The Value of Traders -

GreenCo
EE Business Intelligence
Webinar - August 17th
Structure

Introduction & Energy Trading 101

Southern African Power Pool (SAPP)

Making of a Trading Desk

The Value of Traders - Solutions & Services

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 Introduction – The Africa GreenCo Group
Key Facts & Figures

§ A creditworthy intermediary buyer and trader of

renewable energy $50m 1st 4.6GW
Portfolio support Energy Trader to of generation in
capital raised join SAPP regional IPP pipeline

§ A reliable and affordable provider of renewable energy

to utilities, municipalities and large power consumers
with flexible supply solutions

§ A trader on the Southern African Power Pool (SAPP)

§ Strongly capitalized but more needed for further
growth.

§ A diversifier of risk across a growing portfolio of supply

and demand.

§ An operational aggregator of renewable energy supply

§ A scalable business for the region – currently active in
Zambia, Zimbabwe, Namibia and South Africa
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Track Record and Experience

Legend
Active markets
8.5GWh
Future markets Traded onto SAPP on behalf of
Zambian IPP

Subsidiaries

GreenCo, AMEA Power and

Standard Bank have agreed a
cooperation agreement that began
with the signing of an 85MW PPA
between GreenCo and AMEA Power 85MW
and with financing terms provided RSA Status PPA signed in South Africa, with
4.5GW in the regional pipeline
by Standard Bank. The aim is to • Fully incorporated, PPA signed
extend this to other projects. • IPP pipeline 2.5GW
• NERSA licensing process ongoing

$1m +$50m
1st 50GWh+ Team of over 20 highly
Grant funding for BESS feasibility
Portfolio support capital to
stimulate RE generation
(and only) Energy Trader to Managed on behalf of skilled international staff members
study raised to kickstart 400MWh investments
join the SAPP Zimbabwean IEUG across 6 countries, growth in RSA
regional BESS portfolio

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Energy Trading 101 - Excerpt

Schedules
Plans or timetables that detail the amount of electricity to be transmitted or generated at
specified times in the future – usually shared as .xls files via email.

Balancing (Requirement)
The process of ensuring that electricity supply matches demand in real-time, framework to
hold participants accountable to previously provided (hourly) schedules.

Time of Use
A pricing strategy where electricity rates vary based on the time of day, encouraging
consumers to use energy during off-peak hours when it's cheaper.

(Forward) Curves
Hourly time series that entail forecasted prices & transaction costs. Ranging up to 25 years

(Power Quantity) Profiles

Hourly time series that specify the amount of electricity to be produced or consumed over a
specified period
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Southern African
Power Pool -
SAPP
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Southern African Power Pool – Markets and
Mechanics
SAPP History

Bilateral
Created in 1995 at SADC summit; member govts, except Market for the bilaterally contracted power between SAPP
Bilateral Market members/recognized parties. Largest market segment by traded
Mauritius, signed IGMOU. Actual energy trade in the Volume.
region was alive and well as early as the 1950s –
bilaterally.

SAPP Today Forward Physical

Closed auction Monthly or weekly markets for energy delivery on a
Markets: Monthly
• Most advanced and mature power pool on the & Weekly month and week ahead basis, respectively.
continent.

Competitive Markets
• Comprised of 20 members (GreenCo 18th Member,
and 1st member under the new “Market Participant”
category)
• Governing structures ultimately reports to the SADC
council through the integrated council of ministers.
• Structured as a clearing house, enabling the
settlement of all trades through a central
counterparty – SAPP CC.
• Comprised of broadly two market categories; bilateral
and competitive markets.
• Time of Use categorization speaks to value of energy
Closed auction market for energy delivery on a day ahead basis.
Day Ahead
Market
Consists of 24 distinct products corresponding to each of the 24
hours of the following day.
The IDM is an open auction market for hour ahead energy delivery. IDM is
Intra-Day Market a Continuous market, and trading takes place every day around the clock
until one hour before delivery. Players can place bids or ”hit” existing bids.
Newly introduced market aimed at providing balancing services to the
Balancing Market SAPP system operators based on a competitive market. The
Balancing market is yet to record any activity.

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Southern African Power Pool – Market Trends
Market Trends – Facts and Figures
• 7 TWh traded in the SAPP region annually (1,077 TWh on Nord pool
in ‘22) -> huge growth potential exists.
• Bilateral market in SAPP accounts for 70-80% of these traded
volumes
• Competitive markets are dominated by the Day ahead Market by up
to 80%.
• Liquidity; both demand and supply side dominated by 3-4 players
The supply side dynamics have a strong hydrological influence that
bolster annual trends

Implication
• Latent value exists to aggregate diverse sources & capacities and
increase liquidity; Traders.

2020 2021 2022

(ZAR/MWh)
Weekday 1,185 1,662 1,793

Prices
Weekend 694 927 801

Weekday 181 162 177

(MWh/hr)
Volumes
Weekend 189 206 216

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Benefits of Regional Energy Markets

§ Market efficiency and transparency; provide a platform for fair and transparent
price discovery, where supply and demand dynamics determine the market prices.

§ Integration of Renewable Energy; support the integration of renewable energy by

valuing its contribution to the grid.

§ Enhanced security of supply and improved power system stability; pooling of

energy resources and sharing of reserves.

§ Optimization of grid and different energy resources; facilitates the optimal

utilisation and integration of diverse energy resources and technologies from
across the region including wind, solar and hydro.

§ Market and technological Innovation; foster innovation in energy technologies,

business models, and services. Innovations such as GreenCo enabled by a
functional and efficient energy market.

§ Regional Policy harmonization; alignment of energy policies and regulations across

participating countries.

§ Improved [climate] Investment Incentives through pooling of risks. “tight” integration in [EAPP] was
estimated at $18.6 billion in addition
to 30% reduction in CO2 ”- (Remy
and Chattopadhyay, 2020) 9
The Making of a
Trading Desk
 The Making of a Trading Desk – An Overview

Team Trading System Risk & Workflow

o Experienced and service o Leading bespoke ETRM o Robust risk

The traditional trading desk setup is a
complete apparatus for the end-to-
end successful execution and trading
of a commodity or/ it’s derivatives.
oriented trading team
o High skill base (4 certified
SAPP Traders, M.Sc. of
Mathematics & M.Sc. of
Finance, Electrical
engineering skillset)
platform for seamless management
end-to-end execution of procedures
trades Daily scheduling o Operational excellence
o Separate portfolios per through documented
client work-flows
o SQL Data Base

Front Office Middle Office Back Office

• Trade Execution • Risk Management • Reconciliation
• Deal Capture • Market Analytics • Settlement &
• PnL & Position Invoicing
• Scheduling
Management
• confirmation

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The Making of a Trading Desk – IT Infrastructure
The ETRM system is an
enterprise software platform
for the precision end-to-end
management of physical and
financial positions.

Case in point: 0.22M datapoints

required to capture one PPA
price parameter. Multiple cost
and price parameters
necessitate millions of
datapoints for a single PPA!

The GreenCo Energy Trading and Risk Management (ETRM) Architecture

The GreenCo ETRM system was
bespokely built by globally leading
consultants for the SAPP context.

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The Making of a Trading Desk – Workflows

Data integrity &

operational excellence
underpinned by best
practice, battle-tested
workflows &
procedures.

Best practice Workflows, procedures and risk management across the trading desk; front, middle and back office.

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Traders offer
new solutions
& service
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Key Requirements for Traders to Add Value

Day - 2 - Day Operational Excellence
• Operational trading team required that executes on workflows & trading system
• Audible & robust system required
• Errors are very expensive

Operational integration in ESI

• Communication with TSO on a daily/hourly basis
• Engagement with policy makers and regulators to implement new market structures

Creditworthy
• Unlocking the “Financial Close” dilemma, PPAs needs to bankable
• Moving away from PF structures and Escrow accounts -> allowing for a more dynamic market

Aggregator – Trade Book & Portfolio approach

• Building supply and demand portfolio
• de-coupling generation/assets from offerings to demand clients

Managing Risk
• Risk can be mitigated but not fully eliminated. Through proper risk management traders can
identify, mitigate but also ultimately take risks others are not comfortable with
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Traders Allow for new Solutions & Value Add

Traders can provide access to clients (supply and demand) to markets (SAPP,
Market Access
Eskom Standard offer and EGP etc). Without maintaining an own trading desk.
Services
Multiple markets provide more flexibility and opportunities.

To unlock investments into RE, bankable PPAs based on standardized contracts

Bankable PPA are required. Traders need to be capitalized sufficiently as well have the legal
capacity as the PPA is the key document in a project finance structure

Clients usually prefer shorter tenors than IPPs & banks require. Trader can
Flexible Supply provide more flexibility regarding term & profile by decoupling supply from the
underlying assets

Flexibility Service Affordability

o Term o Service oriented o Price certainty

o Profile through o Bespoke solutions o Lower tariffs
decoupling from assets
o Transparency o Financial Energy Markets
o Firm/non-firm (Futures & Derivates)
o Certified green energy
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Thank You!

OUR MISSION
Addressing creditworthiness to
increase generation and growth of
renewable energy markets through
partnerships and innovative solutions

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