Hill, Partner & Associate Director at Boston Consulting Group, talks about the future for African cities, the imperative for green growth in low-income countries on the global path to net zero, and her outlook on scaling enterprise and service delivery in Africa.
Katie Hill is an expert Partner and Associate Director at Boston Consulting Group, based in Nairobi, Kenya. She is a core member of the Green Ventures team, building and scaling climate-smart companies across Africa. She has spent over 15 years as an investor and operator in high-impact climate and technology companies. Katie specializes in decarbonization strategy and implementation for global companies; renewable energy economics and transactions; sustainable and impact investing; and digital economy and infrastructure. She received her MBA and MS in Environmental Engineering from Stanford University.
- An overview of the EU Green Taxonomy relabeling nuclear power as a sustainable investment.
- The nuclear readiness map by the Hub and Third Way.
- African countries getting ready for nuclear power.
Katie Hill Interview
- Katie’s BCG bio.
- Acumen, where Katie’s interest for her current field began.
- The exciting growth in African cities.
- The bus rapid transit system, and the example in Dar es Salaam Katie mentions.
- African emissions Katie references.
- The imperative for climate adaptation in Africa.
- What green growth means in some African countries.
- Africa has a high renewable potential.
- The importance of avoiding the neocolonial narrative when approaching carbon sequestration.
- El Salvador’s bitcoin-geothermal initiative.
- Work on energy access through last mile connectivity Katie references.
- Effects of constraints on African enterprises without electricity.
- The Global Energy Alliance for People and Planet.
- An op-ed written on the importance of data centers by Katie and Rose in Scientific American.
- Katie’s *rave on the rise of African crypto trading.
START (KATIE HILL INTERVIEW)
ROSE: I’m Rose Mutiso in London.
KATIE AUTH: And I’m Katie Auth in Washington, and this is High Energy Planet, the podcast from the Energy for Growth Hub about new ideas to solve global energy poverty.
ROSE: On today’s show we talk with Katie Hill, partner and associate director of the Boston Consulting Group.
KATIE AUTH: We’ll ask Katie about her path in creating change from within the private sector, her perspective on green growth in African cities, and her outlook on scaling enterprise and service delivery in Africa.
ROSE: But first Katie and I get amped up about nuclear power.
KATIE AUTH: All that coming up on this episode of High Energy Planet.
KATIE AUTH: All right, now it’s time for Amped Up, when we talk about what we can’t stop thinking about right now in the energy and development space. And this week we’re obsessing about nuclear power and its connection to climate, which has been in the news a lot lately. In the U.S. there are huge debates happening between climate activists and more traditional environmental groups about whether states should be retiring their nuclear facilities. And the EU just included nuclear in its new green taxonomy for sustainable investment, while Germany and Belgium have been criticized for shutting down their own nuclear fleets.
ROSE: You know Katie, what’s particularly interesting about this to me is the climate hypocrisy here. You know, Germany still operates a ton of super-dirty coal and Belgium is planning to replace their nuclear with gas. Africa is often made to be the boogieman for climate goals, but these seem like more consequential issues, don’t you think?
KATIE AUTH: Yeah, absolutely. I was thinking about the fact that our colleagues at the Hub and Third Way have actually been doing some really interesting work mapping out nuclear expansion around the world, including in Africa and countries that you might not associate with nuclear power. And I was surprised to learn that there’s actually five or six African countries who are actively seeking to develop their own nuclear fleets. In contrast to Belgium or Germany, South Africa actually wants to use nuclear to replace its own coal. So in spite of this technology in developing countries it’s definitely concerning for some. But I think we absolutely need to be thinking about the role of advanced nuclear, especially in the context of climate change, given that many of these countries need to provide huge amounts of firm clean power somehow without massively expanding fossil fuels.
ROSE: Yes, definitely. And, you know, if we want Africa to be on an ambitious growth trajectory that will also be zero-carbon, then it stands to reason that nuclear could be in the mix, particularly in the second half of the century. The when and how of this transition is something that we’ll definitely be following closely at the Hub alongside our colleagues at Third Way. And in the meantime we’ll also continue drawing attention to the hypocrisy that dominates a lot of climate discourse, especially in rich countries with regards to Africa. And also point out all of the ways in which Africa is being super-progressive and a trend-setter when it comes to climate and energy transitions. All right, so if you have an energy or development obsession, good or bad, tweet it to us at @EnergyforGrowth and we’ll include it in an upcoming episode. Coming up now, we talk with Katie Hill from BSG’s Green Ventures.
ROSE: Katie, welcome to High Energy Planet, it’s so great to have you.
KATIE HILL: It’s so great to be here, I’ve been a fan of this for such a long time.
ROSE: Wonderful – wonderful. So to get us started could you talk to us a little bit about how you got to where you are now, and specifically what led you to become so passionate about green growth transformation in Africa?
KATIE HILL: Sure, I will try to give you the short version. So I guess, I mean, first starting with my interest and passion for the region, which really began even before university, and then in university I essentially studied economic development and really focused on sub-Saharan Africa. I did my semester abroad at a Makerere University in Kampala, and a lot of undergrad research there. The first chapter of my career was in the early days of impact-investing, and I joined a fund called “Acumen.” And I ended up working on launching out energy portfolio and making some of our first investments in off-grid energy companies globally, and really saw how fundamental energy is to both improving individual livelihoods–whether that’s education or income-generating opportunities–and also at the societal level, which is what the Energy for Growth Hub is all about. You know, how can economies and nations develop if they don’t have access to abundant, affordable power? And also realizing that climate change was going to kind of impact the poor and vulnerable communities globally far more than, you know, affluent and industrialized countries. So I then went to grad school, did an MBA and a master’s in environmental engineering, and then worked for many years at the other end of the development spectrum. I was working for Apple on decarbonizing Apple’s own operations, and Apple’s product manufacturing worldwide, and really demonstrating that we could decarbonize even in markets like China, while either achieving cost-savings or managing risk. So I really, you know, over time leaned into where are all the opportunities where we can create economic value for economies or individuals while also sort of creating a low-carbon future?
KATIE AUTH: Yeah, so Katie I’m interested, like – you know, you mentioned you did economic development in undergrad and you were interested in these global issues. And I think for a lot of people the maybe most obvious next step is to go into the traditional development world, which is a lot of public institutions. And you didn’t go that way. So I’m curious, like, what specifically attracted you to the private-sector side of development?
KATIE HILL: Yeah, it’s a good question because I’m also from Washington D.C., so you’d think maybe I would be a product of that realm.
KATIE AUTH: You grew up in the swamp, yeah. [LAUGHTER]
KATIE HILL: Yeah. And even coming out of university I actually was agonizing over kind of two different paths. One was joining the – working for the senior economist for Africa at the World Bank, and other was joining this, at the time, no-name institution called “Acumen,” which I read about in a half-page article in a magazine, and was only ten people in New York City. So I think for me it probably came down to two factors. One is just personality trait. So my personality being a bit more kind of biased toward action, liking to kind of try new things, test new things, a little bit irreverent and unconventional, and not knowing how well I would do in bigger institutions. And then, you know, at the time seeing a huge opportunity to really steer the private sector towards more responsible practices, and for the private sector to play a role in addressing some of the critical challenges in serving the poor, and addressing environmental externalities. But I also want to be very clear that I am not an evangelist for the view that kind of policy institutional development institutions aren’t effective and we need the private sector to save the world and solve all of our problems. That is not my perspective. I mean, ultimately nothing scales like government, and we see time and again how one smart policy, or one smart program can really unlock in a sector-wide impact. So I think it’s a – for the world I think it’s an and, and it’s just – or on the personal level of figuring out where your kind of skills and passions will be most effective.
KATIE AUTH: Yeah, so kind of talking about those skills and passions, you embrace a pretty optimistic and ambitious vision for the future. And a lot of your work centers on innovation that’s particularly relevant for Africa’s growing cities, which are increasingly recognized, maybe belatedly being recognized as incredibly important in terms of shaping our global future. So I’m curious, like, if we jump ahead a few decades what in your ideal mind would an African mega-city look like in 2050? What do you want that vision to be?
KATIE HILL: One initial comment would also be that the mega-cities get a lot of attention, but at the end of the day the vast majority of urbanization is going to be in these kind of smaller secondary tertiary cities that have even less resources and attention being paid to how they deliver kind of infrastructure and services. So hopefully we can bring some more attention that way. You know, I think the idea African city in the next couple of decades will hinge so much on a certain degree of employment and, you know, income-generation for its citizens. So, you know, there is the kind of economic development and economic opportunity piece that goes far beyond just kind of sustainable infrastructure and services. And then it really comes down to affordability of housing, transport, energy, you know, wastewater. And globally most of those services have some degree of municipal funding. And the challenge we have in most African cities and most emerging-market cities is you don’t have a (tax) space, or municipal bonds being issued, and the ability to fund a lot of the services. So we depend on informal sector, we depend on social enterprises to provide a lot of this kind of last-mile support. And in the U.S. and Europe and most of the parts of the world we would never expect a private company to be profitable managing waste for a city if there wasn’t additional sources of revenue. I think we need to address this kind of – this fundamental contradiction where we are expecting African cities to grow and provide sustainable infrastructure and services without the same kind of resources and support that industrialized cities have had. But I guess saying a little bit more is I think, you know, the future will be – I think a lot of urban services will be modular and distributed and community-based rather than kind of large utility-wide infrastructure. When you think about water, and waste, and connectivity, and increasingly electricity, you know, there is the benefit of the lack of legacy infrastructure today means that we can build cities in a much more modular way. And I think the best outcomes will also be I guess scenarios in which we actually take advantage of some of the adaptive and responsive nature of the private sector. So there’s a lot of criticism of the informal or semiformal public transit systems that you have across most African cities, and there’s issues around cost and safety. But at the end of the day it’s incredibly agile and responsive to what people need and when. And so if we can keep some of the principles that make these cities function today but solve some of the problems around affordability, and safety, and pollution, for example.
ROSE: I like this visions. For a moment there I thought you would take us in the direction of the Jetsons [LAUGHTER] as a future African city and flying cars, and it’s kind of a lot of this un-sexy stuff. You know, Nairobi is obviously near and dear to both of us, and when you say “modular community-based” we already see a lot of that. There are all of these informal, I mean, [quote, unquote] cartels that provide services. So if you’re in the slum and you need electricity there’s a guy who’s stealing power and will sell it to you. There are people who pick up our waste, and it’s very disorganized. And so just a little bit more about how you see these different informal modalities, including the transport sector kind of coming together into a whole that makes what I think many of us Africans dream of, a sophisticated kind of well-functioning city.
KATIE HILL: Yeah, I think a big test of it right now will be the second–I don’t know if it’s the third attempt–but it’s at least the second attempt at a BRT, a Bus Rapid Transit in Nairobi, where the at least stated intention is that this will at least be partial if not fully electric buses that are running on kind of the first bus rapid-transit system. And, you know, if you look at I think examples from Dar es Salaam and elsewhere, this works best when you really intentionally design a formal BRT system with the current informal or semiformal operators. So I think what makes or breaks a lot of this kind of evolution from these African cities as they are today, and the, you know, tech-enabled climate-smart solutions of the future, it is hand-in-hand deeply understanding the economics and incentives of the current actors, and ensuring that they succeed in the kind of new model.
ROSE: Great – great. You’re just dipping into one of our favorite topics, which is about just transitions. But putting that to one side.
KATIE AUTH: Coming up we ask Katie about tactics to achieve the vision for green growth in Africa, and of course we lay Rant or Rave.
ROSE: All right, Katie. So when Western development finance organizations or energy investors, and even just policy people in the development space, when they talk about Africa they’re often focused on how the West can [quote, unquote] “help Africa” build out clean energy or increase climate resilience. But this can be quite patronizing. How can Africa be more active in actually taking advantage of the new global carbon economy, as opposed to this very kind of passive model even narrative-wise, like, West-helping paradigm?
KATIE HILL: On the net-zero front Africa contributes three percent of global carbon emissions. Today most of that is South Africa and a few north-African countries. So to talk about net zero is just a little bit ridiculous. And on the A&R front we know that needs to happen, we know that the region will be dramatically more impacted by climate change than elsewhere. And so that – there is a huge imperative there. But if we’re successful at adaptation and resilience that’s treading water. You don’t see progress for Africans from adaptation and resilience. You see protection from kind of greater downside. And so I feel like the first pillar needs to be about green growth, jobs, and GDP growth for countries taking advantage of what needs to happen in decarbonization and adaptation. So, I mean, to get very specific about that, it’s recognizing that globally there is going to be a lot of not only capital but also demand for low-carbon, zero-carbon, and carbon-sequestering products. And so where are the opportunities for the region to take advantage of some of its natural assets, and participate more in the global economy than it otherwise is today. So that could be – I mean, looking at east Africa’s abundant renewable energy potential, and especially kind of baseload of peak-energy generation with geothermal, we’re just scratching the surface of that potential today. What could the region be manufacturing and exporting, using that renewable energy, in a world where there’s going to be border-adjustment taxes? And actually 100% renewable manufacturing can come at a cost premium or it can be more competitive. Another would be around carbon-sequestration. So there’s a very fine line between the narrative that industrialized countries have created tremendous amounts of carbon emissions, and now they want to pay regions like Africa to sequester it. That is the kind of neo-colonial narrative, right? That we need to be very careful about. But another way of seeing that, if public- and private-sector, and social-sector players in the region can be strategic about this, is there is going to be a tremendous amount of funding available to purchase carbon-sequestration. And the region is particularly productive in carbon-sequestration because of tropical forests and certain coastlines that are very good for kelp, and seaweed, and all the rest – else. So where can we be really smart about actually capturing as much of the fast-growing carbon markets for the continent? Because that funding will go somewhere, and it can either come to companies and entities here, or it can go to other regions.
ROSE: Are there any examples do you think of countries in Africa or in other emerging regions that you think are setting the right tone in terms of taking the stack?
KATIE HILL: Okay, I’ll give you a couple examples. I mean, one is El Salvador–here’s a very specific example–El Salvador about six months ago announced that Bitcoin would be a recognized currency and invited all Bitcoin-mining companies to come and use its abundant geothermal to run compute-intensive crypto-mining data centers. And I don’t…
KATIE AUTH: I totally missed this somehow.
KATIE HILL: It was timed very well with when China was kicking out all crypto-mining from the country, which was primarily running off of cheap coal-power in China. So why can’t Kenya or east Africa do the same?
ROSE: So Katie, speaking of tech, you just mentioned (inaudible) Systems for example, an area that we’ve both kind of worked in at various points in our careers. So supporting tech entrepreneurship and social enterprises in Africa has been a major focus of development-funders for almost two decades now. So, you know, at some point the World Bank and others decided that entrepreneurship is great, “innovation” is a buzzword, we’re now behind – we need enterprises, we need private sector. But somehow we don’t seem to have much to show for it in terms of scaling enterprises, big innovation shifts. We don’t have very many examples of enterprises that have kind of gone big. So do you agree with this assessment, and if so what needs to change?
KATIE HILL: So I agree with most of that assessment. I mean, I think one compelling point here is that at the very least we have seen a material portion of people gaining energy access over the last decade come from the these distributed players, right, and come from this innovation space. So I think in the aggregate at least when it comes to energy access we’ve seen a magnitude of service – (inaudible) service to Africans. On the individual company basis though, I mean, one analysis that we’ve done recently is looked at a few-hundred energy and agriculture companies that have been funded by basically the cast of characters, the DFIs, and the impact, and venture, and growth equity funders on the continent. And plotting the years since founding against the most recent revenue numbers, it’s really remarkable how few have crossed kind of a $10- or $20-million revenue number despite being alive for, you know, 10, 15 years. So we know there are some fundamental constraints that these companies face that we should not be flippant about. We know how difficult the operating environment is. We know the talent challenges, the policy challenges, the capital… The capital has flown in, but (has it) been the right capital at the right time? So, you know, tech entrepreneurship and social enterprise should not be a replacement for what needs to happen from the public sector. And so this is a very positive thing if it is complimentary, but it’s not a positive thing if it is a replacement for the work we need to do from an institution perspective. And that’s where the real danger comes in my mind. Because I think we do have some great examples of these companies being able to operate faster than utilities and deploy faster and be more responsive to what customers need. But, you know, this needs to be hand-in-hand and not an either-or.
KATIE AUTH: Yeah. So a lot of what we’ve talked about from (inaudible)(ability) to the growth of tech entrepreneurship, I mean, all of this at the end of the day depends in large part on the provision of reliable and affordable electricity. And this kind of brings us back full-circle to why you’re a fellow of the Hub and what Rose and I do. Are you optimistic about that service delivery improving in the near term?
KATIE HILL: So I guess what I’m optimistic about is the deployment of renewables across the continent, both utility scale and distributed. I think for the most part we have proven out that that’s a viable asset class for investment. I mean, you see what – on the large scale, you know, there’s (inaudible) funds, and global (ec), and others that have been able to demonstrate returns to investors. And I think there’s going to be a lot of capital available for just renewable power generation. What worries me a bit – and, you know, I’m optimistic about some of the bold initiatives that have come out. You know, Rockefeller, IKEA Foundation, and Bezos Earth launching this global energy alliance. And if we can’t do it now we’ll never be able to do it, it sort of feel like. So it is kind of meeting the moment. What I’m less optimistic about and concerned about, the investment required to upgrade utility infrastructure. So while there’s a lot of funding going into renewables, the transmission and distribution infrastructure, smart grids that enable a substantial amount of renewables and intermittent resources to be on the grid, I think we definitely run a risk of kind of overinvesting in renewable IPPs and not investing enough in the system. And hand-in-hand with that, you know, utility financial health. As much as we all everywhere in the world love to hate our utilities, they play such a fundamental role in advanced economies and industrialization, and we need KPLC and Umeme and the, you know, discos across Nigeria to be financially healthy and viable companies. So I really hope that that, you know, is something that, you know, we as a sector lean into.
KATIE AUTH: Yeah. I mean, it comes back to your point. Private investment in (new) generation is not a replacement for the public investment that needs to happen on the other end.
KATIE HILL: Exactly.
KATIE AUTH: Okay Katie, now it’s time to play a quick-fire rant or rave. We’re going to give you a short phrase or a word and you decide whether you’re going to rant or rave about it, and tell us why. And we’re going to move through this really quickly. Are you ready?
KATIE HILL: Ready.
ROSE: All right, we’ll start with a soft one for you. Africa data centers.
KATIE HILL: I will rave about this. So at the end of the day we talk a lot about the need for a digital ecosystem and now we’re going to ensure that, you know, Africa gets to participate in an increasingly digital economy globally. And most people don’t think about data centers, a lot of people don’t even know what they are, but they are the heart of the internet.
KATIE AUTH: Okay. Number two, African crypto-mining.
KATIE HILL: [LAUGHTER] I’m also going to rant about this. So, I mean, what’s wild is–I’m sure I’ll butcher the statistic a little bit, but, I mean, I don’t know if you guys have seen that Kenya and Nigeria and a number of other African countries are amongst the highest in the world for peer-to-peer crypto-trading. This is an area of also large energy consumption, sort of digital industrialization, and I don’t see any reason why we shouldn’t be using abundant renewable resources on the continent to power cryptocurrency-mining.
ROSE: So number three, debt-investment into Africa.
KATIE HILL: I will rant about this one. Despite much of the debt coming into the continent at least for kind of impact businesses being labeled “concessionary,” technically being concessionary from BFIs, I don’t see how 8% to 12% hard currency U.S. dollar loans make a lot of sense for asset-backed financing on the continent. And how can you expect these industries to grow when their counterparts in the U.S. and Europe are getting low single-digit loans?
KATIE AUTH: Off-grid energy?
KATIE HILL: I will generally rave if I had to choose one. I mean, at the end of the day I believe the numbers that 70% of new connections on the continent, if we are going to get to kind of full electrification, are going to come through these models as the least-cost way to reach those consumers. But my small rant will be that it is not enough to provide subsistence power to all Africans and call it a day, as if we’ve succeeded at energy access.
KATIE AUTH: Okay, general rave with a mini-rant, I like it.
ROSE: All right, closing things off, bringing it back to some stuff you’ve worked on. So big business net-zero pledges.
KATIE HILL: I’ll only rave about them if there’s accountability. And this is the problem. I mean, pledges mean nothing. So we as an industry need to do a better job of actually tracking what companies say they’re going to do, and we need to have a megaphone really announcing what has been done against commitments. We’re really bad at that.
ROSE: All right Katie, thanks so much for being with us on High Energy Planet. I hope we haven’t scared you off. You know, we really, like, prepped the hardest questions ever and you did not disappoint. You’ve given us so much to think about. Thank you for being our guest, thanks for being an advisor on the Hub supporting our work, and thank you for being such a thoughtful ambassador for growth and change on the continent.
KATIE HILL: Thank you, I love what you guys are doing with this, and it’s such an important set of conversations. So it was a lot of fun.
ROSE: That’s it for today’s show. High Energy Planet is a production of the Energy for Growth Hub, matching policymakers with evidence-based pathways to a high-energy future for everyone. Find out more at EnergyforGrowth.org. And tweet your questions and thoughts to us at @EnergyforGrowth.
KATIE AUTH: And if you liked today’s episode be sure to rate and rank the podcast and tell a friend about us. Bob Lalasz is our executive producer, (Gray) Johnson is our senior producer. Join us next time for more High Energy Planet.
END (KATIE HILL INTERVIEW)