The aef podcast: Development lessons learnt - with Norton Rose Fulbright

We catch up with Daniel Metcalfe and Laura Kiwelu from long-standing aef sponsor and global law firm, Norton Rose Fulbright

Damon Thompson: Daniel, Laura, it’s great to meet you and have a chance to connect before the Forum. Could you start by telling us a little about your involvement in EnergyNet’s Student Engagement Initiative (ESEI), which I know you’ve supported for a number of years. What exactly has been your role in that, Laura?

Laura Kiwelu:  I personally have been involved in presenting seminars to the students at the Africa Energy Forum (aef) for the last four years. Some engineers, some lawyers, some economists, just bringing them through the basics of putting together a power project and what the steps are, who the parties are who are involved, what the documents are.

Effectively, we know what is an IPP, and that sort of thing. We've developed programs for those students' internships. Then, also, we've offered a couple of those students traineeships in one of our offices, and two of them are now just qualified as associates, so they are now fully qualified Tanzanian advocates.

I'm still in touch with them and offer them mentoring, advice, whenever they approach me. Whenever I can, I keep in touch. That's all come from one of the aef events.

Damon:  Excellent. We're very grateful they're working with us on that and looking forward to continuing that in Lisbon. Going back a few years now, I joined EnergyNet seven years ago and I've seen a lot of changes, very positive changes, in the energy sector in that time.

Dan, I know you're relatively new to it. You've been about a year or so, is that right? I think your first aef was in Mauritius. What have been your key observations about the sector?

Daniel Metcalfe:  I had traditionally started off as an infrastructure lawyer and did that for many years. Although I've done a lot of energy work in and around that, I haven't really had a particular focus on power and energy until the last three or so years.

For me, it's been an interesting transition and a combination that other institutions have also made in terms of joining infrastructure and energy. The two are fairly indivisible when you think about it. Lots of it has been a continuum, but in terms of understanding the technologies and things like that, it's a bit of a new learning for me.

Because I'm almost exclusively focused on Africa, for me the one thing that is a constant is the fact that there is just a continuing need. Whilst technology is, of course, crucial and vital for development, at the end of the day, almost any technology will do in that we just need to be in a position where we're bringing more power and energy to the countries, to the communities.

Damon:  Which are the main countries that the firm focuses on from a power perspective? Laura, maybe you wanted to take that one.

Laura:  There aren't any particular jurisdictions that we focus on. I think we're active in pretty much all of them. Personally, I was based in Tanzania for four years…

Damon:  How was that? Was it an enjoyable four years?

Laura:  It was, from a lifestyle perspective, a very good place to live for four years. From a projects perspective, quite a frustrating place to be in terms of it's not the easiest jurisdiction in which to develop a project. A lot of the work I was doing was outside of Tanzania as well. In terms of being geographically based in East Africa, that meant naturally more projects in that region.

Personally, I've been working in Rwanda and Kenya. Malawi, Zambia, and Zimbabwe have been those jurisdictions where I've been. As a firm, we've also been doing quite a lot in West Africa. We've been very active in Nigeria and Ghana, as I think Dan can say more about, and also in the Francophone jurisdictions. We've been very active in those, so certainly, Pan‑African in approach.

Damon:  Obviously, you're a global firm. Are there any lessons that you've learned from your work in places like Australia, for example, and other countries that you're perhaps able to bring and use your experience in Africa?

Laura:  I think certainly in Australia the interesting things being speaking to my colleagues that are around the more innovative technologies like battery storage, the fact that we've been really trail‑blazing in Australia on projects. Certainly, we want to see Africa as leap‑frogging onto these technologies, not to be just sticking with pure solar PV for a long time, but actually bringing in battery power, battery storage as well.

I'm in regular contact with colleagues in Australia around the battery storage projects that they've been working on, considering lessons that we can learn, and how these can apply to projects that we're working on in Africa that are involving small but increasing amounts of battery storage and the fact that storage technology's been mentioned increasingly on projects.

Damon:  I think there are obviously some pitfalls when you're trying to develop projects. They can sometimes get stuck. What are some of the challenges, and are they unique to Africa in terms of getting a project from start to close?

Daniel:  I don't think they're unique to Africa, but they are in. Africa hosts a number of developing markets. That itself brings challenges, regulatory challenges, economic challenges, political challenges. That's actually the interesting thing about doing projects in and around and across Africa.

You have those different dynamics involved, yet you have to be experienced and have an understanding of how to navigate those challenges. In terms of how best to go about that, really it's about picking the right partners, picking the right advisors, early planning, understanding that it will be difficult, it will be challenging, and having realistic expectations.

Damon:  In terms of the pilot project value chain is NRF, as a firm, able to go in at any particular part of that chain? Do you work with EPCs, technology providers, investors would it be fair to say?

Laura:  We do. It can really depend as to when we'd be brought in. What I've seen quite often from being in Tanzania is to the see the point at which local counsel are brought in, which is much earlier when you're scoping projects, early‑stage due diligence on markets and on land regimes, permitting, and that sort of thing.

You see the local lawyers being brought in generally earlier than international counsel, but we still have those conversations with our clients quite early on an ad hoc basis. What do we think of this market? Where should they go? What are our views? What have we experienced?

Damon:  Talking projects, you've obviously helped to develop a whole number. Is there one that you're particularly proud of, one that really sticks in the memory as having really strong impact with you?

Daniel:  For me, it's one that certainly sticks in the memory because it was a particularly difficult and challenging one, but also it was quite a recent one, which is the Bridge Power project in Ghana, which we close the vendor financing of just before Christmas. 202 megawatts, gas‑fired, combined‑cycle in Tema in Ghana.

That, for me, was a really interesting one. It had quite a unique project structure. It also had quite a unique financing structure, vendor financing with some GuarantCo support.

Damon:  And Laura, yourself? You must have worked on some memorable ones in Tanzania in your time there.

Laura:  Yes, certainly. In Tanzania, it's a lot of mini‑grid work with the smaller developers and on the mini‑hydro projects that have been interesting because of community benefits. In terms of memorable projects, it would have to be the first project that I worked on in Africa, which was a solar PV project in Rwanda for Gigawatt Global.

That was very memorable due to the fact that it was a very accelerated time table. The time from first instructions to financial close was just over a year. We had the PPA settled within six months and then the financing done within probably about three months, but a very good jurisdiction in which to work.

That, unfortunately, set my expectations quite high as to how quickly projects can be closed. Since then, it's a matter of every year being surprised that, you're right, another year on the draft has gone by in terms of actually getting project documents settled.

Damon:  Do you work a lot with governments and utilities? Are they one of your client sets, as it were? How is that with working with those governments?

Laura:  I've done some work on the Power Africa advisory side on a project, which was a very good experience being on the other side of the table and knowing the requirements of the utility and being a little bit savvy in terms of what a utility should be asking for.

I think that's something that you don't want - a utility being taken advantage of by a developer. Similarly, I've seen it the other way around as well. Knowing what the requirements should be and defending the utility's decision on points. Particularly, that was around a tender process as well. I've had that experience.

We've also advised the Tanzania Geothermal Company on some legislation in Tanzania to develop geothermal, which is also extremely interesting. We were working a multi‑advisory team looking at different forms of geothermal legislation and policy around the world and applying that to Tanzania. That was also a very interesting assignment.

Daniel:  Similarly, in Botswana, actually. It's quite interesting because you get involved at a much earlier stage. Laura was talking earlier about, from that developer perspective, a lender perspective, you're a little bit later into things.

It's probably true with the government as well, but you are involved at a much earlier stage of a project. You're essentially helping to develop policy. You can't do those roles without having to advise sponsors and lenders, because you need to know what is essentially a bankable project framework, PPA concession arrangement. If it's not, you simply won't get the appetite from the investors.

Damon:  Moving on to technology. We mentioned storage earlier there. What other technology trends do you see happening over the next few years? Is it gas to power? Is it moving away from coal? Is it more focus more on renewables?

Laura:  There's definitely a strong future there for the mini grids. That should be encouraged, and legislative support, and policies needed to enable that to happen without too much government interference unless it's necessary in terms of regulating tariffs and things.

More just distributed renewables is what I'd want to be seeing, and as I said earlier, more battery as well to replace the existing thermal baseload. That's the way that we can see it happening, crystal ball gazing, but then actually the reality of policy and what we might actually be seeing in future.

Damon:  I guess, with the lack of transmission infrastructure, generally, throughout Africa, the mini grids are the way forward really, and hybrid solutions for that as well in terms of solar as well.

Daniel:  On that, one of the interesting things that we've seen is...I do a lot of work in the telecom side. I've done a lot of work in telecoms infrastructure, which has been booming across Africa for last five to seven years in terms of specific companies taking on that infrastructure.

Those companies are also driven by a need to power the towers, and they are very keen to develop battery storage technology and roll that out. The next opportunity is clearly, because telecom towers are essentially in increasingly remote areas, in many cases off grid, they can provide a solution to have panels on the top, and then essentially generator, a micro grid solution for the local community. Different sectors can obviously join together.

Damon:  That's the first I've heard of that. Using towers to put solar panels up and then connect that into the grid, or was it were off grid scenario?

Daniel:  They're both because you could have back‑feed into the grid, or you can essentially create a new micro grid.

Damon:  I think we should be speaking about that at aef, actually. Talking about the forum, as I mentioned earlier, it's our 21st year in Lisbon. You've been attending, I think, for few years now. What do you get most out of the forum? What do you go for? What are your key takeaways?

Laura:  From my perspective, I would like to go three times. I would like to go once to hear the sessions going on, and other times just to be on the conference room floor in terms of bumping into clients, friends, contacts and that sort of thing. Often, just those informal meetings and exchanges that you can have at aef, you just don't get at other conferences.

Then, a third time, just making the most of these in the meeting rooms and for client meetings, and actually having productive project meetings during aef as well.

Damon:  Daniel, you joined us in Mauritius last year – what was that like?

Daniel:  Yeah, that was a nice one. Really, if you've got all the key decision‑makers in a room at the same time, from our perspective, that's a tremendous opportunity to meet people who, as Laura was saying, are old friends and colleagues.

It's an amazing convening of everyone you want to see in the same place, but at the same time having informed and interesting dialogue on the platforms and in the conference rooms. It's really good, the conference.

Laura:  It's definitely true that projects are made at aef, that coming together of stakeholders and things does accelerate project development.

Damon:  In one of the conversations we’ve had, and also a number of conversations I've had over the years, one word has kept coming up - patience - with regards to getting the project finally done. What frustrates you about some of the work you do?

Laura:  From what I've seen, it's certainly development cycles are very long. Product developers do have to be extremely patient. I really do admire some of my clients that are far more patient than I would be in those situations in dealing with some of the out of the blue correspondence that can hit their desk on a particular project.

There's definitely something to be said for looking into jurisdictions to develop power projects. You may have good bankable project on paper. We can get there with a bank or projects on paper, and that that ticks all the right boxes in terms of bankability and structuring, but actually, the regulatory regime can change it at any time.

What's really missing in many markets is that understanding of product development cycles that are a lot longer than electoral cycles. Often, what I've seen is that we have a real push it of activity just before an election, and then a very real slowing down afterwards.

Developers have to be aware of that cycle too, and in terms of actually taking advantage of an opening door prior to an election or at the relevant time, really pushing when that door is open, because at some point, that door will be closed again, and there'll be another store on a project for another few months or years.

Product development cycles are very erratic. That, in turn can get can very frustrating and having to see what developer clients then go through and having that patience, but then that ability to move quickly when the door opens is extremely important to the development team.

Damon:  We always try and do some new initiatives at AEF each year. There are a couple of new initiatives which we're bringing in for Lisbon.

The first of those is a charity football match to raise money for victims of Cyclone Idai, because Portugal is well‑known for its football. It's a very passionate place for football. We're going to be having a friendly football match on the Monday - Rest Of World versus Africa. It'll be great to have you involved in that in some capacity.

The second is driving our inclusion and diversity with having each of the 56 sessions moderated by a woman. We think that will really help to perhaps change the dynamic of the panel sessions.

I’d like to round up with a final question with regards to why you are in Africa and in this sector.

Laura:  From my perspective, I quite boringly always wanted to be a lawyer from the age of 14. I wanted to be that. With Africa, it was qualifying as a lawyer, always having wanted to work in London, qualifying as a lawyer and then going traveling in Africa during qualification leave that reopened my eyes to it after having had a stint in the Middle East as a trainee.

At that point, Africa was really opening up to opportunities and projects, more projects that were coming in.

Then, actually having lived there, having gone through power cuts, water cuts, all that various natural disasters and things that happen living there, again, you just see the importance of having reliable power and the fact that it actually directly impacts the people. It yields results immediately, and the importance of that that the small businesses and families that have incredible electricity when it when it's needed.

It's also the day‑to‑day thing that I enjoy about projects in Africa. You just never know what to expect. Every project's very unique. Very, very interesting developing clients that we work with. Really nice, decent people that we meet within governments.

It's just, generally speaking, a good place to experience business and get down to the nitty‑gritty of being a projects lawyer and documenting everything that may hit your path.

Damon:  And the unexpected element. Has there been anything which has really surprised you?

Laura:  In terms of surprising me? There's been very interesting aspects to it. Often, the thing that will come up when we'll be having a meeting on PPAs, and more often than not, you'll get a pile of kedgeree in the meeting. It's always quite funny as to who can have the wittiest line during that meeting.

Similarly, working evenings and having regular power cuts and having to break off conference calls to switch on the generator and that sort of thing. You just wouldn't get that working in London in the commercial meetings that we have here.

Most unusually, just various, random correspondence that can come through on projects that you'd not expect it, like a change in law or a change in permitting regime. On some of these projects’ laws being interpreted for the first time and applied for the first time.

You may have had laws that have been around for several years, but they've never actually applied, like a generation license has never actually been issued, which I've seen in one jurisdiction recently. It's a very interesting market to work in each day.

Damon:  I agree. I've only been in it seven years, but that’s fairly old on the conference side. I've loved every minute of those seven years. In a way, we're facilitating getting the right people together at the Forum that can go and develop these projects.

Dan, why are you in this sector? I know you were in telecoms originally. You're in energy now. What is it you're getting out of it?

Daniel:  Very similar, but I can't speak like Laura has in terms of living on the continent. I found transactions in Africa ‑‑ not just projects, not just energy projects ‑‑ to be that little bit more interesting, that little bit more exciting, a little bit more complicated.

As I mentioned, there's a number of different dynamics. Those challenges make it interesting. Every, single deal I've done in Africa is different. I've done deals where you're delaying financial close because there's a coup. We had that in Burkina Faso in 2015.

You're doing deals where there's suddenly a change of law. We had that on Bridge Power just at the end of last year. You simply have a very different and dynamic type of work. That's what makes it enjoyable...

Damon:  Every day is different. Every project is different.

Daniel:  Absolutely.

Damon:  Thank you very much indeed, Dan and Laura. It's been a pleasure speaking with you and look forward to seeing you in Lisbon.

Daniel:  Likewise. See you on the football pitch.

Damon:  Yeah. [laughs]

Transcription by CastingWords