africa, a major challenge for engieuas.engie.com/content/uploads/sites/8/2016/06/engie... ·...

Africa,

a major challenge

for ENGIE

2 – Afr ica, a major challenge for ENGIE

Africa, a major challenge for ENGIE

ENGIE is

confident that

in the next 40

years, global

growth will

be driven by

Africa’s growth,

which is in turn

fuelled by

strong

demographics.

Africa’s population grew from 100 million in 1900 to 275 million in

the 1950s-1960s, 640 million in 1990 and one billion in 2014.

According to demographic projections, by 2050 there will be

between 2 and 3 billion Africans, rising to 4.2 billion in 2100. The

prospects for economic growth are also promising. According to the

African Development Bank, Africa’s GDP could rise from a baseline

of USD 1700 billion in 2010 to more than USD 15 trillion in 2060.

Over the last 10 years, Africa’s economic prospects have improved

considerably, even though growth is still very much skewed

towards South Africa, Nigeria and North Africa. Multiple key

factors combine to ensure the long-term continuation of this trend:

sustained, rapid growth of the working population with the

emergence of a significant middle class, a sharp increase in foreign

direct investment, vast and better exploited natural resources,

wide-scale urbanisation and improved governance and institutional

capabilities.

However, this kind of economic growth is only possible

if a major effort is made to increase power generation

resources on a continent where 75% of the population

has inadequate access to energy.

Africa, a major challenge for ENGIE - 3

To address these challenges, ENGIE decided to

create a Business Unit (BU) dedicated entirely to

Africa.

The creation of this BU demonstrates just how much importance

ENGIE attaches to Africa and how determined it is in helping Africa

meet its energy needs. For ENGIE this is a new frontier for growth

and development, following the Group’s major international

successes in South America, Asia and the Middle East.

The new Africa BU is part of the Group’s general reorganisation in

early 2016, involving the creation of 10 geographical BUs. The aim

is to move even closer to customers and deliver solutions that are

ideally suited to their needs, while being fully immersed in local

ecosystems and giving the ‘territorial’ dimension priority over the

‘business’ dimension.

In taking this approach, t h e Africa BU aims to ‘be African’. This

means recruiting personnel locally, identifying risks, being capable

of creating institutional networks and partnerships with local

companies, forging sustainable relationships with investors and

private and public financial institutions, and asserting our local roots

while forging contacts with civil society and NGOs.


Africa is a richly diverse continent, where the Group’s strategy must be adapted to countries and regions

which are all very different in terms of their natural resources as well as their political, economic and

demographic situations.

This means mobilising all of the Group’s businesses:

• Centralised electricity generation with a systematic focus on renewable energies and

gas.

• Gas infrastructure, specifically transmission, regasification terminals and storage:

- coordinated with exploration/production, the importation of liquefied natural gas and

gas-fired power generation.

• Energy support for local authorities, not just massive megalopolises connected to the

grid, but also rural areas with the deployment of off-grid solutions or innovative micro-grid

solutions.

• The sale of gas, electricity and energy efficiency services to businesses.

• The sale of gas and electricity to residential customers via new mobile phone billing

options.


ENGIE aims to be one of Africa’s main energy leaders in the next ten years, with five major projects in Africa.

To support this ambition, the Africa BU will have around one hundred people and will be

active across the entire continent with four offices corresponding to vast regions where

ENGIE is active:

• Casablanca (Morocco) for North Africa,

• Abidjan (Côte d’Ivoire) for West Africa and central Arica,

• Nairobi (Kenya) for East Africa,

• Johannesburg (South Africa) for the southern part of the continent.

BU Africa

Our offices

ENGIE

ENGINEERING


ENGIE in Africa In its efforts to develop successfully in Africa, ENGIE is focusing on South Africa and Morocco,

specifically power generation with an installed capacity of 760 MW, of which 395 MW in

wind and solar, but also energy services via the creation of its subsidiaries Cofely and

Tractebel Engineering.

Tractebel Engineering has offices in Algeria, Morocco, Nigeria and Tanzania, and is involved

in some forty projects across the continent.

In addition to these assets, the Group is involved in the exploration/production of gas fields

in Algeria and advanced prospecting in Egypt.

The Group is also present via its solidarity-oriented investment fund, ENGIE Rassembleurs

d’Energies, which invests in projects that help people living under precarious conditions gain

access to sustainable energy.

The fund is active in Morocco, Burkina Faso, Kenya and Tanzania.


ENGIE in South Africa South Africa – with a population of 52 million and an estimated GDP of USD 350 billion

accounting for more than 25% of GDP in sub-Saharan Africa – is the second largest economy

in Africa after Nigeria.

In terms of energy, the country is the biggest electricity market in Africa, with an installed

electrical capacity of more than 45 GW, but it still struggles with under-production.

Some 25% of the population does not have access to electricity and the grid suffers from

under-capacity, exposing the country and industrial companies to frequent load-shedding

risks.

In its COP21 contribution, South Africa reasserts the commitment it made in Copenhagen to

reduce CO2 emissions by 34% by 2020 and 42% by 2025 compared to a ‘business as usual’

scenario. To reach these targets, the country is establishing a carbon tax, implementing

precise regulatory limits for each sector of the economy and modifying its energy mix,

specifically by developing all renewable energies and replacing coal-fired power plants.

In other words, South Africa is aiming to increase its energy production while modifying its

energy mix. To achieve these objectives, the South African government decided to call on

independent power producers for 30% of its production, with the rest provided by incumbent

operator Eskom. The government also launched a 20-year plan aiming for a 42% increase (17

GW) in new capacity based on renewable energies: solar, wind, nuclear, hydro and biomass.

ENGIE is ideally placed to address this challenge: it has had a presence in South Africa since

1994 – specifically in energy services – and is the country’s leading independent power

producer.

The Group aims to support the government in defining a balanced energy mix based on

renewable energies and gas.


2

West Coast One wind farm

West Coast One is a 94 MW wind farm 130 km north of Cape Town. It

has 47 2-MW wind turbines.

West Coast One is part of the government’s programme to develop renewable energies by

independent power producers (the ‘world-class renewable energy IPP procurement

programme’). The programme aims to develop 8 GW of wind power over 20 years.

Construction of the wind farm began in mid-2013 and it commissioned in June 2015 for 20

years. This will result in 5.6 million tonnes of CO2 saved during that period.

The project was led by Aurora, a joint venture created by ENGIE (43%) in partnership with

Investec Bank (34.5%) and Kagiso Tiso Holdings (20%).

In accordance with the rules currently applicable in South Africa, 2.5% of the investment is

donated to local development projects (Local Community Trust).


Kathu

solar park

ENGIE is also developing a solar park in Kathu (Northern Cape

province), 600 km southwest of Pretoria, the country’s administrative

capital.

This 100 MW concentrated solar power (CSP) plant uses parabolic trough technology and will

be equipped with a molten salt storage system that provides 4.5 hours of battery life, thus

helping to offset the intermittent nature of solar energy.

Led by ENGIE (49%), the consortium comprises a group of South African investors, including

SIOC Community Development Trust, Investec Bank, Lereko Metier and Public Investment

Corporation. The consortium was given ‘preferred bidder’ status in January 2015.

This project is also part of the government programme for renewable energy independent

power producers (REIPPP). The candidates selected as preferred bidders will be invited to

engage in negotiations with a view to concluding a 20-year power purchase agreement (PPA)

with Eskom, the public power production and distribution company in South Africa. The Kathu

works phase is scheduled to start in early 2016.


Solairedirect in South Africa

Solairedirect, a wholly owned

subsidiary of ENGIE specialising in solar

energy, has been present in South

Africa since 2009. Solairedirect is

currently in charge of two projects in

Aurora and Vredendal (Western Cape

province) with a total installed capacity

of 21 MW. These two solar parks are

part of advanced regional projects

involving local authorities and

stakeholders.

Dedisa and Avon peakers

Tractebel Engineering in South Africa

Tractebel Engineering is active in South Africa in

engineering and consultancy, specifically for

Upington (100 MW, Northern Cape) and Kathu,

and for the West Coast One wind farm and the

Koeberg nuclear plant.

ENGIE is also developing two thermal power plant projects in South Africa: the Dedisa and

Avon peakers (with a total capacity of 1,000 MW).

Dedisa and Avon are new open-cycle gas turbine plants (335 MW and 670 MW) located

respectively in Cape province and in KwaZulu-Natal near Durban. They are scheduled to

come online in 2016.

A 15-year operation and maintenance contract was signed with Eskom (the incumbent

operator).

The project companies that own the plants – Dedisa Peaking Power (Eastern Cape province)

and Avon Peaking Power (KwaZulu-Natal) – are held by ENGIE (38%), Legend Power

Solutions (Pty) Ltd (27%), Mitsui & Co (25%) and The Peaker Trust (10%).

The Dedisa plant is essential for the development of the 11,500 hectare industrial development zone in


Port Elizabeth, specifically for key sectors such as metalworking and aquaculture. This plant is one of

the biggest investments in the zone and has created 1,500 direct jobs and 1,000 indirect jobs in a

region highly impacted by unemployment.


ENGIE social programmes in South Africa

In South Africa ENGIE supports the Valued Citizens Initiative, an NGO which organises educational

support and social programmes in public schools, including in Saldanha Bay near the West Coast

One wind farm. The NGO encourages personal development and civic engagement within a

democratic context.

The ENGIE Foundation has also been a partner to the Valued Citizens Initiative since 2002 in its

campaigns to support education and youth.

From 2002 to 2009, the Foundation supported the Values in School programme, which set up

workshops to raise awareness about constitutional values and citizenship in schools in South

Africa.

The ENGIE Foundation has been funding the Inspire

programme since 2009. This project helps girls

develop their leadership skills, expand their

horizons and take control of their lives, while

fighting gender inequality and poverty in their

communities. To that end, the association organises

leadership training camps for 50 disadvantaged

girls and 50 girls recognised as leaders in their

schools. The girls must then organise a citizenship

project in their school involving other pupils. The

ENGIE Foundation funds this programme in

KwaZulu Natal province, where the Group is

located. Every year it benefits 100 girls aged 14-

16 directly and around 7,000 young people

indirectly (thanks to the reach of Inspire Clubs in

schools). All in all, more than 600 girls have been

helped directly since 2009 thanks to ENGIE’s support.


ENGIE launches new Schools, Lights & Rights programme in late November

2015

The Valued Citizens Initiative is one of the associations benefiting from this project. It will

receive a grant of €17,000 to promote the civil registration of unregistered children (around

1,100 registrations) and 1,700 portable solar lamps.

The lamps help improve the everyday lives of children by enabling them to study

more easily in the evening. They replace the highly polluting oil lamps that often

cause domestic accidents.


IkamvaYout

h

Ikamva Lisezandleni Zethu is an NGO that supports and assists young people

in their career development.

ENGIE & IkamvaYouth developed the FunMaths programme to help pupils aged 14-15 from

disadvantaged environments with subjects like maths and English. The association brings together a

large number of volunteers: university students and workers, themselves often former beneficiaries of

the programme. ENGIE funds the deployment of the programme in six of the association’s ten branches,

benefitting 247 children.

Social programmes have been set up near the sites of the Avon and Dedisa plants. ENGIE established an

independent fund to ensure that local black organisations and communities can benefit from these

projects. The Peaker Trust holds a 10% stake in the project companies; it was created to fund social and

educational programmes. All of the Trust’s dividends will go to local socioeconomic development

initiatives for at least 15 years, for the entire duration of the power purchase agreements.


ENGIE in Morocco

With a GDP of nearly USD 100 billion, Morocco is the fifth largest economy in Africa. Its GDP is

expected to grow 4.5% per year during the period 2012-2016. ENGIE – which has had a presence in

Morocco since 1980 – wanted to support the country’s energy growth. Demand for electricity has been

growing an average of 6% per year since 1998 and should continue to advance for the next 20 years.

In this favourable context, Tarfaya, the 301 MW wind farm operated by ENGIE, marks a turning point

in Morocco’s energy strategy, which is aiming to have 42% of installed capacity powered by renewable

sources by 2020. ENGIE also plans to commission the Safi thermal unit (capacity: 2 x 693 MW), the first

latest-generation plant in Africa.

Morocco also announced its intention to develop its gas infrastructure via a massive plan to build a gas

terminal in Jorf Lasfar and four new combined-cycle units (600 MW each), upgrade two existing 150

MW units, and develop new gas-fired units (up to 6,300 MW), a 400 km gas pipeline to connect the gas

terminal to these plants, industrial sites and the Gaz Maghreb-Europe (GME) transmission grid.


2

Tarfaya wind

farm

In Morocco ENGIE operates Africa’s biggest wind farm, with an

installed capacity of 301 MW. The farm was developed under a

50-50 partnership with Moroccan energy company Nareva

Holding and commissioned in late 2014.

Tarfaya is covered by a 20-year power purchase agreement with Morocco’s National Office for

Electricity and Drinking Water (ONEE) under a BOOT (Build, Own, Operate and Transfer) arrangement.

The wind farm is located in the coastal desert in southern Morocco and enjoys optimum wind conditions and a high utilisation rate of 45%, preventing the emission of 900,000 tonnes of CO2 per year.

The farm accounts for around 40% of Morocco’s total wind capacity.


Safi thermal plant

This project involves the construction and operation of a latest-generation coal-fired plant with a

capacity of 2 x 693 MW.

A contract for the sale of electricity generated by this plant was concluded with ONEE (Morocco’s

National Office for Electricity and Drinking Water) for 30 years after its planned date of

commissioning in 2018.

This plant aims to meet the country’s growing demand for electricity. It will be fitted with a multi-

stage electrofilter system for capturing dust and particulates, a seawater flue gas desulphurisation

unit to remove sulphur dioxide and a flue gas reheating system to eliminate visual impact.

It is being built by the South Korea’s Daewoo Engineering & Construction Co and will cost USD 1.8

billion.

The project company, SAFIEC, is incorporated under Moroccan law and held by ENGIE (35%), the

Moroccan company Nareva Holding SA (35%) and Japanese group Mitsui & Co (30%).

A strong presence in services In Morocco, ENGIE is present in services through its subsidiary Cofely, which has nearly 200

employees. Cofely has seen strong growth in multitechnical services, energy efficiency and facility

management over the last five years.

Tractebel Engineering, the Group’s engineering company, has also been present in Morocco since

the 1980s, providing consultancy and technical support. It was involved in designing and

development of the Mohammedia and Jorf Lasfar thermal power plants, and performed studies for

the LNG terminal project.

Tractebel Engineering works on thermal plants, such as the Safi plant, as well as the Tafilalt and

Ouarzazate photovoltaic plants, which are part of the ‘Moroccan solar plan’.


ENGIE in Algeria and Egypt

The Touat natural gas fields in Algeria ENGIE signed a production-sharing agreement with Sonatrach for the Touat region in southwest Algeria,

near the city of Adrar, in the Sahara desert.

The region is located 1,400 km southwest of Algiers and 700 km from the enormous Hassi R’mel field, the

heart of the Algerian gas system.

The partners created the TouatGaz consortium. An exploration and assessment campaign was carried out

between 2002 and 2009, confirming the presence of a quantity of natural gas sufficient to plan the field’s

development.

Ten wells were drilled. The proven and probable reserves are 68.5 billion m3 of natural gas and 8.5 million

barrels of condensates.

Production should start in 2017 for a period of 27 years. Expected output is 4.5 billion m3 per year.


ENGIE in Egypt

In Egypt, ENGIE’s Exploration and Production subsidiary is active on four concessions, two exploration

concessions as an operator, and two production concessions. Egypt’s output is minimal compared to

ENGIE’s total production.

• West El Burullus, offshore exploration concession in the Nile delta (wholly owned by ENGIE, operator)

• Wadi Dib & East Wadi Dib, onshore exploration concession in the southeast part of the country (wholly

owned by ENGIE, operator)

• Alam El Shawish West, onshore production concession, in the western part of the country (ENGIE holds

25%, non-operator)

• Ashrafi, offshore production concession in the Gulf of Suez (ENGIE holds 50%, non-operator)

ENGIE also holds a 5% stake in the first train of the Idku liquefied natural gas plant and has a long-term

supply contract for 3.7 million tonnes per year.


The challenges of access to

energy

Nearly 1.3 billion people (18% of the world’s population) still do not have access to electricity and nearly 2.7

billion people (40% of the world’s population) do not have access to clean and secure cooking systems. The

United Nations has designated the period 2014-2024 as the International Decade of Sustainable Energy for

All.

Energy consumption is not going to decrease, but will instead rise globally in the years ahead. This trend must

go hand in hand with a reduction in greenhouse gases.

For the population groups in question, mainly in Africa and South Asia, this is not some insignificant detail,

but a key factor governing everything else: access to healthcare, education, economic development, etc.

In the countries concerned, a pragmatic approach will make it possible to find funding and design an energy

mix that takes account of local situations and resources. This is something that will be handled differently

near a large urban area compared to rural areas where there is no energy infrastructure (off-grid).

The solutions envisaged by these countries are based on a balanced and sustainable mix, specifically the

massive use of low-carbon forms of energy (gas and renewable energies depending on the local situation:

solar, hydraulic, wind, biomass, biogas, etc.). Successful deployment will naturally require a close partnership

between the various stakeholders, sponsors, central governments, civil society and companies, including

social entrepreneurs.

Solutions now exist that enable access to energy that is clean and affordable (specifically thanks to the falling

cost of renewable energy technologies) while guaranteeing large-scale security of supply for countries.

Assuming that 500 million homes do not have access to energy, the deployment of such solutions would cost

approximately USD 50 billion per year to supply the infrastructure. To this must be added distribution costs

as well as maintenance and customer service costs in order to guarantee the long-term existence of systems

for their users. But this is achievable. And above all, the energy would be totally carbon-free in line with the

UN’s climate targets and recommendations.

ENGIE has extensive experience we are prepared to share in well-structured and balanced partnerships that

respect everyone’s obligations. Certain NGOs well known for their expertise (GERES, CARE, GRET) have also

been approached with a view to discussing new forms of NGO partnership – companies focusing on universal

and sustainable access to energy services. The Green Climate Fund receives USD 100 billion per year, part of

which could be dedicated to the implementation of universal access to energy.


Rassembleurs d’Energies is ENGIE’s solidarity-oriented investment fund that invests in sustainable energy

access projects for population groups living in precarious conditions. The fund aims to invest in social,

economically viable projects sponsored by social entrepreneurs.

Projects supported by Rassembleurs d’Energies in Africa

The African companies that Rassembleurs d’Energies supports aim to deliver an electricity access service to

non-connected population groups by installing improved cooking appliances or individual solar-based

solutions.

Investment in Simgas in Tanzania

Rassembleurs d’Energies supports Simgas in Tanzania, which provides small rural farms with modular and

sustainable biodigesters that produce gas for use in cooking and fertiliser. These systems are used to

eliminate toxic emanations and improve crop output, leading to additional income. They also replace wood as

a fuel, thus helping to combat deforestation. The biodigesters are produced and distributed by the local

communities and can be installed in a few hours.

Investment in EGG-energy Nearly 80% of the population of Tanzania has no access to electricity. Created in 2009, EGG-energy offers an

electricity access service to non-connected populations via individual solar-based solutions that can provide

lighting, recharge mobile phones and run small electrical equipment (radios, televisions, fans, computers). It is

present in the Dar Es Salam region, in the central and northwest part of Tanzania. In 2013, the company

started distributing solar technology connected to ‘mobile money’ via the mobile telephone network. EGG-

energy currently manages the sale, funding and after-sales service of these solar solutions for homes and

small businesses. Rassembleurs d’Energies decided to support their growth by reinvesting in the company

during its second round of funding.

Investment in FENIX International As an innovative company, FENIX International distributes high-quality individual electrification solutions for

off-grid population groups in East Africa (Uganda, Kenya, Tanzania, etc.). It distributes its products in

partnership with the mobile telephone operators (MTN, Vodafone and Orange), giving it a great deal of

development potential. Rassembleurs d’Energies supported FENIX’s development by taking part in the

company’s second round of funding.

Donation to ICSEE (an NGO)

Since 2009, the ICSEE (International Collaborative for Science, Education and the Environment) has been

supporting Masai groups in northeast Tanzania in order to raise awareness and install improved cookers.

These fuel-efficient stoves fitted with chimneys enable smoke extraction and are linked to solar systems that

provide lighting and a system for charging mobile phones. Codegaz, an association of ENGIE employees,

carried out a mission in 2013 in partnership with the Group’s foundation on behalf of ICSEE (an NGO).


Donation to FREEME/PlaNet Finance The FREEME project (promotion of renewable energies and energy efficiency in Morocco and Egypt)

encourages the development of renewable energies in those two countries via microfinance. The project is

based on four key pillars: building capacity for local and international stakeholders, helping micro-

entrepreneurs to sell efficient equipment, drafting appropriate financial models and creating an energy

microfinance fund, and raising the awareness of population groups about renewable energies. The project has

benefitted 4,800 people in both countries and has raised the awareness of nearly 2,400 micro-entrepreneurs

and low-income homes.

Donation to the Energies pour le Monde Foundation in Burkina Faso

In 2011, the Energies pour le Monde Foundation and ENGIE joined forces to create a partnership to

implement an electricity access programme in six localities in the province of Kourittenga in central Burkina

Faso. The purpose of the programme is to facilitate the involvement of a private operator – as a potential

investor – for the installation, operation and management of solar equipment.


GDF SUEZ

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92930 Paris La Défense Cedex, France

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