Green Investment Diagnostics for Africa: What are the Binding Constraints to Investment in Renewables in Kenya and Ghana?

The vast potential of renewable energy is failing to be realised in many African countries, in spite of the many pledges made by donors and international financiers. This is not due to a lack of policies supporting investment. Many African countries have renewable energy targets, feed-in-tariffs (FiT), or import duty exemptions for renewable energy technologies. In some cases these policies are not fully implemented. In others they are implemented but, put in the language of this report, they are not targeting the most binding constraints to investment. Whatever the reason for their lack of success, it is clear that simply introducing formal policies is not enough. This Research Report presents the Green Investment Diagnostics methodology that aims at supporting policymakers to better target policies for the promotion of renewable energy investment. Our approach draws from the original Growth Diagnostics developed by Hausmann, Rodrik and Velasco (2004) to identify the most binding constraints to economic growth in developing countries. We adapt that approach to the particular case of the energy sector, so that we can identify the main bottlenecks faced by renewable energy investors in a particular country. We start by asking: for this particular country, at this particular time, what is preventing higher levels of investment in renewable energy generation technologies for which there is an economic rationale? To answer this question we follow a systematic approach, which starts with a decision tree analysis and continues with the cumulative building of evidence to back up potentially binding constraints. We apply the new methodology to two Sub-Saharan African countries, Kenya and Ghana, but this exercise could be replicated in any other context. In Ghana, we look for the reasons for underinvestment in renewable generation capacity. We find that renewable energy investments provide low returns in the country, disproportionate with the very high risks coming from an unreliable off‑taker, poor regulation, macroeconomic imbalances and corruption. Furthermore, there is insufficient access to finance due to scarce domestic finance and high returns expectation for short-term loans. In Kenya, we first look for factors behind the successful attraction of investment for large-scale renewables, mainly wind and geothermal. We then focus on the constraints to future investment, particularly in flexible, smaller-scale technologies more appropriate for increasing electrification rates in rural areas. Kenya offers generous returns to investment in renewables and least cost generation from geothermal and wind. However, it faces high system costs due to a lack of networking infrastructure and an inflexible generation mix. It also presents regulatory constraints at the planning and procurement stages and serious problems of social acceptance. Social problems are exacerbated by uncertain land property rights and consultation processes, inequality in access to services, and the rent-seeking behaviour of local elites. At the heart of each country’s constraints there is a stable status quo in each country: the over-borrowing state in Ghana, and a rent-capturing elite in Kenya

The role of Turkey in the European energy market

The essay in this Med-Agenda aims to examine the role of Turkey in the global energy market within the context of European Energy Security. In the essay we have attempted to answer the following questions: What will the future role of Turkey be in the global energy market? As is usually argued, can Turkey play a leading role as an energy hub or an energy corridor/transit land in the European Union’s energy security? As conclusion we may argue that Russia will continue to match the European demand for natural gas by diversifying transportation routes in the coming decades. For the time being, Turkey can take a part in Gastrom energy policy and European energy security as a transit land and in the meanwhile can cover its own consumption demand for energy

A study on improvement plan of overseas business through process and issue analysis

Thesis(Master) --KDI School:Master of Public Management,2018.This research paper aims to show improvement points of K-water overseas business. In other words, this study focused on suggesting ways to improve overseas business by reviewing the risk allocation and major document issues in K-water overseas project. This study examined the structure and major risks of overseas IPP business, as well as key issues of major contracts. IPP projects require extensive procedures and review processes from development to operation. In order to understand this, it is necessary to concretely summarize IPP business and it is necessary to organize the whole framework. In addition, based on a case study of K-water, I propose an optimized improvement plan for K-water overseas business. Therefore, this study tried to present a more realistic research plan through academic theory and practical case presentation.. Eventually, the most important thing in this study is to review the overseas IPP projects promoted by K-water, and to summarize the overseas IPP projects of K-water, which is a public corporation, based on the results. For this purpose, K-water's overseas business strategy was analyzed and SWOT analysis of K-water overseas business was conducted. Finally, completing an overseas project is a long-term process, complex contract document, long-term negotiation and collaboration of project stakeholders. The purpose of this study was not only to suggest ways to improve K-water overseas business but also to give help to the people in charge of K-water overseas business. In addition, I want to help understand the promotion of the overseas business of the public corporation.1. Introduction 2. Literature review 3. Concept, Type and Procedure of IPP 4. Risk of IPP business 5. IPP business major stakeholders and Major contract issues 6. K-water’s overseas business case analysis 7. Improvement plan of K-water’s overseas business 8. ConclusionmasterpublishedJeonghwan, LEE

The ability of renewable energy assets to attract private investment: factors and considerations that influence an investor's decision to invest into South African assets with a renewable energy exposure

This paper aims at facilitating, through research and increased understanding, the inflow of investments into renewable energy (RE) assets. The private sector represents vast pools of funding that is needed for RE capacity to be unlocked on a sustainable and large scale rate. Through using a grounded theory research design methodology, the drivers and restraints identified were the risks and rewards involved in investing into a RE asset, specifically the macro-economic and microeconomic risk and reward factors involved. Renewable energy assets were found to closely be affected by government policies and the stability thereof. Return attributes to renewable energy were a high cash yielding, long term in nature and inflation indexed payments - all attractive attributes to pension funds, the largest private investment group with regards to assets under management. Through the grounded theory methodology process a causal loop diagram (CLD) was built, representative of the insights of RE as an asset class- gained from the literature. One leveraging factor identified in the CLD to increase investment is government policy stability which will substantially decrease perceived risks to investors and facilitate in increased investments into renewable energy assets

Building and investigating generators' bidding strategies in an electricity market

In a deregulated electricity market environment, Generation Companies (GENCOs) compete with each other in the market through spot energy trading, bilateral contracts and other financial instruments. For a GENCO, risk management is among the most important tasks. At the same time, how to maximise its profit in the electricity market is the primary objective of its operations and strategic planning. Therefore, to achieve the best risk-return trade-off, a GENCO needs to determine how to allocate its assets. This problem is also called portfolio optimization. This dissertation presents advanced techniques for generator strategic bidding, portfolio optimization, risk assessment, and a framework for system adequacy optimisation and control in an electricity market environment. Most of the generator bidding related problems can be regarded as complex optimisation problems. In this dissertation, detailed discussions of optimisation methods are given and a number of approaches are proposed based on heuristic global optimisation algorithms for optimisation purposes. The increased level of uncertainty in an electricity market can result in higher risk for market participants, especially GENCOs, and contribute significantly to the drivers for appropriate bidding and risk management tasks for GENCOs in the market. Accordingly, how to build an optimal bidding strategy considering market uncertainty is a fundamental task for GENCOs. A framework of optimal bidding strategy is developed out of this research. To further enhance the effectiveness of the optimal bidding framework; a Support Vector Machine (SVM) based method is developed to handle the incomplete information of other generators in the market, and therefore form a reliable basis for a particular GENCO to build an optimal bidding strategy. A portfolio optimisation model is proposed to maximise the return and minimise the risk of a GENCO by optimally allocating the GENCO's assets among different markets, namely spot market and financial market. A new market pnce forecasting framework is given In this dissertation as an indispensable part of the overall research topic. It further enhances the bidding and portfolio selection methods by providing more reliable market price information and therefore concludes a rather comprehensive package for GENCO risk management in a market environment. A detailed risk assessment method is presented to further the price modelling work and cover the associated risk management practices in an electricity market. In addition to the issues stemmed from the individual GENCO, issues from an electricity market should also be considered in order to draw a whole picture of a GENCO's risk management. In summary, the contributions of this thesis include: 1) a framework of GENCO strategic bidding considering market uncertainty and incomplete information from rivals; 2) a portfolio optimisation model achieving best risk-return trade-off; 3) a FIA based MCP forecasting method; and 4) a risk assessment method and portfolio evaluation framework quantifying market risk exposure; through out the research, real market data and structure from the Australian NEM are used to validate the methods. This research has led to a number of publications in book chapters, journals and refereed conference proceedings

Assessment of cryptocurrencies as an asset class by their characteristics

The cryptocurrency market has witnessed significant growth in the past few months. The emergence of hundreds of new digital currencies and the huge increase in the prices of their leading representatives have attracted a lot of attention from investors. However, the financial characteristics of the cryptocurrency markets have not been systematically evaluated yet. As a consequence, there is currently no consensus on whether cryptocurrencies constitute an individual asset class or if they share substantial similarities to stocks, bonds, commodities or foreign exchange. Based on Markowitz et al. (2017) this paper aims to fill this lack of research by evaluating the cryptocurrency market based on seven requirements of an individual asset class. The authors find that the cryptocurrency market distinguishes itself remarkably from established asset classes in terms of risk and return. Additionally, the low correlation between the cryptocurrency markets and these established asset classes induces a diversification potential for investors, leading to more favorable risk/return profiles of their portfolios. But also the emergence of investment services and products provided by the financial industry and the increasingly cost-effective access to cryptocurrencies corroborate the conclusion that cryptocurrencies can be seen as an individual asset class