We were there when mini-grid regulation was established. When financial transactions were closed, we saw new technology thrive and companies fail. This is where we tell the stories. This is where we discuss the future. The mini-grid business.

Hello, here's Nico. Hello, everyone. This is Nico. Welcome to a special episode that we are releasing both in German and in English. My guest today is Siegmar Gabriel, former German foreign minister, former Vice Chancellor, and former chairman of the Social Democratic Party, the SPD. For many years he was one of the most influential figures in German politics. And today he works as an author, speaker, and as chairman of the Atlantic Brücke, an organization that promotes transatlantic dialogue. That's true, yes, we are. It was shaped by the victorious powers of the time. Many of today's important countries, India, the Latin American nations, and the states of Africa, had no say in its creation. They were not at the main table. They were seated, as we say in German, at the children's table. Some were still colonies of the European empires. So the global South never really accepted that old order. For years it has been pushing to reshape the rules of the game, so its own voices carry more weight. At the same time, the superpower that once designed and maintained that system, the United States of America, no longer wants to play that role. It is turning inward, focusing on its national interests, especially on the Asia-Pacific region. From Washington's perspective, China is the great challenger. Under President Obama, the US still saw itself very clearly as the indispensable nation, the country that had to keep the world in balance and help resolve conflicts. That understanding has changed profoundly. Today America is stepping back from that mission. And in many parts of the world, it is no longer seen as a particularly effective peacekeeper, but rather as an old imperial power. The wars it fought outside international law have not been forgotten in the global south. So two developments are happening at the same time. First, a new self-confidence in many countries of the global south that no longer accept a Western-dominated order, and second, the withdrawal of the traditional hegemon from its former global responsibilities. In practice, Washington now prefers bilateral agreements and often regards multilateral institutions as almost superfluous. A complete reversal of how American foreign policy used to think. So when the United States retreats from certain regions or responsibilities, the space it leaves behind is immediately taken over. And unfortunately, mostly by authoritarian powers. China is there. At times Turkey has been active. Iran has tried, parts of the North African monarchies are involved. And of course Russia is pushing in as well. In global politics, when someone leaves the room, that room doesn't stay empty. Someone else always moves in. And the only ones who don't seem to take part in this new game are the Europeans. Europe, quiet, frankly, stands on the sidelines, watching somewhat stunned, as the others take over. That has a lot to do with Europe's history and design. The European project was never built to deal with world politics. It was built to keep us out of it. After all, when Europeans and especially we Germans got involved in world affairs in the past, the results were usually disastrous. That's why the founding idea of the European Union was to focus on ourselves, on internal peace and cooperation. For the big global issues, we relied on the United States and to some extent on France and the United Kingdom as permanent members of the UN Security Council. But now, if you look at today's conflicts, take the Middle East for instance, Europe plays no significant role. Even in the war between Russia and Ukraine, our role is limited to supporting Ukraine politically and economically. We have no influence over how or when this war might end. Russia wouldn't even consider negotiating with us. So at the moment we Europeans are like vegetarians in a world full of carnivores. That's pretty much our role right now. Yes, I'd like to bring the discussion back a bit to energy policy. Against this whole geopolitical background we've just described. Simply because the infrastructure isn't there. African governments have been trying to change that for decades. But progress has been slow and at the same time they're being courted from outside. For example, Russia is offering to build nuclear power plants in several African countries, which would of course give Moscow a certain influence in those regions. Other countries are also coming in with different technological offers. So now many African governments are wondering how we should act? Which path should we take? Often they try to pursue several approaches at once. If we look back, Germany also went through an electrification process, though of course a long time ago. And in recent years, we too have faced serious challenges regarding our energy supply, both in Germany and in Europe as a whole. Not only natural gas from Russia, but also hard coal from elsewhere. In recent decades, we tried to move away from those fuels, mainly for climate protection reasons, not so much for independence. The idea that we might be dependent on someone else for energy didn't really trouble us, at least not until very recently, because even during the darkest days of the Cold War, the Russians always delivered their gas on time. Energy from Russia was never unreliable. So our motivation for renewable energy wasn't fear of dependence, but rather environmental and climate concerns and the wish to phase out nuclear power. But of course, as our economy kept growing while we were phasing out coal and nuclear, our demand for energy continued to rise. And then at the beginning of the 2000s, the European Union liberalized the energy market, meaning, in essence, that the state withdrew from its responsibility for energy security and left it to the private sector. And what did private companies do? They went for the cheapest available source, which happened to be Russian gas. That, in short, is the story of how our dependence was created. If we now talk about the next phase, the electrification of society as a whole, from electric cars to heating systems powered by geothermal energy and electricity, we have to ask a new question. Where will we get the resources needed to build all these energy systems? And here we find ourselves dependent again, for example, in battery technology, where we rely on rare earths that mostly come from China. Not so much from Africa, because Africa has in large part allowed China to take control of its mining sector. So we face a choice: be dependent on certain African states, some of which are politically unstable, like the Democratic Republic of Congo, or depend on China, which controls much of the global supply chain. What I'm trying to say is this, the idea that a modern industrialized economy in a globalized world can make itself completely self-sufficient, that's an illusion. We tried something like that once in Germany during the National Socialist period, when we even tried to mine low-quality iron ore right here in the region where we are sitting today. That experiment ended quickly because it was simply uneconomical. So when we talk about independence, we always have to ask independence from what? And in which areas? It depends on the kind of energy we are talking about, on the country's resources and on its overall situation. There is no one size fits all solution. In Africa's case, we should remember there isn't just one Africa, but 54 very different nations. The opportunities vary enormously. Some countries have access to the sea, others are landlocked, which alone changes the entire infrastructure reality. What is clear though is that renewable energy represents a major opportunity for Africa. That means it's possible to build decentralized renewable mini-grids that are much cheaper than the centralized systems we built in the industrialized world. So renewables offer Africa a huge opportunity. Yes, exactly. And from what I see, and also from what my own company is helping to shape, many African governments are indeed taking that two-track approach. That's why over the next few years, several billion dollars will be invested in solar mini-grids, small modular systems that provide power locally. These grids are often operated by private companies that have emerged over the last 10 to 15 years. There are now several hundred of them across the continent. The big advantage is their flexibility. They can be built and expanded step by step. And you said earlier there is no single solution, and that's true. In a way, we did the opposite here in Germany. We started with a very centralized system and are now trying to make it more decentralized. We talk about microgrids, about building resilience into the network, the idea that certain parts of the grid can be separated if needed, or that individual businesses and households can rely on their own solar and battery systems if the main grid fails. African countries now have the chance to start from the other end, to build those decentralized systems first and then connect them into a larger network. Well, I'm always careful about giving advice to African governments. But let's take a look at Germany as a point of reference. We are one of the world's largest industrialized economies, more than 80 million people living on a relatively small patch of land. Our major industrial centers are in the south and west, while most of our renewable energy potential lies in the north. Wind power performs better, especially offshore where the expansion has been much faster. But even then we face a simple problem. The electricity generated in the north has to reach the industrial load centers in the south. That's why we still need a strong centralized grid. Decentralized networks are important, but if you power only one small village, say Haandorf, that doesn't help much when most people there work in Wolfsburg at Volkswagen. So for Germany, a centralized grid with a smart system of distribution networks, which themselves bring a certain degree of decentralization, remains the right structure. Now, what an African state should do is a much more complex question because the starting point is so different. But of course, centralized systems offer a great opportunity. The chance to bring electricity to remote areas without investing billions in large-scale transmission infrastructure. We've also learned that the way we calculate costs matters. If you look only at the cost of raw materials, the fuel you burn, then wind and sun are essentially free. That's why, in the so-called merit order of energy pricing, renewables always come first. However, even in Germany we are still struggling with the famous dunkelflaute, those periods when there is no wind and no sun, and the grid comes under real stress. That's why we are now talking so much about energy storage. These storage systems can also be decentralized. They don't always have to be giant and expensive facilities. African countries will face similar questions. What happens when the wind doesn't blow and the sun doesn't shine? But you still have to keep a nearby factory running and hose holes as well. So in that sense, the challenges are similar, but Africa can benefit from the lessons we've already learned. German companies, for instance, can adapt the know-how we've built up during our energy transition to Africa's very different conditions. And there is one big advantage. African countries don't have to spend 20 years and hundreds of billions of euros to make renewables competitive as Germany did. We've already gone through that phase and now the technologies are far more affordable and efficient than they were a decade or two ago. The same goes for networks. Smart grids, something I wish we had rolled out much faster and made mandatory in Germany, are crucial if we want to expand renewables successfully. They balance fluctuations in the grid and help keep the system stable and affordable. Which I think makes a lot of sense. So if we integrate such countries into our supply chains, we need to be aware that it comes with significant risks. It's not that we can avoid risk altogether, we can't. But we have to manage and balance it carefully. And that's where diversification becomes the key strategy. Africa will play an increasingly important role in that diversification. But, and this is crucial, we should avoid repeating old mistakes. A good example is what happened years ago when people first started talking about harnessing the sun of the Sahara for energy in Europe. At that time, the whole discussion in Europe was focused almost entirely on one question. How do we get that electricity to Europe? We hardly talked about how African countries themselves could benefit from that solar energy, for example, by using it to power desalination plants in North Africa or to strengthen their own industries and societies. No, instead we looked at Africa mainly as a resource zone, as a place that could help us solve our problems in Europe. In hindsight, that was a very neo-colonial mindset. The whole Desertec project, which caused such a sensation at the time but never materialized, perhaps fortunately so, was driven by that perspective. Yes. But to be fair, that's probably the least of our problems. The real heavyweight in Africa right now is China. China is moving in aggressively to secure access to raw materials. And the Chinese approach is very different from ours. They don't ask questions about good governance, democracy, or child labor. They don't lecture anyone about human rights. Instead, they show up with ready-made offers. They build roads, railways, and ports, often with their own construction workers flown in from China. And in return, they secure long-term access to mining concessions and other resource projects. The European Union, in contrast, wants to apply higher standards, and that's good. But it also means that we have to be realistic. We can't expect African governments to turn down Chinese offers if we can't provide credible alternatives. Ultimately, it's also up to the African states themselves to recognize that good governance isn't just a Western demand. It's in their own best interest. Transparent, stable institutions attract investment. Corruption and political instability drive it away. And that's another major reason why investments in Africa are often more expensive. European banks, for instance, add significant risk premiums for projects on the continent because of fears of corruption, political upheaval, and regulatory uncertainty. That's an area where governments, including ours, can and should help. Through development banks like KFW, the state can reduce those risk premiums, for example, by offering guarantees or co-financing mechanisms. But at the end of the day, the real responsibility lies with the African governments themselves. They need to build the kind of trust that convinces international investors that their money will be safe and that the rules won't suddenly change halfway through a project. Exactly. And that's actually one of the core areas where we at INENSO are working on regulation and legal frameworks for electricity supply in Africa. And of course, that ties directly into the hydrogen discussion as well. One key question we keep coming across is whether these hydrogen production facilities should be connected to the national grid to help stabilize it, or whether they should operate as standalone systems independent of the local network. So these projects first and foremost help Namibia, but of course, once the local demand is met, the country can also export hydrogen and generate revenues. These two goals, national self-sufficiency and export. Opportunities don't contradict each other. They can go hand in hand. What's essential though is that a government takes a strategic approach, that it plans carefully what should happen where and for what purpose. And on the European side, I believe the European Union needs to engage much more actively with the African Union and its member states. Yes, and finally I'd like to return once more to the topic of decentralized energy systems in Africa and the opportunities they might create for German industry. As I mentioned earlier, we are already in touch with several German companies that are seriously looking into how African resources could be accessed and processed locally under the specific conditions that exist there. The rapid drop in the cost of renewable technologies, solar, wind, hydropower, and storage makes this more feasible than ever before. These technologies now make it possible to establish processing steps directly at the source in rural regions, rather than shipping raw materials abroad. He said, You Europeans believe that when Africa becomes wealthier, fewer people will migrate to Europe. In reality, it will be the opposite. More people will come simply because more of them can afford the journey. And I think he was right, at least partly. Of course, there are also other studies that show the opposite effect, but his point was that economic development alone doesn't stop migration, at least not immediately. The African continent is going to double its population in the coming decades. That's an enormous demographic shift. And many millions of young people there are already prepared to move. They see the Mediterranean not as a dangerous sea, but almost as a large puddle between them and the opportunities they imagine in Europe. They won't try to go to America, most of them will come here to Europe, and that will become the great challenge of the century for Europe. How to manage this process together with our African neighbors in a way that's fair, humane, and sustainable. Because if we fail, the sheer scale of migration could overwhelm us politically and socially. I remember once when I told the Egyptian president that it wasn't acceptable to simply arrest every political opponent, he looked at me with a straight face and said, You're welcome to take them. How many hundred million would you like? It was meant as a joke, but it shows the scale of the issue, and that's something we Europeans still tend to underestimate. So no, I don't believe migration can be managed by a single policy instrument or solved through better energy supply alone. The wealth gap between even the more advanced African countries and Europe is still enormous. As long as life in Europe seems vastly safer and more prosperous, the desire to move will remain. And of course, when people face civil wars, corruption or other grim circumstances at home, that desire only grows stronger. We have to look at that issue in a much broader context, not just through the lens of individual policies like electrification. That said, there is no question that if Africa is to develop economically, energy will be the key. Ideally, clean and climate-friendly energy, and the best answer available right now is renewable energy. We are fortunate that these technologies now exist to make renewables work even in developing and emerging countries. You can see that clearly in China, yes, they are still building coal and nuclear plants, but they're also constructing a massive number of wind farms and solar installations. So it's not the fossil fuels that are expanding most rapidly, it's the renewables. And that creates a real opportunity for technology partnership between Europe and Africa. At the same time, the geopolitical landscape is shifting. The United States is moving away from its close alignment with Europe. For the Europeans, that means we have to be very careful not to be squeezed between China and the US, two giants who increasingly see the world as their chessboard. That means Europe has to look for new partners. In Southeast Asia, in Indonesia, Thailand, Vietnam, but above all, in Africa, our immediate neighbor. Perhaps we don't need to think only in terms of traditional free trade agreements. Maybe we can develop new forms of cooperation, partnerships that focus on technology, skills, and joint value creation, not just on exchanging raw materials. What definitely has to stop is the old pattern that coffee harvested in Africa but roasted and processed in Europe, or that we export cheap frozen chicken to Africa and in doing so destroy local farming industries there. Those are practices that have to change if we want Africans to take Europe seriously as a fair partner and not as a neocolonial actor in a new disguise. And you can already see a new self-confidence emerging across Africa. If you watch CNN Africa, for example, you see a vibrant, confident continent full of ambition and creativity. That's an image we rarely see in Germany or in Europe in general. When I'm abroad, I like watching those African programs because they completely change your perspective. We Europeans are often a bit depressive these days. We feel like the golden age of Europe is coming to an end. But if you go to the global south, you'll find the opposite mood. There people are optimistic. They are saying, now it's our turn. And they're right, it is their time. The best outcome would be if they rise in partnership with us, rather than in opposition to us. If we can work together out of mutual respect instead of retreating into fear and protectionism. On the world order. Or whether they will fall into new dependencies. In many countries, the latter seems to be the current trend, but there is still time to change course. Rural industrialization driven by local enterprises could be a decisive factor in this transformation. On migration, former UN Secretary General Kofi Anan once stated that as prosperity in Africa grows, more people may initially be able to migrate to Europe. This so-called migration hump is empirically well documented. Our own experience, however, paints a more nuanced picture. As MiniGrid operators, and that is what most of our listeners are, we are in close contact with people in rural Africa, our customers, partners, and markets. For many, the cost of traveling to Europe is not the main obstacle. Migration is often financed collectively, neighbors and family members contribute funds, and in return, they place strong expectations on the migrants. What matters less is absolute poverty and more the perceived difference in economic opportunity and security between home and Europe. Whether this disparity and prosperity will lead to a new wave of migration depends largely on how quickly the rise of the global south unfolds, and how much Africa participates in it. Mr. Gabriel is right, isolated measures such as electrification alone will not prevent migration. Yet, this is precisely why microutilities in Africa play such an important role. They do not see electrification as an end in itself, but as a means to create jobs, income, and prosperity in rural areas. On access to African resources. As Mr. Gabriel mentioned, many African mines are currently operated by Chinese companies. However, the continent's resources are far from exhausted. There remains enormous potential for new locally anchored value creation. Decentralized energy supply through mini-grids can provide a crucial foundation for rural industrialization, complementing the expansion of national grids. On supply chains. From a German perspective, diversifying supply chains to include African resources and value-added processes is both sensible and necessary. Many German companies still have little experience working with African suppliers. And investments in the extraction or pre-processing of resources directly in Africa are often hard for them to imagine. At the same time, we are seeing increasing openness. A growing number of German industrial companies are willing to establish partnerships with African suppliers and to support them with the necessary know-how training and quality management. In areas such as production, documentation, and traceability, targeted financial support from public institutions could accelerate this positive development significantly. To make this possible, African suppliers also need to invest and position themselves strategically. Against this backdrop, INESUS and COSTRAT have founded the German African Import Network, GAIN. A partnership between German industrial companies and African suppliers. GAIN helps both sides navigate the market, build relationships, and learn from one another. The German federal government is also improving the framework conditions for imports from Africa. For example, through new financing instruments for African suppliers and additional measures aimed at strengthening fair trade relations. On hydrogen, much has changed in the hydrogen sector since the days of the Desertec project. Nevertheless, we observe that African countries with hydrogen ambitions have not yet fully realized their potential to manage and control these emerging markets.

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