Webinar on DFIs & SE – Opening Remarks by EU Ambassador Jan Sadek
30 March at 9:00am
Permanent Secretary Masire, fellow ambassadors and development partners, Financial Institution representatives, ladies and gentlemen, welcome to this seminar and dumela from Gaborone!
Today we will focus on European financing instruments of interest to the expansion of sustainable energy in Botswana. The aim of this webinar is to showcase Team Europe’s financial instruments to facilitate pro-development investments in Africa that are also applicable to sustainable energy in Botswana.
We are very pleased to have assembled an impressive number of presenters from Team Europe’s Development Finance Institutions, including the European Investment Bank, Agence Française de Developpement and COFIDES, in addition to ATI, ElectriFI, Facility for Energy Inclusion and Climate Investor One, which are also backed by the EU and its member states.
We are also honoured by the presence of Mr Mmetla Masire, Permanent Secretary at the Ministry of Mineral Resources and Energy and by our colleague Georgios Grapsas, Energy Team Leader at INTPA HQ. I thank you all for taking the time to be with us, and I also thank the [large number of] participants from the private sector, public authorities, development partners, diplomatic community, financial sector and academia that have joined us today.
Well it’s another beautiful morning in Botswana. Even though we’re still officially in the rainy season, today we can look forward to 12 solid hours of sunlight and blue skies, like most days of the year. Although it’s very important, we’re not here to talk about the weather, we’re here to talk about the climate, and how Botswana’s is ideal for it to become a renewable energy powerhouse. More on that later, though.
You may ask yourself why the EU is interested in sustainable energy in Botswana. As many of you know, we at the EU are currently consulting with all our partner countries worldwide to jointly define our cooperation programmes for the 2021-2027 cycle. This exercise will determine the priorities of the EU’s development assistance envelope over the next seven years. The EU citizenry’s elected representatives at the European Parliament have decided that thirty percent of this worldwide envelope will go to actions to address the climate crisis. In Botswana, our Delegation’s specific multiannual programme will concentrate on two focus areas. One of these two areas is the Green Transition, which includes biodiversity conservation, the circular economy and sustainable energy.
We believe that Botswana is a land of opportunities for renewable energy production, and it stands to gain great national wealth by tapping into the free source of energy called the sun. Botswana is one of the best places on earth to produce solar energy thanks to its mostly clear sunny skies all year round, and its vast tracts of open land, much of it desert. The sun is strong and bright in this country, as anyone walking in the middle of the day will tell you.
So the potential is clearly there, but where is the demand for renewable energy? After all, at the moment almost all of Botswana’s electricity comes from burning coal and diesel. Well, we see three sources of demand for solar power over the short, medium and long term.
In the short term, some of Botswana’s far-flung villages remain to be electrified. Around one third of the population has no access to electricity, and they live for the most part in rural areas. Many rural families have no electricity because they can’t afford to connect their houses, even when their village is hooked up to the national grid. Other villages are far from the grid, and in these cases the most cost-effective option is to build solar power minigrids or microgrids to electrify these villages. Moves are currently under way to build solar minigrids in 12 sites through a 35MW photovoltaic programme that the Government of Botswana is rolling out.
In the medium term, Botswana could use solar power to close its electricity deficit. The country is a net electricity importer: it buys between 20 and 40 percent of its total electricity needs from its neighbours through the Southern African Power Pool. There is no reason that Botswana could not substitute these imports by producing all this electricity on its own. It could do this either through solar or coal or both, given that Botswana is extremely well endowed in both these resources. However, the cost of solar production has plummeted in recent years and, worldwide, electricity from new solar installations is now cheaper than electricity from new coal-fired plants.
Botswana can achieve energy sovereignty and produce all the electricity it needs, but why stop there? Over the longer term, an ambitious strategy would see Botswana exporting electricity to its increasingly power-hungry neighbours in the SADC region, and that is in fact the government’s vision. This way, instead of spending valuable hard currency to import electricity, it could start earning more and more of it to help Botswana along its path to high-income country status.
Experts also think that Botswana could start to reduce its dependency on fossil fuels by gradually replacing more and more of it with solar power. This will not see the coal industry just disappear, since it still accounts for almost all the electricity production in the country. As Botswana’s power needs grow, so can the proportion of renewables in the electricity mix, and the government has committed to source 15% of electricity production from renewables by 2030 as one way to meet its Paris Agreement commitments on greenhouse gas reductions. The fact that the sun only shines in the daytime will never become a problem for Botswana if it adopts complementary power technologies that do keep going after sunset.
New demand for electricity will come from vehicles. More and more carmakers are setting phase-out dates for petrol-powered vehicles. Just two months ago, General Motors made a commitment to sell only zero-emissions vehicles by 2035 – that’s just 14 years from now. In Europe, Renault has pioneered electric vehicles and both Mercedes-Benz and Volkswagen have promised electric or hybrid versions of all their vehicles within ten years. The growing popularity of companies like Tesla also underscores the shift toward zero-emission automobiles. Worldwide, electric cars are the fastest growing segment of the auto industry.
We don’t yet see many hybrid or electric cars in Botswana, but I’m sure this car-loving nation will embrace them once the cost to buy and run them tips below that of petrol and diesel cars. The interesting thing about plug-in electric cars is that they all come with advanced batteries. As electric vehicle sales expand in the future, so will the country’s storage capacity. Photovoltaic electricity produced during the day will be stored in thousands of batteries for use any time during the day or night.
Photovoltaic solar panels are not the only game in town. Some of the largest new solar generation facilities in the world today are concentrated solar power towers, and they can go on producing electricity for the whole night, no batteries required, thanks to their superheated salts. Another proven technology that also works at night is wind power, and studies are currently under way to determine where the wind blows best in Botswana. The European Union is a world leader in wind power technology and generation, and our firms could be very happy to invest in Botswana given the right investment climate. Windpower and other renewables are so successful in Europe that there are countries that are occasionally hitting 100% electricity consumption from renewables when conditions are favourable.
But Botswana also stands to benefit in another way from the worldwide shift toward renewable electricity and electric cars. Copper is mined in Botswana, and this commodity is also becoming more valuable for its use in renewable energy applications. And though diamonds are the country’s biggest export earner, the rare earth minerals that are also found in Botswana will become more and more valuable as raw materials to manufacture fuel cells low and zero-emissions vehicles. We can see a future where Botswana becomes a manufacturer of advanced batteries and fuel cells for the auto industry: it has the raw materials, it has the workforce, and it has the peace and stability.
In these remarks, I’ve spoken about Botswana’s renewables potential and also about the demand. What I haven’t spoken about is the possible financial means, and this will be the focus of the seven presentations that out DFI friends will deliver after our initial addresses. Aside from its natural endowments, Botswana can also boast of its exceptional stability, unbroken record of democratic elections and prudent economic management, and these assets are very valuable to investors. But there are also certain constraints to foreign investment, and we hope that our presenters will address both sides of the coin.
Before I close, I’d like to salute our friends at the UN, Power Africa, USAID, JICA and other development partners present. We hope that this webinar will spark further discussions about possible joint initiatives in renewables in Botswana and beyond.
If this country decides to go big into renewables, the construction, operation and maintenance of new energy projects will create many good new jobs for Botswana’s youth, as will the exploitation of mining products needed for this energy revolution. Add to this the revenues from renewable electricity exports and we can see that Botswana’s future prospects will be as bright as the sun over the Kalahari sands.
Thanks for your attention. I hope you find this webinar interesting and useful.