BNCC, together with Equinor and KPMG Norway, organized an event to discuss how Norway can collaborate in enabling clean energy investments into emerging markets, with Brazil as an example case. Scatec Solar, Statkraft, ZERO, the Differ Group and Equinor, together with an opening presentation by the Ministry of Foreign Affairs, delivered an interesting dialogue on the energy outlook in the context of climate change, and some of the key lessons, risks and tools at the disposal for Norwegian companies entering emerging markets.
Of course, governance and sector-wide challenges persist, such as low predictability, the financial viability of off-takers, and affordability and willingness to pay of end users, among other obstacles, which combine to make market entry for the private sector risky, said Mr. Svelle. To offset some of these risks, Mr. Svelle presented the Norwegian government's recently lauched Guarantee Scheme that will inject up to 300 mill. NOK annually in a period of 3-5 years.
Following the instruction of the guarantee mechanism, Larissa Slottet, Executive Director of BNCC, moderated a panel discussion between representatives from Scatec Solar, Statkraft, ZERO, the Differ Group and Equinor on their experience, ongoing initiatives and key lessons learned, from their efforts to promote clean energy in emerging markets.
Kicking off the discussion, Tom Erichsen, CEO of Differ Group, explained that the energy outlook is “more renewable, more distributed, and more off-grid.” Distributed, sustainable energy will be key to meeting development and climate goals. Erichsen explained that the guarantee scheme was as a welcome instrument for the off-grid market and distributed energy companies (DESCOs), which are usually characterized by the absence of power-purchase agreement based (PPA) models.
Per Kristian Sbertoli, Head of Renewable Finance from Zero, echoed the importance of leveraging Norwegian expertise in combating coal. “The key trends in the sector are represented well in this panel,” explained Mr. Sbertoli, referring to Statkraft’s interest in wind and solar; Scatec’s increasing focus on establishing solar in fragile markets and the commercial & industrial (C&I) market; Differ’s emphasis on distributed energy systems; and Equinor’s priorisation of offshore wind.
Looking at Brazil, the panel discussed how the county is an attractive market for green energy investments. While Brazil has a well-developed hydro and renewable sector, representing some ~40% of the internal energy supply. And there still exists vast unexploited potential in wind, solar, and floating solar PV, explained Slottet. Speaking on behalf of Statkraft, Simen Bræin, Senior VP International Power, shared the lessons learned from their operations and recently acquired 663 MW of wind capacity in Brazil. Notable lessons from the engagement were how power markets are becoming increasingly sophisticated and complex, characterised by Brazil's move into hourly pricing, which introduces spot price exposure to combine with PPAs. Further trends in the move from stable baseload to more intermittent power, and end-users expecting companies to integrate sustainability into core business, all work to increase complexity of the sector. Given the complexity, securing "capital is not the problem, its competency," explained Mr. Bræin, and the regulatory and governance challenges that arise from more sophistication.
In responding to some of these challenges, the MFA also plans to increase its support to Norfund, an essential vehicle providing risk mitigation measures to companies, explained Mr. Svelle during his presentation. By working closer with to the private sector and being more responsive to the obstacles facing Norwegian companies, it is hoped these new risk mitigation mechanisms can play a key role in mobilising Norwegian investment, experience, and expertise to reinforce market development for renewable energy abroad.
One company actively involved in emerging markets is Scatec Solar, which is aiming to double its installed capacity from 1.9 GW, over the next two years. In Brazil, its 50-50 joint venture with Equinor is driving local value creation, explained Scatec's VP Project Development, Axel Holmberg. “Our ability to manage risks in complex environments comes from collaborating with governments, political bodies, and local stakeholders before starting a new project”, he emphasized. The rising demand for energy in the country, Slottet explained will be an opportunity for Norwegian renewable energy companies like Scatec. “As a chamber of commerce, we are well positioned to support those Norwegian companies that would like to enter Brazil market but may need more information or potential partners to make that a reality”, said Slottet.
Wrapping up the panel discussion, Equinor’s lead for wind Project Development, Justine Burg, explained the company’s Climate Roadmap, a strategy to reduce emission measures through better energy management and technical design in oil and gas projects. Burg explained the strategy is compliment by Equinor’s target to scale up its investments with ~20% of its portfolio by 2030, illustrated by its exciting work on offshore wind.
Following the Q&A with the panel, attendees were then invited to an extended mingling session at the KPMG offices in Majostuen. KPMG’s international Development Advisory Services (IDAS) practice is actively working on climate change and, in partnership with leading Norwegian consultancies, delivering an unique and holistic approach to renewable energy development in emerging markets.
See the presentation from MFA here.
By Larissa Slottet, BNCC/ Matthew McKerman, KPMG.