ISI Hosts a Panel Discussion at POWER-GEN International

This year’s POWER-GEN International conference, which took place on December 6th – 10th in Las Vegas, truly was an ‘international’ event with over 20,000 attendees from 111 countries.

The power generation industry has faced huge transformation over recent years related to fuel prices, renewables, distributed generation, electricity storage, demand response and energy efficiency to name a few. So, it was not surprising to see much discussion focused around new technologies and business models to respond to these issues.

In addition, many of the U.S. companies attending, were focused on how to grow their international business in emerging markets. So, ISI consultants was pleased to be invited to host a panel on How to Succeed in Africa at the 2015 POWER-GEN International.

Ian Oliver, ISI’s Client Services Director, led the panel discussion by putting into context the vast opportunities available in Africa for the Power Generation industry.

According to the International Energy Agency, over 620 million people in Africa have no access to electricity. In fact, excluding South Africa, the entire installed generation capacity of sub-Saharan Africa, a land mass equivalent to North and South America, is only 28 Gigawatts or roughly equivalent to that of Argentina.

In Nigeria alone, manufacturing companies experience power outages an average of 56 days per year and as a result, it is estimated that those companies with limited back-up generation lose as much as 20% of their potential revenue.

And with a population set to double and power consumption to quadruple by 2040, there is even more pressure to find solutions.

However, there is hope on the horizon. Already, $500 billion has been committed toward power generation projects in Africa through 2024 and according to a recent PWC survey of senior executives in the power and utility sector across Africa, 96% say that load shedding will be the exception rather than the norm by 2025.

So how can a U.S. company take advantage of this enormous opportunity? That was the topic of discussion for the panelists who represent U.S. and African companies working in the power industry.

Peter Dixon, Energy VP for Business Development Merrick & Company, outlined how his company approaches market selection across Africa, which includes an internal process they use to analyze each market as opportunities arise. With 54 markets, and many projects having a regional scope, understanding the risk/reward ratios for specific markets is incredibly important before investing resources in a particular market. “I have seen companies who don’t have a process for evaluating opportunities and markets lose their shirts over just one project.”

The discussion on market selection touched on some of the myths of doing business in Africa. Many U.S. firms believe that South Africa is the gateway to Africa, and while that may be true in some industries, for the power sector the most successful companies localize to grow their market share and the most promising power sector projects are in other parts of the continent from central Africa to the western and eastern coasts.

Felix Ekundayo, Managing Director of Askiko Energy, based in Nigeria, spoke of many of the mistakes he has seen American and other Western companies make in Nigeria in particular. The market has a lot of opportunities but as Felix stated, “Foreign companies are too quick to enter into relationships with local companies that promise access and large, winnable projects, but don’t do their diligence on these companies or the deals they bring to the table.” One of the most common mistakes however that he sees is with how contractual agreements are developed. “Too many Western companies are leaving good projects and money on the table because their deal structure is too one-sided. They need to put themselves in the shoes of their local partners who also need to build trust with them, and meet them halfway. Companies are being beat out of the market by their competitors who approach relationships with shared risk.”

All the panelists shared their strategies for finding and vetting opportunities in Africa. For companies new to Africa, the most sensible way to enter a market is as part of a bidding team with experience in that market, including local partners and multinational firms. Peter also highlighted how many American firms overlook the opportunities there are in consulting projects as a go-to-market strategy. These projects can range from the hundreds of thousands into the millions and are an easy way to begin work in a market with less risk.

Peter went on to highlight the importance of developing a ‘Go, No-Go’ strategy for project opportunities and sticking to that process. There are countless deals across Africa but companies need to evaluate each one carefully. And Greg Martin, Business Development Manager for Clean Energy, added “Once you decide to pursue an opportunity you need to understand effective, local bidding and how to meet local content requirements, including a strategy to build relationships with high-performing local partners.”

The panel closed with tips from each panelist for approaching African markets, and the common denominators were finding geographic focus and the importance of fully vetting opportunities and partners.

ISI Consultants assists U.S. companies to enter or further expand their business in Middle East and African markets. From small projects to longer-term engagements, we put our knowledge and experience to work for you, saving you time and money and minimizing your risk. And our results-oriented approach means we don’t just advise you on what to do to be successful – we work with you to get it done.

As part of our commitment to the National Export Initiative (NEI), ISI Consultants offer a limited number of COMPLIMENTARY STRATEGY SESSIONS each month to qualified U.S. companies. 

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