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Powering up Africa’s Renewable Energy Revolution

Makhtar Diop's picture
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As African Presidents, Prime Ministers, and business leaders arrive in Washington to attend the first US-Africa Summit, one topic that will be paramount in their discussions with President Obama and his Cabinet is: how governments and families can access affordable electricity across the African continent.

Consider the facts: one in three Africans, that’s 600 million people, has no access to electricity. Neither do some 10 million small and medium-sized enterprises. Those homes and businesses fortunate enough to have power pay three times as much as those in the United States and Europe; furthermore, they routinely endure power outages that cost their countries from one to four percent in lost GDP every year.

Akosombo Dam in Ghana, June 18, 2006. (Photo by Jonathan Ernst)Despite the fact that Africa is blessed with some of the world’s largest hydropower and geothermal resources (10-15 GW of geothermal potential in the Rift Valley alone), bountiful solar and wind resources, as well as significant natural gas reserves, total power generation capacity in Africa is about 80,000 megawatts (MW) (including South Africa), roughly the same as that of Spain or South Korea.

As Africa enters its 20th consecutive year of economic expansion, with the World Bank forecasting that Africa’s GDP growth will remain steady at 4.7 percent in 2014, and strengthening to 5.1 percent in each of 2015 and 2016, the continent needs more electric power. Specifically, Africa needs to add 7,000 MW of generation capacity each year to meet the projected growth in demand, yet it has achieved only 1,000 MW of additional power generation annually.

Over the last week I visited Cameroon and the Democratic Republic of the Congo, two of Africa’s so-called ‘fountain states.’  The resources in these two countries – along with Guinea, Ethiopia, and Uganda – can generate enough hydroelectricity to satisfy the growing demand in Africa. I saw the range of applications for which this power is needed, and I saw clear solutions.

In Eastern Cameroon I visited the construction site for the Lom Pangar hydropower project. Once construction is complete and the reservoir is filled in the next couple of years, this new dam on the Sanaga River will improve the reliability of power supply and lower the cost for up to five million Cameroonians. The Lom Pangar project will also pave the way for developing the full 6,000 MW of hydropower potential of the Sanaga River by regulating the flow of the river.      
 
In the Democratic Republic of Congo, last week, I visited the Inga hydropower site on the mighty Congo River. DRC’s overall hydropower potential is estimated at 100,000 MW, the third largest in the world behind China and Russia, yet only 2.5% of this key resource has been developed. With 40,000 MW of generation potential, Inga is the world’s largest hydropower site. Its proper development can make Inga the African continent’s most cost-effective, renewable source of energy with an estimated generation cost of US$ 0.03 per kilowatt hour with little or no carbon footprint--a significant added virtue.


As African leaders will undoubtedly tell their American hosts over the coming days of the US-Africa Summit, Africa has vast hydropower potential but it is using just 8 percent of this untapped water force. Compare that to Western Europe which uses 85 percent of its available hydropower potential. What a stunning contrast, 8 percent versus 85 percent!
 
Abundant hydropower in Western Europe gave many countries the economic boost they needed to steadily raise their living standards and power new chapters in their drive for economic development. Hydropower gave Europe a powerful head-start on building affluence and progress. Like Europe and the rest of the world, Africa deserves the same opportunity to exploit this green source of power to improve the lives and economic prospects of its people.
 
Beyond building these power generation assets, they must be connected to the market, which calls for regional cooperation to build the transmission network.  We are working with African leaders and their development partners, as part of our broader initiative of Regional Integration, to create power pools in Africa’s East, West, Central, and Southern sub-regions.  Those countries with abundant geothermal, gas, hydro, solar, and wind resources can feed their excess power supply into a common pool, while neighboring states with lesser endowments of energy resources and generation capacity can benefit from this integrated approach to delivering electricity to their people. It is incumbent upon the individual countries to remove all barriers to these cross-country investments.  As noted by both the World Bank and Power Africa Initiative, the benefits of these investments in generation can only be harvested, and transferred to African consumers, if the distribution companies meet the minimum level of efficiency, financial viability, and good governance. The region’s electric utilities – whether they are state-owned or private enterprises – need to be operating at full capacity and undertaking the necessary reforms so as to bring the power to the people of Africa.
 
In East Africa, for example, the World Bank has mobilized $684 million to build the Eastern Electricity Highway Project (EEHP) to connect Ethiopia’s electrical grid with Kenya, and reduce energy costs and protect the environment while paving the way for more dynamic regional cooperation between the countries of East Africa.
 
Elsewhere in Africa, as world prices for photovoltaic equipment have fallen, solar power is an increasingly affordable option to add the continent’s energy mix.  In Mauritania, which is in the forefront of the renewable energy movement in Africa, solar energy now powers 30 percent of Nouakchott’s energy use, with 50 percent of the capital city’s energy needs likely to be covered by solar in the next several years. There is also significant potential for large-scale concentrated solar power arrays, as have already been constructed in Morocco.

In addition to power from two regional hydropower plants at Manantali and Felou, Mauritania will commission a 30-MW wind farm in the next 24 months that will bring the total share of renewable energy, including hydropower, to about 45% of that country’s total energy demand. The remainder will be supplied by the Banda Gas to Power Project, recently approved by the World Bank’s Board of Executive Directors. Not only will the Banda project produce and convert natural gas from offshore gas fields in Mauritania into 300 MW of new electricity generation capacity, it will also export surplus power to Mali and Senegal, yielding regional benefits as well.
 
The Banda project is significant – not only for its contribution to the energy needs of The Sahel, but for its demonstration of the range of World Bank Group instruments that can be deployed to bring this high-return project to fruition. A combination of up to $261 million in partial risk guarantees and $585 million in investment guarantees has been mobilized to attract foreign and regional investors to this innovative regional power project.
 
Going forward, it will only be possible to attract these investors – international equity funds, insurance companies, pension funds (both African and global) – if power projects are bankable and well-structured. Institutions such as the World Bank Group can help to build that financial architecture through instruments such as Project Preparation Facilities, guarantees, and insurance.
 
Guarantees are essential because the perception of risk associated with energy investments in Africa remains distorted and excessive, and do not reflect the solid macroeconomic realities on the ground. Furthermore, large-scale infrastructure investments require long-term capital, yet they are typically subject to a mismatch of both currency and maturity. Countries are borrowing on the global bond markets, for five- or seven-year terms, when power projects take far longer to construct and generate revenue streams. Similarly, as sustained growth in Africa is also reflected in rising domestic savings, it is imperative to tap these resources and channel them into productive, high-yielding investments. By providing guarantees and political risk insurance, the World Bank Group can help to manage those risks and, in time, correct the risk profile of energy projects in Africa.    
 
Expanding Africa’s access to electricity through grid, mini-grid, and off-grid solutions is a key element of our efforts to achieve the twin World Bank Group goals of ending extreme poverty and creating shared prosperity for all people of the continent. Furthermore, by meeting electricity demand with our plentiful renewable resources – hydro, geothermal, solar and wind – Africa can grow in an environmentally sustainable manner, with minimal additions to overall carbon emissions.  Africa is poised to achieve green growth – a global public good -- while meeting the energy needs and growth aspirations of its people. 
 
These are the messages that are likely to reverberate throughout the US-Africa Summit in Washington this coming week. I look forward to the discussions of how we can meet Africa’s electricity challenge. You can be sure that we in the World Bank Group, with President Jim Yong Kim in the lead, will mobilize new commitments to power up Africa’s present and future in close alliance with the US Government and Africa’s political and business leaders.

Comments

Submitted by Ronald Muhammad on

The article proposes a real solution to a big problem across Africa but the major stumbling block continues to be the lack of unity and cooperation of the various countries and the warring factions throughout the continent. Peace has to come first and in some cases the removal of corrupt leaders.

Submitted by rwehumbiza joel joseph on

its a very good ideal,it not only provide more electricity but also jobs to the unemployed Africans,,,

Submitted by Eritrea Today on

In East Africa, for example, the World Bank has mobilized $684 million ? How come it did not created any Jobs and why only in Ethiopia and Kenya? How about Eritrea needs help with Energy and did not get any money of the $684 million.

Submitted by Dennis Barongo on

This sounds and I believe indeed is an exotic opportunity for African states, especially given the commitment so expressed by The World Bank in collaboration with the US Government.
With the above in mind, I would think that prior to such summits, the World Bank and/or the US Government align their commitment to emphatically requiring the African political and business leaders to present writings on evidence of knowledge to the existence and arrays of hydropower resources in their states, and the visionary approaches on how they would go about using such in taping on the opportunity
(a) for the benefits of the people in the countries of hydropower resources.
(b) for sharing of electricity in the form of exported product to neighboring countries to generate foreign currency while presenting an opportunity for the growth of other African states around them that are with little or without hydropower resources.
The World Bank and/or the US Government would examine and where possible investigate on the contents earlier on, such that summits like this should discuss real issues than abstracts. Africans like myself would like to hear about a conclusive decision on the number of projects to be established and projected start dates instead of the mythical political terms like we are planning, we are in discussion, we have targeted, etc.

Thank you.

Submitted by simbarashe mandeya on

My eyes have been opened from an entrepreneurial perspective. Lets join hands as Africa and develop this potential so inherent in us but under utilised.

Submitted by Anonymous on

With American support coupled with african free cross border unit we can combine the grid power extension and renewable power sources to overcome this power shortage in mother africa

Submitted by Freida Bowlby on

I was able to read the whole content, all I can say is this is great! Great post with great ideas with great ideas with a great concept and with such a great writer. A written perfectly and love for all was very much easy to understand.

Submitted by Laureene Reeves Ndagire on

Thats one of the problems we have, 2 actually; 1)dependency on foreign aid 2)failing to tackle our own problems
People need to be equipped with skills that they can use to make themselves useful to their communities. Sure, small loans can be given here and there, but they should be followed up and not be made to look like handouts. In Uganda, for example, there is a youth fund which keeps getting bigger while the number of unemployed youth also gets higher. See the problem here?

Submitted by Afolabi Jelili on

i believe that the use of "COMBI-BIOTECHNOLOGY" in Africa to produce Energy will be the best because there are a lot of waste in Africa.this technology has been used in other countries to produce power and is very successful.

Submitted by pauline desfontaines on

I fully support this idea. Renewable energy are an imperative for Africa. I would like to add and underline that another MUST is to foster african youth involvement in this sector. Mr. Diop, I would be pleased to introduce ideas and a first proposal about the core topic of YOUTH. Kind regards, Pauline.

Submitted by James Wimberley on

" ...45% of that country’s [Mauretania's] total energy demand." Surely electricity not energy?

The article is entirely about electricity. Admittedly this is a big enough challenge, but the path to sustainability also goes through decarbonising industrial processes and especially transport. Electric bicycles would be a place to start in Africa. Electric buses and delivery vans in urban areas are now probably competitive, given the high price of diesel and its large health burden. That's before counting the CO2 benefit, as the Bank should in ranking projects.

Submitted by Sushil KUMAR on

Very relevant contents! You solve the problem of energy in Africa the continent will be up and running. A couple of big projects in each economic block connected with interconnected power grid will solve the problem provided there is a political consensus and will to go ahead.

Submitted by Howard Ramsden on

I am interested to know where the ARGeo project is at present - looking at geotechnical evaluation of the African Rift Valley for Geothermal energy production.

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