentage right. And again I'd point to Mexico as having a sort of a variable system that's tried to strike this right but also we've learned a lot about disclosure EITI, funds that publish things who knows what will happen with Dodd-Frank but we are on the trend already in Europe towards high levels of disclosure in Europe at the project level and I think we'll figure out a definition in the next year or so and have that in the United States but the idea so that people will know what is in the system. Now those as my friend Charles McPherson from the World Bank used to say those are outputs not outcomes. And so this is all important information but it doesn't actually produce better governance but I think it's essential in order to create it. And on this category of promoting shared value here's where it really falls on governments to share the wealth early and make sure that the whole country is going to benefit from this but you also have to build community support and so there's a lot of discussion in the NGO community about local consent. People have to know what's coming what's in it for them and since it's a capital intensive industry companies have to figure out what's going to be in it for them. It is a great opportunity that you can create a platform for small and medium sized enterprises for plumbing for electricity for food for transport and if you could plan at a large scale like Jennifer's talked about and Port Lama and other places you can figure out you get the gas you get the electricity you get transportation you can grow the whole economy. And so the challenge there is that that is a that requires a top-down planning process from the countries it cause it requires intergovernmental cooperation and all this is happening before anybody's making any money. This is all while it's sort of prospectively eight or 10 years out. So it's a big lift and so I'd close with gratuitous advice to my colleagues in the US government I've already given it to Chris but it's fun to be on the outside and give people impossible jobs to do but I think the first is to take a next step and really step up our bilateral assistance in this capacity building. We do a little bit in different places but it's under resourced and we can do it by sending feds overseas but but I think we really need to deliver there. The second is to support the efforts of the multilateral development banks and we have not done as well as we could and supporting reform in these institutions but the idea that they channel their assistance including into the hydrocarbon sector because we can promote climate change but we have to promote development at the same time and Africa is going to develop these resources so we need to be unembarrassed about investing in the technical capacity for these governments to do that well. I think we need to support some of this cross investment which really takes some support in helping governments facilitate this regional sub-planning and we can planning and we can also step up our diplomacy as Chris is doing by going overseas and the president's trip to Africa as the State Department is doing very often we lose a lot of our diplomatic capital to crises in the Middle East and regular meetings with Europe and so you know we are in the tail end of the administration ramping up the engagement with Africa on a number of levels but it doesn't take that many people it doesn't take that much time but the time to do it is now because the frameworks the infrastructure the planning for these countries is going to happen for good or for ill in the next five years and we'll be living with it for the next 30 and so that leads me back to where we started with the question here making the most of emerging opportunities this time can be different it's going to be really hard but I think if we we push at the donor level and the U.S. government level and at the country level I think we can do it thank you as you may have gathered this is a really a very serious effort I think this whole fundamental question of governance they're huge resources there questions getting governments right and I think the point that was made and I think it's a very good point is that governments have to realize they're competing there's a world market for investment and if you create terms that are not sustainable the companies will leave they'll go elsewhere and particularly in a low price environment so I think a practical approach and I think this is unlike a lot of Washington projects this is really a very practical project I congratulate you too now we just have a few minutes and so what I'm going to do is let's take a few questions and then we'll just take the questions and refer it to you all and then we have to stop so sir good morning my name is Lawrence Jones I'm with Austin Grid I'm also the chairman of something called the Center for Sustainable Development in Africa Jennifer thanks for an excellent report I have a question there's not enough time to sort of ask specific questions but I just want to ask a contrarian question and ask us to just pause for a second I think you mentioned caveats and I think David you talk about a lot of you know if then and these things that have to happen can we imagine a scenario where none of this resource in Africa was made known and was tapped and Africa and African governments had to develop without knowledge of these resources how would the trajectory of the development go and the reason I bring this up because right now in Liberia and many other African smaller countries these governments are throwing their entire hope and future on something that hasn't even been dug out on the ground and to some extent while this is good it is sort of a deferring their focus and development fundamental strategies on how they're going to move forward so I'm just asking the question I mean are we I mean not the hype but the issue of the buzz and the expectation that is being set if this fails then what and so assuming these things were not known because most of these African countries even the big ones don't even have their own geological studies institute they're being told that the resources exist they don't know for a fact they're guessing so if it's not there what have we done thanks Hi I'm Sasanka from Oxfam thank you for that that was really interesting I want to unpack quickly if you could elaborate on two things Jennifer you mentioned a distinction between gas to power and gas to industry and I'm really glad to hear that because there is a distinction between the two and you said that the the former was a little bit not as straightforward be curious to get some elaboration and if it's time David I'm curious on your reforms of the MDBs that you suggested right at the end there that would be beneficial towards this thank you Good morning my name is Ion Gitsurotar I'm the U.S. African Development Foundation so I'm part of the Power Africa Hold of Government Initiative and I wanted to just have a brief comment on I know this is focuses on fossil fuel generation on clean energy and a mix with the large potential for solar in Africa and and the hydro and the geothermal even and biomass and biogas and just get your comments on that thank you My name is Chris Shavin I'm with the Department of Energy and just curious to know your thoughts on on tight resources how you're thinking about this in the context of of more standard oil and gas plays in the sub in sub-Saharan Africa and what resources are sort of there right now and what needs to be there for local companies and international companies to take advantage of those Sure, well on the first one Lawrence kind of you hit the nail on the head there and I think part of the impetus of this report was to say it's not that straightforward and I think you know particularly in a place like Liberia and Sierra Leone which you know emerging from conflict they're still at a fairly low base you look at Kenya which has been fairly strategic about developing renewables about developing its power sector and getting kind of the structure of the power sector right and you know without a lot of resources and promise you know that the the oil finds are fairly recent and they're still very very early on or you look at you know you can look at some of the non-resource wealthy countries in Ethiopia even who's looking to other you know hydro is the is the big even as you know there may be maybe some oil finds but yes for a country like Liberia and Sierra Leone and it's very iffy if the resources are there or or commercial in any way and I think that's a major task for the Liberian government is to you want to be hopeful to your you know and to your citizenry but you don't want to raise expectations around something that's not there and the the problem is you know you see some of the headlines even when Uganda found oil you know next Kuwait to you know this this hyper hyperbole is is very dangerous in the long run I think so this is so exactly right on the on the power to and the gas to power again it sounds kind of like natural gas big power deficit perfect match but the fact is that you know governments have to make the hard decision of whether you export the natural gas or whether you export the gas which is probably gets you a slightly better rate of return is much more attractive to investors who who see a much steadier market there or if you use it for domestic use particularly in a place where in Mozambique like Mozambique or Tanzania where yes there's a huge deficit but the the technical term the the present demand is just not there and you don't have the market that's going to buy up that that power generated unless it's heavily subsidized by the government and so an investor looking at producing power for a market that's heavily subsidized by the government that's also kind of reliant on them for returns I think makes it a very difficult proposition Tanzania and Mozambique both currently use some of their natural gas Mozambique very little for domestic consumption but kind of as a as big investors go into to exploit the the big resources that trade off will become I think much more difficult it's something we point to in the report their efforts in Ghana even as well you know do you can you create a regional market so that you have a a a sureer purchaser at the end of the day or an anchor industry like mining that will that will buy up the power that's generated when you use it domestically so those are some of the uncertainties around that that on the on the renewables mix I'm not sure that I quite got the question right but look so many countries don't have these fossil fuels at all is one the second is that these these may help generate power well some of it may be for export some of it may be kind of on grid power generation but a hugely unmet demand is in kind of off grid in rural areas and so forth where these kinds of resources are not going to be as economic in the long term as other kind of renewable resources wind solar and so forth I'll leave the last one to you great I'll take out very briefly a shot at a couple of them I mean for one I think the Liberian Sierra Leone may very well disappoint and so you wonder if they never you know the most successful countries in Africa are ones that don't you know don't have aren't resource rich and so you have a more diversified economy this is an opportunity to have a big investment in education and infrastructure if governments do it you don't have the capital if you don't discover it so that's why they're they're developing it but nobody has really gotten it right except for Norway and they had an industrial base to begin with and so you know that's why we're so worried about the challenge I think on the MDBs I think my my point is that we have failed to make room for the new emerging economies and the governance the large institutions and they have a huge stake in the governance of these countries going forward and so I think it would be better to do that second I think we've had a period of extreme ideology with respect to MDB investment and particularly in the gas sector which in my own view is deeply misguided because these governments are going to need baseload energy as well as distributed energy and you're not going to reduce those you know we ought to be about greenhouse gas reduction not purely about promotion of renewable energy and I think if you were less discriminatory about gas than you know you might you know instead of the Medupi coal reactor in South Africa maybe they'd have gas if they had access to gas but they don't have access to gas so those are the choices so I think a little less ideology a little more practicality and I think the getting the emerging markets in would help I think on and that really leads to electricity question too is if you get prices right which is market pricing for gas and market pricing for electricity and you just subsidize the poor then the market will decide whether you know renewable energy or gas or other is going to be the source of feedstock and big companies don't invest in countries to produce for the domestic market they produce to export to the global market for a global price so it's really all about getting prices right as pretty much all development work is and just subsidizing the people who need it but not having the big industrials pay anything other than a market rate and I think that's where you're going to get your mix of renewables distributed and base load energy you can't forget about base load energy I mean South Africa needs three gigawatts you know you're going to cover Johannesburg in windmills even to produce three gigawatts I mean it's just it's not realistic so it will be all of the above if you get prices right and Chris your question I think on I mean that tight resource you mean unconventionals the prospect for unconventionals in Africa I think is on a resource basis you have South Africa the Karoo Basin and Algeria and Libya more North Africa but I think unlikely South Africa because of water scarcity also you don't have the infrastructure you don't have the you don't have the framework there and there's so many other resources so I think at some day if it's still needed they might develop it I think it's only really in North Africa and places in the Middle East Jordan Morocco where they don't really have another choice where unconventionals make sense but you know why Algeria needs to do unconventionals I really couldn't figure that out and I think in sub-Saharan Africa with the exception of South Africa I don't think that the resources there okay I think it's time to wrap it up thank you all very much as I say I think this is a really a very solid report and I think the bottom line of the whole thing is the quality of governance that's the key to all of this thank you I think we're going to move fairly quickly to our next panel which goes into greater detail on the renewables okay if people can begin to make their way back to their seats we can get on with the the brave new frontier of renewables okay we'll herd those coffee drinkers in so much for fossil fuels coming out of last week's Bloomberg New Energy Finance Summit one of the headlines was fossil fuels just lost the race against renewables the beginning of the end so we've done oil and gas in Africa now I think we'll look to the big excitement that's happening now around renewables wind solar hydropower biomass projects all of which are going to play a major role in meeting Africa's growing power needs there are big possibilities in utility scale projects you think of places at Inga Dam the Ethiopia Ghana but equally important renewal is the role that renewables will play in getting access getting power access to the vast majority of Africans who live in remote or rural areas and who do not have access to a centralized grid renewables play will likely play a huge role in this through off grid and mini grid applications that can bring huge benefits in terms of development in education in health and empowering small and medium enterprises as I said the vast majority of Africans are likely to work in the foreseeable future so there's lots of excitement in renewables there's lots of innovation there's a slew of entrepreneurs Lawrence Jones who who asked a question in the first one is kind of at the heart of some of the exciting kind of small enterprises and innovative technology use of technologies that are happening but there are as in oil and gas a number of big challenges facing renewables and I think we're going to hear again we want a little bit of a reality check today on what are the upside possibilities for renewable energy in Africa but with the with all this excitement what are some of the big challenges I think one of them is scale for example and financing how do you how do you and I think Diana will talk about kind of how do you aggregate many kind of micro projects that can have huge impact but that are that kind of strain the bandwidth of of companies and and institutions that are seeking to finance them so we have a terrific panel of expertise here today each of which each of whom looks at different aspects and different stages of kind of getting projects from idea to implementation to start off we're going to start with Ethan Zindler who's head of the Americas and head of policy at Bloomberg New Energy and Finance he's also a senior associate and of the CSIS Energy and National Security Program Ethan we're very fortunate to have him we just had an exhausting week in New York talking about this and Ethan maybe you can say a little bit how or whether Africa factored into some of those conversations there we're next turn to Zephyr Taylor who's a clean energy lead at USAID working on on helping helping renewables project kind of makes make the business case and gets gets set up to receive financing we have Diane Jensen who is managing director for renewable energy at OPIC and then finally we have Jeff Leonard who's president and CEO of the Global Environment Fund which offers grants and is a private equity firm but offers also grants and project preparation for renewable energy projects and entrepreneurs I thought we would just start Ethan perhaps you can give us the big picture and kind of what you see in terms of the big opportunities and the challenges and then turn to each of our panelists for from their perspective and where they sit what are the big obstacles and possibilities here so Ethan why don't you start us off here sure okay and will this work move the mouse to the here comes Ben sorry guys anyway I'm Ethan Zimler with Bloomberg Energy Finance as was mentioned thanks so much for hosting me here today it's great to be at CSIS and have a very minor role that I have here I had our group in the Americas I also write a lot about policy I'm not our official Africa expert so that's some of my caveat for the day we have great people in Cape Town and in London who are very focused on this area and I'll show you some of their research in just a moment for those of you who don't know us Bloomberg Energy Finance is a division of Bloomberg that is essentially an energy market research firm and we did hold that conference last week for the record though we did not write the headline that we think that renewables have won we did say that there was more renewable energy capacity installed last year than there was fossil capacity installed globally and then a headline writer who writes opinions for another part of Bloomberg said that renewables won we're a little more practical about this we do think we've entered an era of real price competition between renewables and fossil generation and in some parts of the world right now renewable energy is clearly the best option but in others that's not necessarily a case and I think it's important to be practical about this I'm going to just start talking through my first slide because I kind of generally know what it says but yeah go ahead you just use these right here no this would yeah way simpler than I thought yeah or was it well we'll get it oh okay so I'm sorry my fault it doesn't happen anyway we our firm as may have been mentioned earlier we track we track investment globally in renewables and in and in fossil and over the last six years or so we tracked about 60 billion dollars that's gone into sub-saharan Africa on what we would call non-new renewable energy capacity so this would be fossil plus large hydro and about 32 gigawatts of capacity was installed with that 60 billion dollars over that period this is common in a variety of forms it's pretty lumpy different years see a lot more money than other years depending on big projects being financed big coal project in South Africa really accounts for big chunk of that and generally speaking when you talk about Africa and you try and split the numbers about money it does become a lot about South Africa versus all the rest of sub-saharan Africa because so much of the money does end up in South Africa the next slide which is a nice picture is about shows renewable energy investment and we've tracked about about two gigawatts of capacity being added per year in the last several years and again a lot of the concentration has been in South Africa South Africa has been very active in holding power auctions for renewables these tenders that have been won but there's also the big Lake Turkana wind project in Kenya as well and a bunch of geothermal that's been developed as well as renewables become more cost competitive across the region I show one of the things that that has been intriguing to us certainly in tracking the money is the sources of the capital and China has been very it's been very involved in financing activity in sub-saharan Africa in particular China export import bank I think if I recall it's about five billion dollars that we tracked of that total 60 billion and frankly it may be more that's the five billion that's been documented there's also undisclosed deals as well so China's with by our calculation has been that you know that that institution was the largest single investor but there were others on the list as well one of the things within the context of Africa I think it's worth really thinking about is the concept of cost competitive for renewables and I only focus on this for one second only in the context of the fact that my sense is and I certainly invite the panel to disagree with me but my sense is that there's a bit of a schism within the development finance community about the role that renewables can play now at the very top of the of these organizations like at the World Bank and elsewhere you know there are pronouncements about not wanting to spend any more development finance money on building new coal but institutionally within I think some of these organizations there is not yet the belief that that renewables can be the low cost option and that if you really do that if development is your number one priority then coal is the way to go so I think there's actually a bit of a split there I think that that's a discussion that's ongoing for our part you know we did a big study this past year which I talked about here at CSIS some months ago called Climate Scope where we surveyed we surveyed 55 developing countries around the world including 18 in sub-Saharan Africa we looked at a whole lot of different things but among other things we we did gather a lot of information about electricity prices and I certainly welcome folks thank you Ben I welcome folks to to go to global-climatescope.org to take a look at some of the data that we collected but among other things that we looked at I guess I said were retail and wholesale electricity prices in these different markets and this is a very kind of crude comparison but I just kind of want to make one basic point here which is that when you look at the price of electricity that's being paid in some of these markets it far exceeds the levelized cost of electricity for wind and solar technologies okay so what's what's LCOE what's the levelized cost of electricity it is a calculation that we do and others do looking essentially what would be the price at which you'd have to sell your power to earn a reasonable rate of return in our case we calculate around 11% internal rate of return for an equity holder of that project how much would you have to sell your juice for to earn that reasonable rate of return on a global basis the average for solar as you can see is somewhere in the range of about $140 by our calculation and it's somewhere around $75-$80 for wind by comparison if you look to the left of this chart you can see that some of the wholesale prices in these countries I'm going to go back I didn't touch it okay that the wholesale prices in some of these countries including you can see a few of the prices on the countries on the list from south sub-saharan Africa are far in excess of this now I point out that this is a crude kind of comparison but my basic point is that if you can finance wind and solar at the kind of rates that you can finance it in other countries they can truly be cost-competitive they can be a lower cost option than the price at which electricity is being paid for in a number of these markets and so I guess I only I invite anybody who says well it's one or the other it's development or it's clean energy that is that's wrong that's just if you're not more carefully looking at the technology costs as of literally you know the last couple months then then you're using old data because the price at which we've seen clean energy costs come down has been so rapid and so dramatic that you need to look very very currently I'm not saying that every project everywhere solar beats you know beats coal you know wind beats coal but I am saying is it's not a simple conversation and the economics need to be looked at carefully just a quick look in terms of where we see things going you know our forecast for the next several years South Africa as I said it's really South Africa and kind of everybody else in in Sub-Saharan Africa in terms of where the renewable energy market is the forecast on the left for South Africa is really largely based around the kinds of auctions that they've held to build new projects and our forecast forward for how much capacity we think is going to be built you know it's roughly four or five gigawatts of new capacity is going to be added of renewables in South Africa we know this is pretty pretty major given that basically the entire capacity almost entirely in South Africa to date is coal as you might expect given the local resources so it's a big shift and then if you look elsewhere you can see you know we're expecting two to three gigawatts of capacity being added in other countries as well with geothermal playing an important role given some of the outstanding resources that are there on the continent so finally I'm going to say one quick word about off-grid because I do think it's really worth talking about you know I don't know what the latest estimate is I think maybe half a billion people are without basic access to energy on the African continent still and there's some incredibly interesting things going on in this off-grid space that frankly falls under a lot of people's radar it's none of it is reflected in the dollar figures that I just showed because we're counting big projects but there are as a slew of new companies and they are companies they're not they're not nonprofits they're not NGOs they're companies looking to make money that are fostering a development of off-grid access to electricity through using the latest technologies and I think what they do is extremely cool and obviously a number of venture capitalists in Silicon Valley are starting to think that as well these companies last year by our calculation raised about 80 million dollars in venture capital this year alone a handful of them have raised another 40 million dollars and what they do is they essentially many cases offer so-called pay-as-you-go solar electricity so what you're seeing here is a company called Phoenix these guys are really interesting to former Apple I think programmers who started this company about five years ago that device that you see there essentially you can go to your local phone provider I think they're operating Tanzania and essentially you take that home you give them a small amount of money take that device home and then what it can do is it can generate power that you can use to plug your phone which you see at the bottom of the picture is a is a USB cord and then at the other end is multiple plugs for charging your phone it also has a light which is that sort of bent thing there apologies I was the photographer this was at the Global Off-Grid Lighting Association meeting several weeks ago in New York but the way it works though is that you pay as you go meaning you take the system home and then you essentially buy a certain amount of of kilowatt hours by paying over your mobile phone and much the way funds are transferred and then once you've paid and you've used as much juice as you can well then you can buy some more again over your mobile phone you get sent a code back you plug the code into the device and that gives you access the size of the market for off-grid this is very hard to know at this point by one estimate it's a half a billion dollars an activity that took place last year it's been growing at like you know a hundred percent rate for the last several years and the kind of innovation that's going on there is really fascinating because it uses mobile phone technology mobile money technology and it capitalizes on the fact that photovoltaic costs have come down so dramatically that this stuff actually can make a lot of sense so if you put down twenty or thirty dollars to take one of these home and then you spend you know fifty cents per you know per day on electricity thereafter if you pencil a math out on what you were spending on kerosene that the numbers can start to work pretty quickly if you're in a remote village somewhere and of course you don't have the health risks associated with kerosene and you don't have the unpredictability about the cost of the kerosene and you don't have the inconvenience of having to go to get the kerosene to light your home so this is an area of real interest what these guys need though and what they're what the challenge that they're running into is they need working capital they need debt capital to finance the expansion of this yes they're raising equity from the venture funds but the debt money is a bit more of a challenge for them to come up with but it is in my view perhaps the most exciting development that's going on in sub-Saharan Africa given the sheer number of people without energy access so with that I'm going to stop and I'll hand it to to Diane and I'm hoping if I just keep clicking we'll get to your slide there we go okay good sorry so thanks for including me and I think what I'll do with this presentation is try to do a very quick overview first just who and what you know who Opik is what we do for those of you who are not familiar with the institution and then get into sort of what we're seeing in renewable energy and the trajectory of our lending in the sector so to start off Opik is the U.S. government's development finance institution so anybody who's familiar with the international finance corporation or Asian Development Bank and American Development Bank African Development Bank we do the same thing we provide financing for projects in emerging markets and we have a dual mission one is to facilitate U.S. capital into those markets where commercial banks would be unlikely to lend and the second prong of that is to support development in those markets and as you can see there Opik was established in 1950 so we currently have a portfolio of 18 billion dollars worth of debt investments and so just as a highlight to give you a sense of where we are with renewable energy we committed 1.2 billion dollars in loans in our last fiscal year and you know supporting everything from larger solar projects you know CSP projects in South Africa to very small scale projects and this gives you an idea of where we were in 2007 and 2008 along with everybody else no one was lending to renewable energy projects and a huge growth that has occurred in the last five years and again here you can see the vast majority of our portfolio in renewable energy is in solar and then followed by wind and then geographically it's largely dominated by Latin American Caribbean and that has a lot to do with a number of projects solar projects we supported in Chile in that year this is a program that is specifically aimed at supporting Africa Energy Solutions OPIC was provided a partnership with State Department Trade and Development Agency and USAID and we were given 20 million dollars to help support early stage investment in these in small renewable projects in Africa so the idea being that a lot of the projects that we see for financing have you know they need feasibility studies they need some early stage money to get them to the point where they might actually be a viable candidate for financing so this is purely grant funding that was deployed and there are a couple projects mentioned there that demonstrate our role in Africa to date and so as part of the Power Africa Initiative we supported big big and small projects and this is the background on the clean energy fund that where we're supporting early stage financing again I shouldn't say financing in the form of grants and what we've essentially achieved over the last year was we supported that 20 million dollars was deployed to 30 projects in 10 different countries in Africa and it's gone to mini-grids small-scale distribution to describe for instance some of the types of projects that Ethan was describing we've provided funding to those types of companies so this is sort of going from the in-the-box home solar solution that Phoenix has developed where you can plug in and have a light bulb and charge your phone to actually a mini-grid where you're hitting a number of villages and usually that's with solar and this is a bit outdated so as I said it's a total now of 30 projects with the 20 million and in 10 countries and this just gives you a sense of who we work with and I think that this is relevant you know when I first started at OPIC many years ago we did big investments we did a lot of conventional power it was you know with big companies and it's changed dramatically I mean we work with NGOs we work with impact investors investment funds you know private sector companies we interact a lot more with other government agencies and it's a much broader sort of range of types of investments we support and with a much larger groups of partners and this is just you know a quick look at sort of the history of OPIC and how much investment we've supported and a demonstration effect really that so much more of this money is going into into renewables into impact invest investment and that's it and I just wanted to make a quick point on Africa specifically and I just want to I was just looking at some notes that we had from a piece that our press office did and right now 25% of our global portfolio is in Sub-Saharan Africa and in 2013 we committed 1 billion to Sub-Saharan Africa and now our entire active portfolio in the region in Sub-Saharan is 4 billion and I wanted just to also talk quickly about these types of projects that you know Ethan referred to and the challenges for an institution like OPIC you know right now I'm currently working on two or three very small scale projects in Africa one in wind another in solar and these two are very actively moving along and I think the challenge for an investor and a lot of financial institutions is that these projects are small scale they're in difficult markets you have investors a lot of often entrepreneurs who are just sort of getting into an area they have a very varying experience globally that may not be familiar with the market that they're going into and you have foreign exchange risk OPIC only lends in dollars so we always have foreign exchange risk got a large project you hedge it you enter swaps you get into these very complex financial arrangements and that's a challenge for us on small projects where that's not an option and it's an additional risk we have to be willing to take you have assets that are in the case of doing for instance like a hundred villages with a solar solution or this in the box home solar system your assets are spread out all over the place you know how as a lender do you take collateral on a financial transaction like that so there are a lot of risks and a lot of structuring concerns that we have to think about and the development finance institutions globally I think are really just starting to lend to these sectors up and to this point it's been a lot of initial investment coming from investment funds and venture capital and grants and impact investors and it's just now starting to get to the point where I think that institutions like OPIC are willing to take a little bit more risk on some of these smaller investments because everybody's looking at scale ability right once you do 10 villages or a hundred villages then it's the thousand the two thousand villages and does it really make sense for these utilities to be building transmission lines out to rural parts of these countries where there aren't that many customers the customers that you're serving don't consume a lot they really don't have the financial resources to consume a lot so it doesn't make sense in many of these places for these utilities to get power out to these people so then the only solution is to think of these these off-grid solutions and I think development finance institutions realize that if we're willing to take a little bit more risk on some of these first projects where it's just a few villages with really strong partnerships that the next time it's going to be a much you know it's going to be the thousand villages and at that point I think you're going to see an enormous growth in this whole sector Zephyr Thanks Jennifer thanks to CSIS for having me as well I run the risk of being much less interesting than both Ethan and Diana because I'm not going to have the aid of slides with very nice graphics on them but I'm going to I'm going to focus on a couple of our capacity building programs that USAID has I sit in the global climate change office so the kind of first and foremost objective of our work is climate change mitigation and adaptation obviously for the clean energy space that's focused on mitigation but our work is also centered very much around private sector engagement kind of sector development market mobilization maturation these sorts of things so I think there's a very strong connection to the market fundamentals and the mobilization of private sector finance even as it relates to climate change mitigation efforts and to connect back to David's call to action in the previous panel session regarding technical assistance that is principally what we at USAID provide and so the first of these major programs I'll highlight is our enhancing capacity for low emissions development strategies program it's been around for many years it's a global initiative and it's a whole of government effort to basically work with countries to comprehensively holistically plan their economic development looking out over the long term and the idea behind this obviously is so that you can touch on some of these things that Jennifer mentioned about political stability regulatory risk I mean the uncertainty that the private sector shies away from in terms of investing hundreds of millions billions of dollars into sectors is strongly connected to their perception of enabling environment stability regulatory risk currency exchange risk you know poor capacity and monetary policy dramatically affects that and so we use the low emissions development strategies work as one way to say start at the very top look across all your major potentially carbon intensive sectors and think about how you can strategically and kind of holistically plan those looking from now out to 30 years and it typically starts at you know again the kind of accounting the taxonomy level of what the sectors are but then it slowly leads down in terms of the capacity building implementation of thinking about take for example the energy sector do you need to unbundle and commercialize the space in order to obviously increase private sector participation but also increase efficiency whether or not your distribution or transmission companies are sufficiently collecting their revenues they're addressing technical management losses and their lines these sorts of things and so the low emissions development strategies program really connects to every level and it trickles down through the energy sector to the capacity building of the regulator capacity building of the key stakeholder members of the stakeholder value chain whether or not their engineers architects EPC contractors or they're looking at the commercial underside I mean this could be another dimension of a low emissions development strategy itself that says the lack of participation in financing clean energy projects by local commercial banks is significantly hampering the scaling up of this infrastructure and so that's another great example of where this program can really touch on that capacity building of all the key members of a stakeholder value chain in this case as an example for the energy sector to date our countries in sub-Saharan Africa that have this core program they are Ethiopia Kenya Ghana and South Africa there are a number of other ones that I think we're considering unrolling out in and that's strongly connected to the recent Power Africa initiative that's come into being over the last couple of years I probably won't waver on the Power Africa program too much I'm sure most people here have heard quite a bit about it I know my colleague Andy Herskowitz was here last week discussing that obviously that's kind of the elephant in the room in terms of USAID's work in sub-Saharan Africa for the energy sector but the the low emissions development strategy work connects very strongly to that it actually predates it and now we're working to kind of roll out more of these leads programs in Power Africa countries the second program I want to highlight is a program that I'm the director of called the Private Financing Advisory Network which is actually a multilateral initiative 10 member countries and this is focused on the entirely other end of the spectrum more or less so WEDS thinking of this is very macro whole of economy top-down planning capacity building PFAN is a transaction project mentoring and advisory service that it's actually fortuitous for me that Ethan highlighted the Phoenix International technology platform because that's precisely the type of project that the PFAN program would seek to provide advisory or mentoring services to now the program doesn't provide any financing directly that's where the OPICS or the MDBs or the impact investors of the world come in but what it does do is it tries to identify projects that have obvious commercial promise and viability they're not early stage it's not doing upstream project incubation and preparation it's more mid to wait stage pre-commercial operations where you identify a project typically 5 to 10 million USD total investment range so the SME space and you look at the project and say you have tremendous commercial viability at your core business model but a couple of things one you haven't addressed fundamental business model strategy risk issues have you considered this off-taker risk do you are you sure about your your land permitting these sorts of things that you you find a lot of these really viable kind of business model ideas that are just not sufficiently polished up to be at a bankable level of quality and so that's kind of the one part very traditional kind of consulting financial advisory input to these businesses like the Phoenix internationals of the world to say how can we get you financing the second part is the actual matchmaking which is okay we've kind of helped you polish up your business model here now you need to find someone that's going to write you a check and there's two parts of that one is the program maintaining a network of financiers and investors that are interested in the space and that includes you know institutions as large as OPIC all the way down to small local kind of impact investors high net worth individuals etc it says okay we need to we need to get you introduced to some of the people in this community that's one of the two big steps the second one is literally the investment pitch and what we say to them is listen you got a solid commercial business model here you have 15 minutes you get one cup of coffee on that first cup with this investor if you blow it you're not going to get invited back for the second cup of coffee so put your suit on you know wear a tie well fortunately I'm not up here but you know if you have a 15 slide deck don't dedicate 10 of those slides to the social do-gooder-ness of your project granted that is an invaluable component of this particularly when you're looking in the sustainable energy space two slides on that but the investor wants to hear 80 percent of your discussion needs to be talking about your management team your core business model how your structure financially what the takeout periods are for them I mean you know fundamental kind of commercial issues that any savvy investor finance year is going to want to hear about so that's kind of the other part of that matchmaking service PFIN has been quite successful to date it's mobilized just over 600 million USD in investment globally about a third of that towards sub-Saharan Africa we work in a strong kind of partnership and collaboration with the power Africa initiative again the I work as kind of a technical advisor to the power Africa program within USAID as well so there's a lot of kind of cross-pollination and collaboration amongst our technical assistance programs and you know I think PFIN is a great example of a program that's instead of addressing that kind of macro scale political environment enabling environment issues which are paramount to really kind of maturing sectors creating stable investment attractive investment environments it's one of those kind of grassroots bottom-up approaches that says there are a lot of good projects out there typically this SME space you know where these companies don't have the in-house expertise to really develop their business models they don't have the networks to to find the sources of money but there are a lot of good projects out there and and and and sub-Saharan Africa is probably one of the best examples of a region of the world where there are so much opportunity in that space and then I just want to highlight how it connects specifically again to SSA in terms of the off-grid energy access issue as Diana noted you know the the costs in terms of grid expansion getting grid connectivity to so many of these areas I mean I think the economics don't really weigh in favor of of grid expansion in a lot of places right now I mean again there's probably tremendous amount of debate around this but I think looking at that energy access that off-grid application or solutions side of this is is is is equally as important in sub-Saharan Africa as looking at the kind of utility scale grid connected grid expansion space because ultimately there's a lot of energy needs now there are tremendous hurdles in terms of the economics of grid expansion so how do you bring how do you bring modern energy services to these rural off-grid communities in the near term and and you know advising projects supporting you know the mobilization of investment for projects like Phoenix International I think is is another great way to do that in terms of the off-grid space so I think with with that I'll stop just highlighting two of USAID's technical assistance programs and turn it back over to Jennifer thanks so much Jeff yes Jeff good morning it's nice to be here and I noticed that since we started the sun has come out and behind you all so we'll try to well I I want to speak today from the perspective of of an investor whose job it is whose commitment for 35 years or more has been to development and to electrification and all the things that we want to see happen and renewable energy in Africa and in developing countries in general but today as an investor for the last 25 years who has to look for projects that return a good return on equity for for these transactions and from that perspective look at renewables in Africa but I also want to start by picking up on something that's ever said the coordination from the top down I asked some of our team members on our forestry and our Africa growth investment team in Africa to give me some ideas or just the context that they're dealing with today in looking at deals who are looking at all over Africa and one of them said that the big issue and especially in countries where they're largely dependent upon DFI as an external financing today is and this is speaking about Tanzania in particular he said the country grid manager seems to stagger from grant to grant with an unclear strategic plan between generation transmission distribution and he wasn't even talking about renewables he was talking about the bigger picture and so what we see across the continent and is going on today is just this explosion of great projects renewables and in many areas but it's not necessarily coordinated and that raises a whole bunch of points that I want to pick up on in my remarks based on the other some of the other comments made by our panelists this morning first of all the big context of course is huge economic growth today which is stunted by the lack of electricity we see it in Africa there's in South Africa I mean their estimates that one to two percent of GDP growth is not available because they have blackouts today blackouts and brownouts in South Africa a few years ago with so much coal and so much access to so much hydropower you wouldn't have believed it today in Santon you know our offices in Rose Bank and in Melrose Arch I mean our systematically being blacked out every day practically we see it across the continent in many other places in Nigeria industries cannot get reliable electricity even those on the grid they're down the power is down all the time so these are tremendous issues there's deregulation people said before there's less than 30% of the African population has real access to the grid so that has creates tremendous opportunities but also perils for renewables that I want to come back to deregulation is going on we're seeing the unbundling and the privatization of electricity distribution in Nigeria right now it's just an amazing process I can't say it's led to any progress yet but it's an amazing shuffling of the deck privatization of distribution company in Uganda the Kenya power company was listed on the Nairobi stock exchange so as we look at renewables I have a couple of things to say about all that about the demand the pulsing demand for electricity the two largest funding sources of new electricity generation today in Africa we've kind of heard echoes of this our IPPs that's independent power companies private sector and China China almost exclusively does coal and almost all and percentage of megawatts added of the IPPs have been thermal so let's make sure that we think about renewables in a realistic context we can either we can do one or two things we can think of renewables as somehow outside that picture and providing things like village power and so on or we can think of them as a hand in glove inside the picture and in my perspective from my perspective today and what we see in Africa there is now an emergence of substantial natural gas supplies which will continue we somebody asked about fracking resources or tight tight gas and and there are a lot there will be new tight gas in South Africa they're fighting it but there seems to be huge resources in the Karoo we're seeing more and more gas coming from Mozambicans to South Africa remarkable to me is that we there's a company in South in Johannesburg called a Goli Gas which has the gas distribution franchise for many years believe it or not they can't use the gas they're getting right now because all the boilers are you know are coal all there's not enough electricity I mean penetration beyond the ring of small transmission that they have so but that natural gas opportunity is the same as I see it in the United States natural gas and renewables have to go hand in glove to really make a difference in terms of long term offsetting that massive amount of coal and massive amount of other thermal power that will be generated otherwise in the grid for example in many parts in Africa the grid cannot absorb renewables or cannot absorb more renewables or cannot absorb utility scale renewables because it's non-baseload power so yeah it works fine for village electrification in you know in small during the day and lighting a light at night but thinking about large scale electrification we really need to think in a broader context so I just wanted to start you know kind of give that overall picture that that there's huge opportunities but there are huge limitations if we're really thinking about renewables penetrating as part of the electrification demand of Africa of course we've seen some amazing things going on we've already talked about it South Africa has created invested $14 billion 64 projects almost 4,000 megawatts since 2011 in renewables we didn't participate in that because the equity return was low but the remarkable thing is that's going into the ground and it's going on to the grid that's more renewables power than anywhere across Africa in the last 20 years but to think about this one of the reasons they were able to do it in addition to essentially bidding out these power contracts is South Africa has as no other country in Africa a huge banking system so most of those projects were underwritten by a private banking system and credit service that that really is completely different in most African countries most other African countries the major financiers of the development finance agencies so one thing that we need to think about is how to get more banking services more of the commercial banks involved in lending and renewables across the continent not just in in South Africa but you know we've had some major progress in other areas as well Kenya is now one of the leading producers of solar geothermal biomass they've had 12 projects and 100 megawatts in the last couple of years Kenya is the eighth largest of geothermal generation in the world today because they've got good opportunities there Cape Verde is today a net was a net importer of diesel five years ago and today itself generating almost exclusively from wind because of the large projects which were financed through the African development finance facility the project was developed it took eight years to develop so commercial projects wouldn't commercial investors wouldn't have developed the project but once the project was ready and PPA ready it was taken over by commercial assets so that's another I think a very positive role where the DFI's and like the OPIC and the USAID and other DFI programs can continue to play in both large and small scale renewables we see huge challenges somebody mentioned earlier the land and community issues and renewables land is is really important especially for the large scale projects the land costs if you even can can get the permissions and get the get it all aggregated could be a huge potential so I mean a huge part of the whole project we don't see local capital in many places except South Africa to finance many of these renewable projects so they are dependent on the large agencies so those are some of the challenges let me talk about a couple of the opportunities that we see first of all in distributed generation there is an ability to leapfrog what is a limited ability of the grid to to reach out there are you can do lower cost and quicker to market projects we see private projects in very small scale solar up to a few a couple megawatts or less going much faster than many of the projects of the utility size projects that can take years and years to develop land acquisition may be much easier we've had one group propose to us a set of investments in in Africa where they think just the land cost they want to do one generation of solar but actually they think the land 20 years from now or 25 years from now will be so much more valuable that the exit costs will be dismantling the solar and using as a real estate investment that's a better thing than the residual value that many solar companies put on solar panels that won't have any residual value in the future so somebody said thinking outside the box from an entrepreneurial sense in Africa those kind of solar facilities become the equivalent of the rent as storage and warehouses that people build out near the future metro site and they sit on it for 10 or 15 years getting low relatively low level usage of the land and then then there's a higher usage later on but that takes big capital so so that's one of the challenges cogeneration and trigeneration and integration of natural gas and and some renewables at the smaller scale level I think is as important as the big scale level the reason it's important at the big level is because without that base load power the grids the intermittent power of renewables can't be there and so coal or other big biomass plants or other things are not are not as easy as as natural gas to move up and down so smaller scale natural gas systems can be part of the solution and in fact we see both for gas outside of the big big usage in smaller areas we see both for gas and for renewables and for biomass that some of the most cost effective projects have got to be those with heat and steam because if you're just generating electricity coal almost anywhere transported or kerosene or diesel even in many cases can be a better deal but if you're looking at the sale of thermal and electricity and in fact justifying it through electricity many renewables and in fact many biomass projects become very very cost effective and the reason I know this is because we're doing it we've seen it we have forestry forest products investments in five countries of Africa where our team we own majority control we own these companies and they're in rural areas and we're we're provide we've realized that for instance in Tanzania our teak plantations cannot get reliable electricity but they also need heat for their for their boilers and otherwise in addition to that some of our mills are realizing that their industrial uses outside of their fence where they can pipe over even for companies that are getting electricity they can pipe over steam and heat and and and sell that that product so again in rural areas where there's not reliable electricity a combination of biomass for boilers and other other uses even for electricity then then it it it becomes cost effective we're seeing in in Nigeria in particular where there's a lot of flared and waste residual gas or or that there are tremendous opportunities here in in terms of what I call the virtual pipeline there are many industries Nigeria is an incredibly industrialized country people do not realize it until you're until you're really working there but 180 million people and industries spread out throughout throughout the country so industries are needing reliable electricity more than anything else many of them will not get a reliable will never get a reliable grid or they they're not going to wait for it and they can't wait for a pipeline from gas so we're working with a company that is actually taking flared gas gas is being flared now Nigerian government has signed international treaties making promises that they will no longer no longer flare I forget what the date is but it's we're being recovered and gathered we're shipping it putting it through a shell pipeline to the to the pipeline terminus compressing compress natural gas not LNG and this was what makes it cost effective and distributing it in a trucking med mode for for industries now that can cover a vicinity of up to 200 miles depending upon the infrastructure the road infrastructure but our customers who are our customers well Heineken breweries has eight breweries around around Nigeria Coca Cola the largest noodle maker in in China the noodle maker said to us he's getting gas from pipeline for one of his like 10 plants around Nigeria that he said when I hooked up that natural gas I was saving 40 50 percent on my energy costs I want natural gas elsewhere he's not going to get a pipeline out to his plants for many many years but where we put together the model we can deliver it to him because his challenge is he he needs reliable electricity for large batch production every time the electricity goes down in any one of his plants the boilers go down and he loses he loses a product basically so but so that demand is driving what I think of as a business to business enterprise here there's no government involvement whatsoever in this and these guys these these big plants will never maybe go on the grid because they're going to be getting this but now think about I with the reason I wanted to raise this is clean energy and we love clean energy and whoever else said it today that natural gas has got to be part of the equation I for the environment and for the real offset of carbon emissions I think they're absolutely right but think of the opportunity to do what you what we were talking about before about these small village electric mini grids it really isn't really the solar unless you've got great wind power right there it's going to be very difficult to give people more than a light bulb and that means local industry can't really thrive so I love these small projects and Phoenix and everything else but people want more than a light bulb and a cell phone because they need jobs and rural processing industries are dying in Africa because they can't get reliable power so we have to have reliable power but take that that mini grid model put together a natural gas virtual pipeline distribution put all the renewables you can into that little mini grid and then augment it with a small 10 or 15 megawatt or smaller natural gas thing that gets served by a virtual pipeline and you've got a cost-effective system so I think you need to think about renewables in a much broader sense I'm going to finish with two two thoughts here first of all we didn't talk a lot about biomass utilization because we see it from our forest products area we see that there's a tremendous opportunity for biomass in Africa first of all there are many many wastelands if you look at the whole Afrum plains of Ghana it's just basically wasted land that can be planted for trees and then trees for power but I'm not a big advocate of just these massive power plants burning biomass because nowhere in the world have they really really worked all that great they're trying to do something like that in Kenya and they're projecting out the supply of biomass for the next 20 or 25 years from local woodlots and I'm looking at saying I don't think you're going to going to be caught you're going to be able to get enough but biomass what we do in our forest plantations throughout Africa is we grow trees and then we look at the trees and say what's the best economic cost we can get from those trees and saw milling and use of the lumber wood has not been cost effective in most parts of Africa but today the demand for lumber in Africa is growing faster than the availability of wood if we can take that trend the demand for lumber and the demand for wood and combine it with using the biomass utilize the waste biomass it suddenly makes much more economic our rural industries we can employ more people build the forest products in the in plantation forest industry so again hand the glove with industrial development rural jobs the opportunity to create more biomass as part of a larger industrial system there are of course many challenges there but but again I think biomass plays a big big limitation finally you can't talk about all this unless you talk about the grid and the ability to transmit electricity first of all the largest source the highest and best most efficient source of renewable energy always almost always is efficiency and and uh in in transmission today you have power lines throughout much of Africa continental Africa which have not been really replaced barely maintained since independence so you're talking about systems that are 40 and 50 years old how do I know because we own a company here in the United States that does repair of and maintenance excuse me of grids in the United States for power companies with helicopters we found the guys the royal former royal Air Force guys from RAF guys from South Africa who are doing this in South Africa and they're doing with many utilities and they tell us that what they replace often is just crumbling resistors and and all kinds the wires the long-term transmission some estimates have been as much as 45% of electricity is being lost in the transmission grid today so without that you can't really talk about renewables at the local level and then wires and poles think about this you've got to have more transmission throughout Africa today there are not enough poles in in Africa in fact in Kenya they're starting to make them out of cement which is much more expensive and energy intensive they're importing poles in Ghana from from Alabama the wood resources there in fact our plantations are now starting to grow trees specifically for poles for the future because there's going to be such a massive demand for electricity transmission poles in the future so again what I think is the if we build the renewables is part of this whole framework we're really thinking about rural development we're thinking about creating jobs we're not just thinking about putting a solar here and a wind project there we need to think about as part of the whole long-term energy plan of Africa great thank you all for for a really thought-provoking informative presentations what I get was kind of the idea of doing well by doing good and I think that was Ethan's first point you know the change of mindset so that we're not pitting kind of this idea of feel good development you know get the slides on the business plan even even while we're doing good put on your business suit even as you're selling a development project in a way the one question I had was maybe to look at other parts of the world and you talked about kind of finding that you the risks of first projects and you know what's it going to take to kind of be the tipping point and I just wonder how that's worked in in a Latin America or other parts of the world that you've worked in I know that Africa is kind of lagging behind in this generally but do you see is it going to be a couple of big projects and then a flood or is it going to be a South Africa kind of leading the way and showing what's possible I just wonder what a trajectory might look like and I think for I mean for what we're seeing at least if we're talking about smaller scale sort of off grid energy solutions I mean the focus has certainly been Africa and India I mean those are the the two places where everybody seems to be focusing and when you get to the Phoenix types of products there are a lot of companies there's one called B-Box there's Phoenix there's off grid electric there are a lot of these companies that are focusing on these small scale in that home you know one light bulb cell phone charging type of solar system and there are so many of them that in my view I mean at some point there's going to have to be some kind of consolidation or someone's going to figure out which business plan really works the best for expansion on a large scale even though there are awful lot of rural areas to cover I think that it's unlikely that all of these companies will succeed and then I think you know the regulatory environments and I mean the land issues I mean there's so many elements that come into play that that is sort of a critical component as well be for instance when you're a lender looking at one of these projects that is you know you're setting up a little solar installation in a number of villages you know do does the developer have rightful access to that little piece of land and in each village that they're using I mean we cannot spend higher lawyers to look at every lease agreement and every so there are a lot of complexities in developing these and I think that going forward the way they're going to be successful is if lenders can kind of find a way to do them on a portfolio basis where you're aggregating a lot of small projects together you're diversifying your risk among a number of smaller projects and then you know that is something that is more scalable than just these one-off very intensive financings where you're doing the same kind of analysis that you're doing on a large one and you're trying to avoid legal costs you're trying to avoid engineering costs you're trying to avoid all these costs to make it affordable and taking more risk so I think that it's just sort of an evolution of of you know scale of getting everybody's that you know figuring out which which developers have the best ideas and backing them because then they're the ones who will be able to scale so it's kind of a winnowing out and figuring out who's doing what and who's got the best ideas and then supporting those and then on a larger scale I mean I think especially in you know I mean if you're looking at hydro, wind and solar I mean all those big projects will continue you know we we've see I think we now have 600 million in exposure in Chile alone in solar so it's you know it's really getting huge and we see these business plans all the time if I could just add a couple quick thoughts well one you know well first that just on the concept of off-grid versus on-grid but none of this stuff is mutually exclusive when you're talking with you know whatever the number is half a billion people without you know proper energy access on the continent some people a light bulb is a major step up and for some you know they're ready to move much beyond that so I mean I think and I you know to Diana's point there are a lot of different firms operating in this but one thing I've never heard them say is we don't have enough opportunity I mean there's so many people who have who could use more access that that that you know that they they don't find themselves directly competing with each other really pretty much ever yet that may change so you know whether you go the you know the the the the Pico you know tiny scout route of Phoenix or you go mini-grid route which Diana's talking about you're talking about larger projects like Jeff's talking about you know these do not have to be mutually exclusive I do think though there have been issues some cases with local policymakers and some in particular grid companies or utilities and their regulators in some of these countries not being open to off-grid activities taking place not keen on on mini-grids where they can't price the electricity and so I do think there does need to be some flexibility in the thinking on the part of policymakers and being open to different types of solutions and that's not frankly not always the case that's out there one quick thought on the Latin American example and question just that a couple trends that I think we've seen in Latin and first of all there are limits in terms of comparisons frankly the Latin American countries are typically more more likely to be middle-income countries are further developed they have higher electrification rates on almost every case they have you know much more extended grids but what has sparked the markets for renewables in a lot of those countries has been the holding of tenders or auctions for power contracts and that's frankly pretty much exactly what we've seen in South Africa too which is probably the most sort of you know on par maybe Kenya is in there as well in Nigeria but in terms of being close to the level of development of a lot of Latin American countries and that has really keyed off the market and we saw that take place in Peru, Brazil Panama other places you know across the across Latin one other thing that I would say lesson learned from Latin and really to to Jeff's point is on dedicated power projects for industrial customers and I think Jeff you're talking about doing for you know with with that with that gas and flaring and such or co-gen but in in you know in places like Chile and elsewhere you know people are running you know doing industrial operations based off of you know wind or solar because they want to lock enterprise for electricity they don't want to be reliant on an unreliable grid and so they'll make that investment to finance or just by the the power from a local project that basically is you know by under bilateral contracts and have little to nothing to do with the grid overall and we could definitely see more of that I think that doesn't need to be confined to to gas in Africa I think it certainly could be other technologies as well we could very well see more of that also I want to take a round of questions maybe I'll just throw one into the hopper too which is what does the low oil price mean for this are we going to see a plummet of that upward graph in terms of investment and financing but maybe we will take a few from the audience and then come back to our speakers if we have yes one and two up in the first row technologies which is one of the sorry one of the companies that was successful working with OPEC and has opened Cutter Reven on 110 megawatt project in Kenya and an expanding of my 24 more megawatts was a really successful partnership with OPEC and that relationship predated power Africa it started before power Africa was born but I'm interested Sefer and Diana with the expanded aperture of the power Africa program to grow the goal and also to go beyond those six initial countries how your strategy is changing if at all and then right behind you I am Ian Butterfield from pace government relations question for Ethan and thinking back to your slide where you showed the relied the proper return on investment for wind and solar what does that slide look like if you incorporate pump storage or battery storage gentlemen here hi Sir Sanko with Oxfam thanks for all of that I want to touch just very quickly on you know when we talk about MDBs or DFI's you know the D in those the development aspect and a lot of the times the environmental and social externalities the non-climate related if you want to call them land water governance don't get factored in when a lot of the times renewable energy sources into we have a better price when you try to price those in the IMF tried to do it and came up with around 400% cheaper actually how are you assessing that and this is to all of you whether it's in your strategies that you do is effort or in the investment decisions don't and Jeff or Ethan in your cost curves pricing in these environmental and social externalities which could probably push the renewables envelope even further thank you Jennifer excuse me excellent panel I like all your comments I have too many questions and I want to ask them because we don't have enough time just a point going back to Ethan's slide that he showed the percentage of Africans without access to electricity and piggybacking what Jeff said much of which I agree with and some I disagree with I can talk to Jeff otherwise with the population growth in Africa currently and with the current number of people without access to electricity even by the year 2030 you could end up having still probably 700 million people without access to electricity many of them actually will live in the cities not in the rural areas and if we look at Germany and California today rooftop solar is being put in cities not in rural areas so I kind of would like to get your perspective on it's just sort of a change in narrative and and not just talk about rural electrification and rooftop solar for the rural areas but you have significant parts of sub-Saharan Africa in the cities in Lagos 25 million people where you don't have access to electricity so I think if you come into Lagos and you say bring rooftop solar to Lagos through some tax credit measure by the government you will see electricity prices drop significantly in Lagos so I'd just like to hear your thoughts on that because that's my main concern is that we think that PV is only for the rural areas but the vast majority of these people grew up in Africa are now in the cities and that's where you have huge power gaps how do we fill that and how do we change this narrative so that PV doesn't become something for the rural areas but it's actually something to address energy access issues thank you thank you very much my name is Arjutu from Uganda you talked about a number of issues but I'm interested in finding out what's the coverage of this funding because most of this renewable energy sources really there's little information on about it do we look at studies do we look at on a development that's the first thing then too if you look at the cost the unit cost of delivering these services to the off grids especially it's a bit expensive and makes it a bit unaffordable and yet you'll find that if you develop it you structure it on the basis of the communities you'll be wasting these resources so what does the program do to fully develop the potential of the resource so as to maybe with the possibility of feeding it into the national grid and then also on the issue of on the issue of ethano we talked about the biomass and what have you there's a huge debate on the issue of food security because if you are going to develop these energy sources how what are we going to do about the food security concern thank you so much so I'll start with the the easy well easy the softball question about a USAID program how has if at all how is power africa's operational strategy change with the increase in its regional footprint and that is essentially now all of sub-saharan africa is kind of fair game to be called power africa in terms of our energy work there so at the risk of hopefully not being redundant to comments that andy made last week the global coordinator I would say that there's no fundamental change in the strategy the issues and this kind of goes back earlier to the question you asked jennifer in terms of what's unique about sub-saharan africa I would say looking even within the region the set of issues are relatively uniform in terms of their existence it's really the scale or significance that they play in driving the lack of functionality of these sectors if you will and I would say that that's a relatively accurate statement globally I mean pretty much around the world even in the you know sophisticated western energy markets you have kind of a suite of issues whether the regulatory enabling environment these sorts of things commercial fundamentals you know the financial markets operate etc so I think in terms of the way power africa's expansion is thinking about this is we just have a an increased set of opportunities to address this kind of ecosystem of challenges in in one country we may focus a lot more on one organism in that ecosystem let's use kind of large utility scale transaction advisory work as one example you know that kin