"FULL TAKE-OR-PAY STRUCTURES ARE NOT SUSTAINABLE".

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Mamadou Goumble

Energy Business at Wartsila

Wartsila's Vice President for Africa, Mamadou Goumble, looks forward to a new era in funding models and network operations in the continent's energy sector.

If you've ever been to Senegal it's likely that the energy you consumed was being generated by Finnish company Wartsila. The corporate giant, which operates in maritime and energy services, builds and operates power plants and has 700 employees on the continent. According to Mamadou Goumble, Vice President for Africa, the firm has built plants generating over 7GW. In Senegal they operate and maintain half the network on behalf of the national utility; in Mauritania even more. They also provide off-grid energy solutions to corporates, among them a mining group in Burkina Faso.

Traditionally they have built plants burning fossil fuels but increasingly they are installing hybrid power plants, combining fossil fuels and renewables. Goumble calls it a new era in the energy sector--a shift that will require a new ways of thinking and providing an integrated approach. This shift will apply to funding models and network operations, which are changing as technologies and energy sources evolve. Wartsila is now offering its clients an integrated solution far beyond the technological knowhow of building and plant operation.

Opportunities in renewables

The cost of renewables, due largely to increased competition and production of the components at scale, has come down, for instance at 4 cents/ KW in Senegal, but the challenge, says Gouble, remains intermittency. Flexible conventional power sources can help to match power needs and the intermittence of renewable energy. Storage facilities are the best response to intermittency, especially in terms of ensuring the stability of the grid, but they are still expensive. We will soon reach the tipping point for a new paradigm shift, with the base load switching to conventional renewables, he says.

Bankability of projects

The biggest challenge that the continent faces, compared with other emerging markets, is the bankability of projects, and Wartsila are doing the development themselves to create a pipeline. Like others in the sector, Goumble believes that it is not capital investment that is the issue, but rather regulatory bodies who are often too slow in approving and negotiating power purchase agreements (PPAs). He believes the administrative side needs to be more predictable, streamlined and consistent across...

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