"New Regulatory Framework for Renewable Energy Projects in Angola" was the theme of the first ALER Talk held on May 27, sponsored by Source Energia, VdA - Vieira de Almeida and IFC - International Finance Corporation. The event had the institutional support of IRSEA - Electricity and Water Services Regulatory Institute.
This event had more than 185 registered participants, about 68% from representatives of the private sector, 18% from the public sector, 8% from cooperation partners, and the rest from the third sector, academy or independent professionals, which demonstrates the high interest in the renewable sector in Angola.
The conditions that are being created to promote private investment in the development of new renewable energy projects were addressed, namely the publication of new regulations and an incentive regime. These initiatives open the door to new investments in renewable generation in Angola whose opportunities and details have been made known.
The National Director of Renewable Energies and Rural Electrification of MINEA, Serafim Silveira, made some initial considerations about the current and expected developments in the renewable sector in Angola, stating that “there is already an enormous willingness of the private sector to invest demonstrated through the numerous expressions of interest presented”.
For his part, the Head of the Technical and Legal Department of the IRSEA, Marino Bulles, announced that “at the end of 2020 a working group was created consisting of the Ministry of Petroleum and Natural Resources, Ministry of Energy and Water, Ministry of Economy and Planning and the Ministry of Finance, which developed an incentive framework to attract private investment in new renewable energies approved by the Economic Commission of the Council of Ministers. A specific amendment will be made to the Electricity Law proposing that, in addition to a public tender, the entry of the private sector can also be made through expressions of interest with the submission of unsolicited proposals. In addition, the basis for the legal regime of tax exemptions was prepared, which will have a chapter dedicated to the benefits that can be attributed to renewable energy projects or investors”. He also added that “the regulation of the binding generation of renewable energies will be published” and highlighted that “this year, through AIPEX, the single window of the private investor was created to coordinate with all entities that it is necessary to contact and facilitate the management of licenses and contracts, simplifying processes and reducing bureaucracy”.
Raimundo Santa Rosa, Executive Director of IGAPE - Institute for the Management of State Assets and Holdings, stressed that “the thermal power plants that currently feed the southern region have a production cost of 120 USD / MWh which, when compared to the cost of solar production of 70 USD / MWh, demonstrates a great savings opportunity and the political will to move forward with renewable projects”. He acknowledged that “risks are the Achilles' heel in attracting investment” but clarified that “the exchange rate risk was overcome with the republishing of the tariff regulation and as regards the risk of default, several options are being worked on that can go through an escrow account and issuance of letter of credit”.
Source Energia's CEO, Pedro Coutinho left a note of necessary clarifications for the development of projects, namely in terms of procedures, from coordination between entities and the environment for foreign investment and capital circulation. He further reinforced in terms of rural electrification that “Angola has huge opportunities for mini-grids” and “that solar home systems are the fastest electrification vehicle using payment through electronic wallets”.
Tiago Almeida, Senior Investment Officer at IFC affirmed that "there have been positive developments that demonstrate that Angola is clearly on the positive path to create a favorable ecosystem to make projects viable, stimulate investment and provide comfort to financiers". He also stressed the importance of “guaranteeing the sustainability of the sector as a whole” suggesting that the “transition to the user-pays principle and tariffs that cover the cost of production and investments” be made.
Finally, Vanda Cascão, Partner at VdA - Vieira de Almeida, drew attention that “from the legislative point of view, the publication of the regulations was a very positive step, but part of the package is still missing, namely the regulation of renewable binding generation and isolated systems and the terms of future tenders”and that it is necessary to“ ensure regulatory stability and resolve inconsistencies that limit the bankability of projects ”and that“ several essential issues are left either to the PPA or to the concession”. Regarding the clarification that was left by the IRSEA of the possibility of bilateral contracts between private parties, she added that “for contracts concluded freely, it is important that the regulation is clear in terms of future costs for producers and consumers so that the contracts are solid and stable”.
The "ALER Talks" is an event in the form of a short and informal webinar on a current topic moderated by the Executive Director of ALER, Isabel Cancela de Abreu, which will have a quarterly frequency.
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