With a population that has a higher number of children and elderly, Zambia is left with not enough workers. Its dependency ratio leaves it vulnerable to taking on too much future debt, regardless of any post-default restructuring solution.
Africa: Siemens Energy on mission to tackle renewable energy
Siemens Energy plans to use its new status as a standalone company to target African markets for wind, solar and hydrogen power solutions, Thabo Molekoa, CEO for South Africa, tells The Africa Report.
The company is discussing retrofit or new renewable energy solutions for businesses and governments in Africa, says Molekoa. Siemens Energy is working on adapting its turbines to enable them to increase the proportion of hydrogen used, and Molekoa is aiming for some turbines to be able to run on 100% hydrogen.
Siemens Energy is in the first flush of its independence from former parent company Siemens. Germany’s largest-ever corporate spin-off led to shares of Siemens Energy being listed in Frankfurt at the end of September.
The new company also has a stake of 67% in renewables business Siemens Gamesa, which says that its African wind power installations of 3.4GW is more than half of the continent’s entire wind power capacity.
- The separation was designed to allow Siemens Energy to “respond quicker to customer demand,” says Molekoa in Johannesburg.
- Siemens still has a stake of about 35% in Siemens Energy. Molekoa says this will drop further in the next 12 to 18 months. “We didn’t want Siemens to have a controlling stake.”
- Many businesses within Siemens compete for capital, says Molekoa. Siemens Energy can now identify the most important trends in its market and allocate capital as needed, he adds.
- African urbanisation and young demographic structures mean that there will be “huge sustainable energy demand,” he argues.
South Africa Mining
Siemens Energy is far from writing off non-renewable sources. Molekoa stresses the importance in the region of taking existing resource endowments and levels of electrification. Excluding South Africa, these levels are still low in the southern Africa region, he says.
- Siemens Energy is in talks with the government of Botswana over how to stabilise its power supply, which at present depends heavily on coal, says Molekoa.
- In Mozambique, the company this month won a contract to supply emissions-reducing power generation equipment for LNG development.
Some South African miners, weary of unreliable from state-owned utility Eskom, have started launching solar tenders in a bid to find an alternative. ArcelorMittal South Africa, Sasol and Impala Platinum are among those to have invited bids to supply solar power.
- The spate of solar tenders represents “a significant shift,” says Molekoa. “The minute that mindsets shift, we are better off.”
- Power, whilst a significant issue, may not be the most important issue facing miners, says Molekoa. He sees them as pragmatic, rather than having a fixed agenda on what power solutions should look like. “They just need a truck. They don’t care if it’s pink or brown.”
Still, he adds, mining companies stand to gain from using renewable power by anticipating future pressure from their shareholders about sustainability.
“We are ready in terms of solutions,” Molekoa says. The timetable for deployment will be determined by “when the client is ready.” Molekoa expects that it will take between three and five years before South African miners start adopting Siemens Energy solutions.
- In the long term, Siemens Energy solutions can be a “useful input” in attracting miners back to South Africa, says Molekoa. Availability of reliable renewable power “will help the business case” for mining in South Africa.
Bottom Line: Power businesses in Africa are likely to be more agile as standalone operations rather than as units within a conglomerate.