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Winds of Change
Sino-African renewable energy cooperation vital for development
By Yu Nan | ChinAfrica December 2015

Sino-African green energy ties reaping rewards

There's a revolution blowing along the highlands about 95 km southeast of Addis Ababa, Ethiopia's capital. Standing high up on the Great Rift Valley, row upon row of giant white wind turbines spin freely, churning out valuable green energy to supplement the nation's grid.

They belong to the Adama Wind Farm, installed by Chinese company HydroChina International Engineering Co. Ltd. Adama Wind Farm boasted an installed capacity of 50 MW in the first phase. The second phase of the project completed this May, and with an installed capacity of 153 MW, it has become the largest wind farm in Sub-Saharan Africa.

Abebayehu Assefa, the project's consultant engineer, is proud to have witnessed Adama's progress from blueprint to reality. The professor at the Institute of Technology of Addis Ababa University says the Ethiopian side developed an in-depth understanding of China's wind power technology and equipment development, as well as management experience, by working with Chinese engineers.

"We are happy that Ethiopians had, for the first time, participated in an international consultancy at the Adama wind power project," Assefa said. "We would like to enjoy long-term cooperation with Chinese wind turbine companies in the future, which would mean a lot to our domestic clean energy development."

Upon completion, the project will meet 20 percent of the power demand in the Ethiopian capital and ease the prevailing power shortage considerably.

Going green

Ethiopia is an exemplar of Sino-African cooperation in the new energy sector.

Africa urgently needs to address its energy shortage. Approximately 13 percent of the world's population have no access to electricity and about 48 percent of them live in Africa, according to a report by the Global Wind Energy Council this year. Yet, so far, only some countries in North Africa, such as Egypt and Morocco, are using wind power on a commercial basis.

Industry experts say as the continent's demand for power propels its transition to renewable energy, significant international assistance in terms of finance and technology is required.

"China's economic development model is a benchmark for Ethiopia. We hope to get more support from China, both in finance and technology," said Ahmed Shide, Ethiopian Minister of Finance and Economic Development.

Bilateral trade between China and Africa was worth $221.88 billion in 2014, up 5.5 percent from a year earlier, according to the Chinese Ministry of Commerce. China has become Africa's largest trade partner. Africa is China's leading import source, second largest project contracting market overseas, and fourth largest outward investment destination.

China-Africa cooperation in the energy sector has been making great contributions to the growing bilateral trade. China's mature renewable energy technology and strong financial support are securing the development of clean energy in African nations.

To improve African countries' abilities to adapt to climate change, China announced at the Fourth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) in 2009 that it would launch 100 clean energy projects - comprising solar, biogas and small hydropower projects - in Africa. Three years later, the Beijing Action Plan (2013-15) drawn up at the Fifth Ministerial Conference of FOCAC declared that China and Africa would advance cooperation in clean energy and renewable resources projects for mutual benefit and sustainable development.

Wind power development in Ethiopia is a good example of this cooperation. In 2011, HydroChina began formulating a China-aid wind power and solar energy master plan for Ethiopia. It was the first technical cooperation project in the field of new energy between China and Africa. In addition, HydroChina also trained local technicians and today, the Adama Wind Farm has become a catalyst for harnessing Ethiopia's potential wind and solar power.

Other African countries are also hoping to get more support from China, both in funding and technology. Chinese solar panel maker Suntech Power has a 100-MW solar panel plant in South Africa, and the Sinohydro Group has a 20-MW hydropower project in west Kenya. Both showcase Sino-African clean energy cooperation and sustainable development endeavors.

Qian Zhaogang, Commerce Counselor at the Chinese Embassy in Ethiopia, said both China and African countries face challenges of energy restructuring. Since there is high structural complementarity in the funding, technology, resources, and markets of both sides, it provides a broader prospect and space for the development of China-Africa new energy cooperation.

"Africa, with its abundant energy resources, is hoping Chinese partners would be able to provide comprehensive risk and financial solutions to help in its infrastructures construction projects," Sierra Leone's Energy Minister Henry Macauley told ChinAfrica .

Diversified operations

Chinese enterprises have developed energy cooperation with African counterparts in a variety of ways, including preferential loans, investment in plant construction, and contracted projects.

In mid-2014, Chinese company JinkoSolar Holding Co. Ltd. opened a solar PV module production facility in Cape Town, South Africa. Covering an area of 5,000 square meters, the 120-MW facility had a total investment of $7.5 million. For the ongoing operations, it employs about 250 local workers.

Peng Shengkai, General Manager of JinkoSolar's South Africa branch, said they took less than six months to complete the plant and start production. What attracted JinkoSolar was the potential for renewable energy development in Africa, with a huge market demand for solar products.

Western Cape Premier Hellen Zille spoke of her government's support for JinkoSolar's decision to open its first factory outside China. She said the plant provides significant opportunities for local job creation and green economic growth. The government, she added, has been working to ease bureaucratic red tape to facilitate the development of all enterprises and create a sound business environment.

Apart from the going global strategy of Chinese enterprises, African policymakers are starting to grasp the opportunities to attract Chinese investments. At the Fourth Africa Infrastructure and Power Forum in Beijing in October, Africa's ministers of energy and finance and industry leaders and practitioners from the infrastructure and energy sectors talked about cooperation opportunities with major Chinese investors in Africa. About 11 projects were placed on the table for Chinese investment. They included the East to West Landbridge - LAPSSET Corridor, East African Standard Gauge Railways, and gas-to-power investment opportunities in Mozambique and South Africa.

Silvester Kasuku, Director General, LAPSSET Corridor Development Authority, said Kenya will gradually open new sectors to greater foreign investment. It is also going to increase private capitals participation in projects.

Financing challenge

According to the International Renewable Energy Agency, solar and hydropower will become the main force of renewable energy development in Africa. Africa's growing demand for electricity in the next two decades will increase 10 times, especially in renewable energy. Yet, the African renewable energy boom faces a tough challenge.

"The biggest hurdle [for African nations' energy development] is financing," Reynolds Beks Dagogo-Jack, Chairman of Jack Reynolds Engineering in Nigeria, told ChinAfrica .

That is why China, with its investment power, is so attractive to Africa. China is shipping more of its investments to the continent, and the Standard Bank Group has predicted Chinese investments in Africa will rise to $50 billion by 2015. The bank also estimates bilateral trade will reach $300 billion by this year, double the 2010 figure.

Bi Mingqiang, Chairman of ICBC Standard Bank, a collaboration between the Industrial and Commercial Bank of China (ICBC) and the Standard Bank Group, suggested investors diversify debt structures. "As more and more Chinese enterprises invest in Africa, I recommend the use of cross-border yuan settlements," said Bi. "The ICBC Standard Bank will offer a full range of financial solutions."

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