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The Actis view: COVID-19: Generating electricity through the pandemic

Barry Lynch

by Barry Lynch
Partner: Energy & Infrastructure
London

The Actis view: COVID-19: Generating electricity through the pandemic Image

Echo Energia continuing to generate power for Brazilians throughout the crisis

Actis Energy Infrastructure focuses on the generation and distribution of low cost, reliable electricity across Latin America, Africa and South East Asia.  We construct and operate large-scale power projects and electricity distribution networks to bring energy into the homes and businesses in countries where operating can be challenging.  These are our “home markets”, from the windiest states in India to sun drenched land of the Atacama Desert in Chile we provide power that so many in the west take for granted.

2020 was already going to be a busy year for the Actis Energy Infrastructure team with 60 projects in construction or operation, to deliver 10,000MW of installed capacity across India, Egypt, Senegal, Kenya, Nigeria, Cameroon, South Africa, Mexico, Chile, Brazil and Uruguay with 70% coming from large-scale wind and solar projects that utilise abundant natural resources.

As we monitored the potential impact of COVID19 in early 2020 and discussed it with our colleagues in Private Equity and Real Estate who saw the early impact on their activities in China, we began preparing, along with the management teams in our 14 Energy Infrastructure platform companies, for the potential impact across our markets.

In line with the overriding principle of the importance of the health and safety of our staff, contractors and members of the public our focus was in three key areas: i) maintaining electricity production from all of our operational assets, ii) minimising the impact on our projects in construction, including supply chains and iii) maintaining our strong relationships with the local communities in the vicinity of all our projects. 

We spent a lot of time with our management teams preparing for the potential impact of COVID19 on our operational projects.  The initial focus was on how we would ensure the safety of core operational staff, where possible reduce non-core or maintenance staff through any COVID19 peaks and work closely with local stakeholders and governments to ensure that we had the necessary support for staff to travel to and from our plants safely.  In certain areas we implemented a quarantined site strategy with a core group of staff living and working on location to ensure that we could generate through the peak of COVID19 in any particular area.  A great example of this was our 461MW gas fired Azura Edo power plant near Benin City in Nigeria.  The core operational staff stayed on site for two months to minimise the risk of any COVID19 infections spreading among the operation teams thus maintaining full plant output during the pandemic in a country that desperately needs reliable power.

Our wind and solar projects have comprehensive remote operational management systems in place that allowed us to maintain a high level of operational performance while reducing the need to put people at risk of travel to and from our project sites.  We also worked closely with equipment suppliers to modify maintenance cycles to ensure that planned maintenance outages could be delayed to minimise the need for mobilising staff to project sites. 

We are responsible for the generation of over 7,000MW of electricity from our operational projects and through the COVID19 pandemic we were able to maintain electricity production from all our assets.  Electricity projects are viewed by most governments as “must run” assets that are essential to the social and economic fabric of society and we take our responsibility to generate electricity very seriously. 

We currently have 3,000MW of wind and solar projects in construction across 20 projects in 7 countries and each was impacted to some extent by COVID19.  In India we worked with local governments to demobilise from our construction sites, ensure that they were safe and secure and then reopen them in line with government guidelines.  We worked closely with our contractors and suppliers to ensure that our supply chain and construction resources were managed in a way that minimised the impact on our projects.  For example our supply of wind turbines blades for one of our Indian projects were coming from a manufacturing facility in India and we worked with the supplier to ensure that we had a steady flow of wind turbine blades once the sites reopened to minimise the construction schedule impact. 

The supply chain for the wind turbine industry is truly global and we were able to work with our suppliers to re-orientate supply chains away from affected regions to ensure minimal impact to activities.  In mid-June in North Eastern Brazil, our Echo Energia business maintained its construction progress on our Serra do Mel project and commissioned 273MW of wind turbines two months ahead of schedule.  This was achieved by utilising the strong local supply chain in Brazil and enforcing COVID19 prevention measures with our contractors.  We also achieved 1.2m manhours without any safety incidents on site.

At the core of our approach is the sharing of lessons and experience across our Energy Infrastructure platform companies.  In the early stages of COVID19 we carried out a number of workshops with our management teams to share learning across key areas such as COVID19 prevention measures, interaction with local communities, supply chain disruption and mitigating contractual issues due to COVID19.  This allowed our teams to share ideas and experiences as they navigated the COVID19 impact in their own countries.  We then carried out a further set of workshops during the peak of COVID19 to focus on what is working well and what improvements or changes teams have made to their policies and procedures.  We also created a central intranet site and uploaded all COVID19 related policies and procedures from all of our platform companies to ensure that each could learn and adopt best practice approaches from across the Actis family.

A key success factor in our projects is our relationship with our local communities.  Each of our platform companies has a dedicated ESG team and an ESG sub-committee of the board.  This ensures a strong dialogue with local communities and enabled assistance in areas such as education of the risk of COVID19, supply of protective and cleaning equipment and provision of food and support packs where required.  We re-oriented many of our social investment plans to tackle or minimise the risk and impact of COVID19 on our local communities and this was well received across our projects. 

Our comprehensive approach to tackling the risk of COVID19 in a pro-active way has resulted in us minimising the impact on our staff, communities and projects.  Our operational projects generated electricity throughout the pandemic and while we had to stop some of our construction activities, the impact resulted in a stoppage of weeks as opposed to months.

The performance of any organisation through a crisis or serious event is a direct correlation of how well that business was being managed prior to the incident and we believe that the way in which Actis and its Energy Infrastructure platform companies have weathered and continue to weather this particular storm is a great example of this.  It also demonstrates the robust nature of investing in best in class power generation assets that have robust contractual frameworks and are designed to weather even the most difficult storm.