1) The document discusses strategies for embedding distributed energy resources like solar PV and battery storage into new property developments in African cities to create localized, low-carbon energy systems. 2) Rapid urbanization and infrastructure deficits in African cities create an opportunity to develop integrated energy and property projects. Distributed energy is now economically competitive with traditional electricity sources and prices are continuing to decline with innovation and deployment. 3) Case studies from around the world demonstrate how new developments can become "energy hubs" generating multiple revenue streams from local energy sales, demand response, and other services. However, barriers like risk aversion in the property sector and lack of suitable financing products must still be addressed.

1. Embedding distributed energy in
new property development:
strategies for a localised, low-carbon
energy transition
Matthew Ulterino, Principal,
Rodin Consulting, UK
Africities
Johannesburg, South Africa
01 December, 2015

2. Overview
- Buildings and large developments can become energy
hubs and ‘bankable’ platforms for investment in local energy
services
- High rates of urbanisation and property development,
pervasive infrastructure deficits, and rising energy costs
create an ideal opportunity in African cities
- ‘Virtuous Circle’ of innovation is driving technology maturity,
cost reductions, and finance opportunities – rapid growth can
happen
- Local governments can accelerate market development
through policy/regulatory effort, stakeholder engagement,
and procurement/investment decisions

3. Linking Property and Energy
Utility energy in
Sunk costs for energy: poor reliability and
rising costs – hardly value for money!
Back-up diesel
generation
Income out

4. Linking Property and Energy
What was traditionally a sunk cost now becomes a distinct
asset with multiple revenue streams and predictable returns
Local generation & distribution
Integrated energy management Energy sales, including
Storage reliable back-up
Demand response
Electric vehicle charging

5. Linking Energy and Property
Uneven urban electrification rates
Electricity Access Rates: Ecowas Member States 2010-11

6. Linking Energy and Property
High urbanisation,
rising urban energy demand
Sources: McKinsey , Ren21

7. Innovation and Deployment
Forget carbon and climate! The renewable energy transition is
about economics.
Fossil fuels
simply cannot
improve resource
productivity fast
enough to meet
aspirational rates
of economic growth.
Source: Hall, Lambert, and Balogh (Energy Policy Volume 64, January 2014)

8. Innovation and Deployment
Every doubling of PV production infrastructure yields a 22%
price decline.
Solar Cost Improvement:
1970-2013
Magnitude of
Improvement
vs. Oil 5,355 x
vs. Nuclear 1,540 x
vs. Natural Gas 2,275 x
vs. Coal 900 x
Source: Tony Seba, Clean Disruption (2014)

9. Innovation and Deployment
Complementary technologies: crowding-in innovation
Source: Nykvist and Nillson, Nature Climate Change, March 25th 2015
Battery Storage – where solar was 5 years ago

10. Innovation and Deployment
- Solar PV can already deliver power at less than 15US¢/kWh
with long-term price certainty in Africa
- Retail electricity
across Africa –
8-30US¢/kWh,
and rising.
Diesel back-up
generation is
2-4x the cost of
retail electricity
- Battery storage
presently at
55-60US¢/kWh,
but costs are
falling rapidly

11. The Local Energy Transition
• Solarsiedlung am Schlierberg, Freiburg
Property investors
from closed-end real
estate fund: rental
plus FiT income
Separate ownership
of PV assets:
property owners or
additional investors
Source: Rolf Disch Solar Architecture

12. The Local Energy Transition
• Hudson Yards, New York City
District CHP: strategic decision by Related Co. following Hurricane Sandy
Energy network financed and owned by Related; energy supply part of lease
terms. Will provide 70% baseload power
Source: Related Company

13. The Local Energy Transition
• Higashimatsushima City
Source: Renewable Energy World
PV systems (470 kW), biodiesel generator (500 kW) and energy storage (500
kWh). Grid independent capable for 3 days
City-owned grid and distribution system

14. The Local Energy Transition
• Garden City, Nairobi
Source: Solar Century
850 kW solar electric array mounted on a car shading structure
PPA + 10 year build/maintain agreement with the energy developer NVI
Energy. Ownership transfers to Garden City at end of term.
PV supply is drawn first as the cheapest electricity source, followed by grid
electricity, and then back-up diesel as needed

15. The Local Energy Transition
• Menlyn Maine, Black River Park – South Africa
Source: Menlyn Maine, Black River Park photo gallery webpages
Menlyn Maine: ‘Climate Positive’ mid- to high-rise new ‘town centre’ in Pretoria
comprising of 350 apartments, 2 hotels, and 315,000m2 of commercial space.
Black River Park, Cape Town: has achieved some of highest Green Star
ratings in South Africa. 1.2MW rooftop PV array added post-construction, the
largest rooftop system in Southern Africa.

16. Localised Energy: Indicative Model
26 hectare site in north Accra, low- to mid-rise building typology.
280,000m2 of floor space across residential (36%), office (48%), retail (4%),
hotel (6%), and hospital (7%) land uses.
Source: dhk Group

17. Localised Energy: Indicative Model
•- PV fixed to 50-75% of
roof area / circa
6-9 MWp yield
- 2,500 – 5,000
kWh battery
•- Meet 33-45% of
energy demands
on-site
Source: dhk Group

18. Localised Energy: Indicative Model
NPV estimates of incremental economic costs and benefits ($USD, millions)

19. Reducing Barriers to Wider Adoption
•- Risk aversion: property sector is conservative
•- Long-term contracts: can all counterparties honour 10- 15
year energy agreements?
•
- Achieving scale and developing a local energy market/supply
and service ecosystem
•
- Cost and availability of financing

20. Reducing Barriers to Wider Adoption
‘Chicken and egg’ problem: market maturity and new financial products
needed to help lower the cost of capital
Levelised cost of electricity from Solar PV in Uganda against the
Weighted Average Cost of Capital (1-100 MW systems)
Source: Fraunhofer Insititute
Levelised cost of electricity from Solar PV in Uganda against the Weighted Average Cost of
Capital
Source: Fraunhofer Insititute

21. Reducing Barriers to Wider Adoption
Growth in dedicated renewable energy funds, DFI and specialist
funding institutions . . .
- Sustainable Energy Fund for Africa (AfDB) / Africa Renewable
Energy Fund (Berkeley)
- Lekela Power (Actis, Mainstream Renewable Power)
- Green Africa Power (Private Infrastructure Development Group)
- AFD concessional loans to private finance institutions
- Climate Investor One (Global Innovation Lab for Climate
Finance, FMO)
- Africa Finance Corporation
- Power Africa (USAid)
- ElectriFI (EU)
. . . but effectively no dedicated support or finance to urban distributed
energy

22. Reducing Barriers to Wider Adoption
Emerging finance models and practices
- 3rd-Party Solar Leasing
- Renewable Energy REITs
- Community Energy Projects and Crowdsourcing
- YieldCos and Green Bonds (PPA securitisation)

23. Reducing Barriers to Wider Adoption
International (U.S.) examples show high levels of financial innovation
- SolarCity, July 2014: $200M bond offer (its 3rd) of Solar Asset
Backed Notes. 4.32% yield, S&P rated
> Notes will be secured by a 100+ MW pool of
photovoltaic systems and related leases and power
purchase agreements
- Hannon Armstrong, December 2013: issuance of $100M asset-
backed Sustainable Yield Bonds (2.79% coupon); scheduled
maturity date, December 2019
> Securitises the cash flows generated by over 100
individual wind, solar and energy efficiency installations
> Hannon Armstrong issued a 2nd $100M bond in mid-2015: A-
rated security, 4.28% coupon with 19 year maturity

24. Reducing Barriers to Wider Adoption
Critical role for institutions and financial models
- In 1991 India had 5 million phones. The same year,
national legislation was passed to break up the
centralised telecom monopoly
- In 2012 India had 960 million phones – a 19,100% increase
- Mobile telephony finance: low-upfront cost with
longer-term contract repayment (sounds like a PPA!)
- Fundamental difference in deployment speed between
centralised and distributed infrastructure

25. Conclusions
Issues
− A pathway for additional capital investment
with local economic development benefits
requires effective public strategies &
regulations
− Match technology cost and finance needs
to the property development process
− Integrating localised energy upfront is
more cost effective than retrofitting
− Convening and influencing: engage
commercial finance institutions, DFIs,
property and energy developers
− Collaborate with national energy regulators
& utilities
Implications
Holistic approach to urban
development
Suitable investment products
Role for local governments
and other civic institutions

26. Matthew Ulterino is an urban planner and specialist in energy efficiency
and clean technology. He has presented at several forums on
distributed energy and urban development including PowerGen Africa
(2015), PowerGen Europe (2013), 2015 Green Summit (University of
Liechtenstein), and Urban Land Institute Europe Annual Meeting (2014).
As a consultant, he has advised property developers and master
planners on integrating green design features into projects; delivered
policy and market research studies on distributed renewable energy,
building energy efficiency and green urban growth; and provided
programme development support to government clients for building
energy efficiency retrofit/finance and distributed energy initiatives.
Thank you
Matthew Ulterino
Rodin Consulting
+44 (0)20 8133 8620
matthew.ulterino@rodinconsulting.co.uk
www.rodinconsulting.co.uk