An
ambitious new road map released last week lays out how Power Africa, the United
States government initiative to increase power generation capacity and access
to electricity in Africa, will achieve its targets by 2030. The report
outlines areas of new emphasis for the initiative, including a greater focus on
energy access and on renewables.
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A
500 watt solar system in a rural village in Uganda powers a home, drives a
public broadcasting system, a barbershop and a video hall and generates new
income for the business owner.
And the U.S.
House of Representatives on Monday unanimously passed the Electrify Africa Act,
which codifies the work of the initiative and should ensure its longevity. The
U.S. Senate passed the bill, which differs a bit from Power Africa goals — it
sets targets at 50 million connections and 20,000 megawatts of generation, on
Dec. 18 and it now awaits approval from President Barack Obama, which should be
forthcoming.
In 2013 when
it announced Power Africa, the U.S. committed $7 billion to tackle the
challenge that more than 600 million people in sub-Saharan Africa lack access
to electricity. That initial commitment has leveraged about $43 billion dollars
in pledges from public and private sector partners, according to the Power Africa Roadmap.
The initial goals were for
Power Africa to increase installed power capacity by 30,000 megawatts and
create 60 million new connections by 2030. To date, the 13 Power Africa
projects that have reached financial close are expected to generate more than
4,300 megawatts of power, according to the road map.
It’s important to note, and Power
Africa does so in the road map, that some of those projects were underway
before the initiative launched. While they didn't come about under the auspices
of the program, they met other criteria, including U.S. government involvement
and meeting environmental and social safeguards.
Power Africa spent its
first year focused on grid-scale generation deals, but leaders of the
initiative are now looking ahead to ambitious connections targets — Power
Africa-supported projects have the potential to lead to more than a million
direct connections — and making changes based on lessons already learned.
Generation and access goals, for
example, are “actually two totally different things,” Andrew Herscowitz, Power
Africa coordinator, told Devex. As a result, the road map lays out specific
plans for each goal, and progress will be measured in actual connections.
“We’ve learned a ton,” Herscowitz
said. “We don’t just trust everything people say at conferences. We focus on
analysis and data.”
The road
map
That knowledge has been poured
into the road map, which has three main pillars: achieving the goal around
generation; increasing the number of people with access; and driving regulatory
and policy changes to improve investment opportunities and speed project
timelines.
Power
Africa is tracking projects in the Power Africa
Tracking Tool, an app built for the initiative that would total
about 45,000 megawatts if the projects all came online, though the road map
estimates that only between 18,000-21,000 megawatts will reach financial close
by 2030.
In order to
meet its 30,000 megawatt goal, Power Africa is looking for new deals, which are
likely to support
natural gas and utility-scale solar expansion. It will also work to improve
efficiency at existing power plants.
The majority
of projects in the pipeline, and certainly those that aren’t yet being tracked,
are at an early stage in their development, so it seems natural that one of
Power Africa’s focuses will be on early stage transaction support. Many project
developers say it’s also where donors and development finance institutions are
needed most.
Reaching the
goal of extending access to 60 million people will take a mix of relying on old
technology — expanding existing grids, and new — developing innovative off-grid
solutions.
One
interesting prediction in the road map is that 8 million to 10 million of the
new connections will come through the currently underdeveloped micro grid
segment of the market, though this raises questions about how to build the
appropriate structures and frameworks for those projects to succeed.
Work on the
third pillar aimed at building capacity and driving regulatory reforms may be
able to help some of those issues. A number of Power Africa programs or partner
programs are working to help countries create solid, transparent regulatory and
policy environments to help them attract investment and structure good
projects.
That capacity
building can also help citizens get a fair deal — a single negotiated deal
between a company and a government not only takes a long time but is unlikely
to provide the country good value for money, in part because African government officials often lack expertise, said Jamie
Fergusson, the chief investment officer and global sector lead for renewables,
infrastructure and natural resources at the International
Finance Corp.
South Africa sets an
example
Examples of
what’s working are quickly emerging. While in many ways South Africa may not be
representative of the rest of the subcontinent, it has risen as an example of a
success story, particularly in scaling up grid-connected solar projects.
Its Renewable
Energy Independent Power Producer Program developed a clear structure and
transparent bid process that has led to more than 2,000 megawatts of solar
between 2011 and 2014 and cheaper bids over time.
SolarReserve,
global developer of utility-scale solar power projects, has won several bids
and built grid-connected solar projects in South Africa. The latest, a 100
megawatt project with 12-hour storage, is set to start construction in the next
two months.
The company
continue to bid on projects in South Africa because the government built a
program that commercially makes sense, has political support at the highest
levels and a committed team that carries out the work, is transparent and keeps
its word, said Kevin Smith, CEO of SolarReserve.
While South
Africa has some advantages — it’s size, local expertise, a strong banking
system lower currency risks —other countries can learn from their example, he
said. Governments need to put together commercial documentation that makes
sense, provide clarity around the off taker and how it works, needs to abide by
international arbitration and devise a transparent and open bidding process
that sticks to a set schedule, Smith added.
Working together
Since Power
Africa was launched, a bevy of other organizations focused on electrifying the
continent have emerged and the initiative has amassed some 120 partners,
including the African
Development Bank, the World Bank,
the Swedish
International Development Cooperation Agency, the Norwegian
government and many private developers, financiers and foundations. Managing
that many groups is not always easy.
Coordination
amongst the donor and development finance institution community takes long,
patient conversations, and some head banging, Ferguson said.
“There's
politics and good intent and different organizations with their own mandates,”
he said. “It is not all perfectly coordinated. Lots of sensible people, but
still those conversations have to be had.”
Herscowitz said
he is proud of the initiative's efforts, especially in bringing the various
actors together. The level of coordination among the donor organizations is
“unprecedented,” he said, citing the example of household solar, where Power
Africa, the AfDB and the U.K.
Department for International Development got together to
discuss their work on in the space and decided to have DfID take the lead. That
cooperation helped shape what U.K.’s Energy Africa initiative does, Herscowitz
said.
There are
organizations stepping up to lead on other issues as well, like the World Bank
and AfDB on grid rollout, organizations like the U.S. Trade Development Agency
on project preparation, and the IFC on grid-level solar.
With so many
players, determining how each player slots in and where donor and DFI capital
should be used is important.
The IFC’s
Scaling Solar initiative, for example, emerged to fill a gap in helping to
structure and simplify the process of developing grid-connected solar projects.
The program developed a template process and document set to help a government
run through a process determining how much solar they want on their grid, where
it should go, if appropriate sites can be developed and how it could run a
competitive process to identify an independent power producer.
“Scaling
Solar is designed with collaboration in that donor and DFI ecosystem in mind,”
Ferguson said.
Governments
will need help paying for advisory work and in financing the projects
themselves, which is where donors can step in. For example, in Zambia, the
first country to sign on to Scaling Solar, DfID and Power Africa are helping
pay for advisory costs.
Donor
financing helped many of the rapidly expanding home solar companies get off the
ground — one of the most exciting development to Herscowitz personally. Super-efficient
fans, irons and televisions are allowing off-grid customers to “live an
on-grid life,” he said, which can change the market and impact the climate
change discussion.
“Donors and
public money is limited and precious and, I would argue, should be targeted
where you can’t attract private capital — transmission lines, distribution
companies, public utilities, all of those things that you can't attract private
capital for,” Ferguson said.
But every
market where Power Africa is tracking deals has some role for the public sector
to play — its role is to “bridge market imperfections,” test new models and get
first-of-a-kind deals done, Herscowitz said.
How well
Power Africa picks the places or types of projects it invests in and how that
translates to achieving its goals will certainly be measured against the
roadmap, which may well serve as a blueprint as the U.S. and its big coalition
of partners work to push things along.
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