Power Africa Annual Report: Second Year in Review
Power Africa’s Annual Report highlights the progress the Presidential Initiative has made in its second year, the lessons learned, and the roadmap for the future. The report highlights achievements to date and progress made toward the new goals set by President Obama at the U.S.-Africa Leaders Summit.
African leaders are articulating their own vision to dramatically increase access to power on the continent. Power Africa is supporting this African-driven vision in practical ways aimed at delivering results. Power Africa’s approach focuses on partnership, driven by the private sector and supported by host country governments and multilateral and bilateral donors.
Large- and small-scale solutions for bringing cleaner, more efficient electricity generation capacity to sub-Saharan africa are all grounded in a new model of development that drives Power Africa. The core of this model is based on effective partnerships that link public and private sector goals and resources, and connect investors and entrepreneurs to business opportunities in Africa. Structured not from the top down, but laterally, with U.S. agencies, African governments, private sector actors, and other stakeholders serving as partners in the enterprise – Power Africa is delivering results.
Power Africa’s approach considers three related but distinct challenges to bringing that vision to life. power must be available, meaning sufficient megawatts must be generated to meet people’s needs. It must be accessible, so that even those communities that cannot be connected to national grids can still access electricity. And it must meet basic quality considerations, meaning natural resources and megawatts generated are efficiently managed to ensure optimal use.
In June 2013, President Barack Obama launched Power Africa – a partnership among the U.S. Government, African governments, the private sector, international organizations, NGOs, and bilateral and multilateral partners to double access to electricity in sub-Saharan Africa. In its first year, Power Africa made progress toward achieving its initial goal of adding 10,000 megawatts (MW) of power generation capacity and 20 million new connections in six countries in sub-Saharan Africa. To expand the reach of Power Africa, in August 2014, during the first ever U.S.-Africa Leaders Summit (ALS), President Obama announced a tripling of Power Africa’s goals – adding 30,000 MW and 60 million connections across sub-Saharan Africa. Alongside this announcement, the President pledged to support Power Africa at a new level of $300 million in assistance per year.
These new goals are ambitious but achievable. To accomplish them, Power Africa is expanding the markets it works in and the tools it offers. To date, Power Africa has assisted with the financial closure of transactions expected to install over 4,100 MW of new, cleaner power generation capacity when fully online. Power Africa has also made progress toward its connection goals. The additional 4,100 MW of power has the potential to enable approximately 4 million new connections through increased availability of power. Under Beyond the Grid, a Power Africa sub-initiative that drives private investment in off-grid and small-scale energy solutions, U.S.-Africa Clean Energy Financing facility (ACEF) and the U.S. African Development Foundation (USADF) have funded companies and projects expected to reach 1 million new connections.
Much of Power Africa’s initial achievements were due to its support of projects that were in development before our launch. Moving forward, we are focused on generating new deals to support, while continuing to ensure existing projects stay on track. In addition to the projects that have reached financial close, Power Africa has identified transactions in the planning stages with the potential to install more than 20,000 MW of cleaner power generation capacity in sub-Saharan Africa.
Generating new deal flow will be easier if certain conditions on the ground are met including opening the door for private sector investment in the energy sector and addressing many of the regulatory and financial constraints that have historically inhibited private sector investment. In Ethiopia, Power Africa and its partners are providing legal and technical transaction support to help the government advance its first independent power purchase agreement (PPA) with Reykjavik Geothermal and partners for the development of up to 1,000 MW of power at the Corbetti, Tulu Moye, and Abaya geothermal energy fields.
In Rwanda, Power Africa partner, Gigawatt Global, officially commenced operations of East Africa’s first ever utility-scale solar energy facility in February 2015 – 8.5 MW of gridconnected power (enough for 15,000 homes). The Solar Field at the Agahozo Shalom Youth Village, in addition to providing the grid with desperately needed power, is also directly benefiting a local community who now receive rental income from the solar facility’s land. In part due to critical early stage support from Power Africa, the project was negotiated and commissioned in slightly over one year’s time, demonstrating how quickly solar projects can get power on the grid. The transaction also helped build government capacity to negotiate power projects and increased government and private sector interest in additional projects. This solar field is the first project to come on line through ACEF, which is a key part of the Power Africa toolbox.
While Power Africa has made significant strides in the first two years, challenges abound, we are stressing the need for new financial models and critical reforms that will accelerate access to electricity. We support governments to make tough reforms and build their capacity so that they retain control of their country’s energy destiny in a financially and environmentally sustainable way. Whether it is enabling a private developer to tap wind resources to power thousands of homes in Kenya, or to help a woman in a rural village in Tanzania install a small photovoltaic solar panel on her roof, Power Africa is equipped with the tools to provide a wide range of support.
The private sector is leading the way. Power Africa’s over 100 private sector partners have committed more than $20 billion toward specific projects, including $1 billion in commitments under Beyond the Grid, our effort to ensure that people living in remote areas also get access to power. Success in mobilizing commitments has been possible because Power Africa has put people on the ground on the continent, who seek feedback from the private sector about the key impediments to their investments.
Power Africa’s experience over the last two years validates many of the reasons why it was launched. First, there are plenty of investors interested in the energy sector in sub-Saharan Africa, and there are a lot of great ideas for projects. But, there is a shortage of “bankable” projects. In the coming years, Power Africa will continue to help advance projects to the point of bankability through interventions such as facilitating the project’s financing and risk mitigation, and providing technical and transaction support to ensure the project is planned and negotiated with best practices. Second, companies see many opportunities for investment, and will quickly shift to other countries in Africa or even to other continents if one country is not willing to make the critical reforms necessary to attract and retain such investments. Third, there are sufficient renewable energy resources in Africa to power the continent many times over, yet there are many challenges in tapping this tremendous potential. Power Africa will work with our private sector and government partners to recognize and capture this potential in a low cost manner in order to promote rapid economic growth.
Working in partnership to overcome Africa’s energy deficit, Power Africa’s ultimate goal is to reduce poverty and improve lives by bringing power to health centers and schools, light to homes, and electricity to businesses.
Power Africa Delivering Results
Transactions brought to financial close expected to generate over 4,100 MW of electricity
Potential to power roughly 4 million new connections from increased availability of power plus an additional 1 million connections through ACEF and the Off-Grid Challenge funded projects
$20 billion in private sector commitments from over 100 partners leveraged by an initial USG commitment of $7 billion – nearly 3:1 leveraging of funds
The Government of Sweden committed $1 billion, adding to the World Bank Group’s commitment of $5 billion, and the African Development Bank’s commitment of $3 billion