By Rich Swanson, GLS Group Consultant
Renewable energy sources could form the spine of a Green Energy Corridor in Africa, setting the stage for a leapfrog in technologies, compared to the way developed nations expanded their own grids. In 2016 Africa added 4,400 MW of renewable-power capacity. Moving forward, a significant portion of planned renewable development comes from hydropower; Africa’s potential to generate power from its rivers is vast and largely untapped. However, accessing power from hydro-generation comes with both benefits and challenges. For example, multiple risks, from climate change to offtake and cost-overrun uncertainty, threaten such projects. Our research found that there can be value to a “flexible-engineering” approach to renewable energy projects. We studied a large, planned project and found that this approach could save developers well over 10% of total project value.
Our economic analysis quantified several risk factors and estimated valuations for starting small and building in stages as additional information becomes available. Importantly, our process incorporated the value of flexibility so planners can compare such designs directly with static, or monolithic plans.