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McKinsey & Company

Women in Energy Business SummitSouth Africa

SPEAKER: FRANSJE VAN DER MARELASSOCIATE PARTNER, MCKINSEY & COMPANY

CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited

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x

Globally, growth in energy demand is driven by developing nations

SOURCE: McKinsey Energy Insights, US Energy Information Administration

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Gas and renewables are the winners, coal will ‘peak’ in 2025Global primary energy demand in 2050, growth compared to today (%)Million TJ

Oil208

Other

143

CoalGas

Renewables38

75

185

Nuclear75

1.2%

0.9%

0.9%

-0.4%

0.4%

7%

SOURCE: McKinsey Energy Insights

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Electricity demand growth outpaces the rest, 77% of new capacity will be renewable

Gas 13%

Solar 48%

Wind 29%25%18%

Other 10%


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In Africa, energy demand will double and is mainly driven by residential

x


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There is virtual no limit to power capacity in Sub-Saharan Africa

1,281

727

DRC

664

Nigeria 604

Angola

South Africa

Mozambique

Kenya

Tanzania

384

616

Botswana

324

Ethiopia 586

543

Power-generation potential for select Sub-Saharan African countries by technology1

Gigawatts

SOURCE: Rystad Energy database, rystadenergy.com; US Energy Information Administration: International Energy Statistics (2013); The World Energy Council, London, UK, World Energy Resources: 2013 Survey, October 2013, worldenergy.org; Geothermal Energy Association's 2012 International Market Overview Report; Wind Energy Resource Assessment, National Renewable Energy Laboratory, 2013, nrel.gov

1 Potential from domestic resources only; gas includes all conventional proven/speculative reserves, and hydro includes all technically exploitable potentiald

Selected countries Gas Coal Hydro Geothermal Wind Solar

459 295 281 27 97 6,487Total

Total > 7000 GW

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Lack of distribution and transmission capacity is preventing Africa from reaching its full potential

28%average rural electrification today

~ 45% access only in BAU by 2030

Halfpeople without electricity

live in Africa

68%average urban electrification today

8McKinsey & CompanySOURCE: WEO 2014, Team analysis, Brighter Africa report

There is more focus on energy access than ever

United Nations – SDG7 goals: 100% urban and 95% rural access by 2030

Power Africa: 30 GW and 60 million new connections by 2030

Africa Power Vision: 80% access by 2040

African Development Bank – New Deal: 100% urban and 95% rural access by 2030

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Cost of renewables have never been lower

2006 110907 10080

20151413

10

8

12

16

2

14

6

4

12

20

22

24

18

13,2

4,1

20,4

Price of renewable energy1

USD c/kWh

1 Levelised Solar PV PPA price

SOURCE: Utility-Scale Solar 2015: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States

10McKinsey & CompanySOURCE: UDI

1 Potential Countries with no private sector presence: Benin, Burkina Faso, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Congo, Djibouti, Equatorial Guinea, Eritrea, Guinea, Guinea-Bissau, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mayotte, Niger, Reunion, Sao Tome & Principe, Sierra Leone, Somalia, South Sudan, Swaziland, Togo

2 Full sector in the process of privatisation, but currently, NIPP assets still in public hands

29483422112251 381212

Tunisia

Ghana27

Tanzania

1112

1521

Cameroon

1

1

Ethiopia

DRCZimbabwe 0Namibia

Mozambique

Cote d’Ivoire 5742

79

6EgyptAlgeriaAngola

11Botswana

10Gabon

South Africa4

5Sudan

28Rwanda 38

28

Gambia

Senegal

CountryIPP penetrationPercent of total capacity # IPPs

3

The private sector started participating

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Kenya is following a similar trend to South Africa

Governments are successfully pushing for access

SOURCE: Team Analysis, Kenya power, Press, WEO, EIU Canback

400

3,200

2,800

3,600

2,000

1,600

1,200

800

2,400

0605 120403 07 1110 130908 14 201596 97951994 0199 020098

Kenyan electrification program

South African electrification program

0

Number of households connected per year, 000’s

12McKinsey & CompanySOURCE: African Development Bank Group (transmission lines); World Pop 2010; World Bank Data Bank (2020 data)

Kenya4.0

Uganda

10.4

9.2

3.5

Malawi

SenegalBotswana

41.4NigeriaCameroonBenin

0.5

2.55.3

Ethiopia

5.1

1.03.8

Tanzania22.4

Cote d’IvoireGuinea

12.5

2.9LiberiaZambiaAngola 5.8Sierra Leone 1.4

18.0DRCMozambique

Mali

6.4

4.1

Rwanda= 100%2.6

Burundi 2.6Ghana 6.1

Urban grid

Rural near grid

Mini-grid

Off-grid2

1 Geospatial model assumes 5pp/ household; Households within 10km of existing >60kv transmission lines = main grid; else those within areas of 30 households per km = mini grid; else off grid2 Off-grid includes white spaces areas with less than 1 household per km

28% 14% 19% 40%

Transmission options in African countries (2020)1

% of households in country (100% = million households)

Technology helps - 42% off-grid and mini grid

42%


What role can women play to capture the opportunity?


Women leadership is important – organisationswith more women leaders perform better

SOURCE: Company websites; Datastream; McKinsey analysis 2007-2009

Average ROEPercent

Average EBIT marginPercent

15

22

+41%

Companies no women in executive committees

Companies with higher proportion of women in executive committees (top 25%)

11

17

Companies with higher proportion of women in executive committees(top 25%)

+56%

Companies with no women in executive committees


45%of workforce

36%of promotions

44%line roles

56%of staff roles

Women are less promoted and have less ‘influential’ roles


Women are under-represented in the energy industryTotal number of companies in sample = 55. Total number of employees in sample = 201,653These are the 55 companies that responded to McKinsey’s organizational survey; they are not the same 55 used for the analysis of EBIT margins

Average

Heavy industry3

Global energy and materials

Consumer goodsand retail

Transportation, logistics, and tourism2

Financial and professional services1

ICT

Health care and pharmaceuticals

SOURCE: McKinsey & Company, Women Matter Africa survey data, 2015

1 Auditing, consulting, real estate2 Air, road, and rail passenger transport, freight and mail handling, tourism and hospitality agencies 3 Construction, heavy equipment, and automotive manufacturing

29%

9%

22%

28%

29%

30%

33%

39%

71%

91%

78%

72%

71%

70%

67%

61%


What can organizations do to drive gender empowerment and diversity?

Implement a fact-based strategy includingdevelopmentprogrammes

Put support structures in place and confrontlimiting attitudes towards women

Make gender a top priority for the organisation

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