Nearly a year ago, U.S President Barack Obama unveiled a new “Power initiative for Africa” with the goal to dramatically increase access to power in sub-Saharan Africa. U.S. Government officials, African energy ministers, along with representatives from more than 30 U.S companies in the energy and petroleum sectors recently met Ethiopia to discuss energy policies and energy efficient technologies.
More than two-thirds of the population of sub-Saharan Africa is without electricity and more than 85 percent of those living in rural areas lack access to power. The Power Africa Initiative is expected to build on Africa’s enormous power potential, including new discoveries of vast reserves of oil and gas, and the potential to develop clean geothermal, hydro, wind and solar energy.
President Obama explained the need for the 7 billion dollar initiative last year while speaking at the University of Cape Town.
“Access to electricity is fundamental to opportunity in this age. It is the light that children study by. The energy that allows an idea to be transformed into a real business. The lifeline for families to meet their most basic needs. And it’s the connection that is needed to plug Africa into the grid of the global economy. You got to have power,”
The program was formally launched last week to make power more accessible to Africans who are not being serviced by their national grids, through small scale energy solutions dubbed ‘Beyond the Grid’. The initiative will use partnerships with 27 investors and energy companies committing to investing over 1 billion US dollars to grow off-grid and small scale solutions on the continent.
“Our Power Africa program already supports over 25 small-scale energy projects, but Beyond the Grid will expand this significantly facilitating over 1 billion in new private sector investments.”
According to the International Energy Agency, the region will require more than 300 billion U.S. dollars in investment to achieve universal electricity access by 2030.
The Power Africa Initiative aims to install 10,000 megawatts of new generation capacity, connect 20 million new customers, and improve electric reliability across the continent. Ethiopia’s Prime Minister, Desalegn Hailemariam welcomed the initiative saying private sector investment in energy had been slow.
“Until recently the private sector has not shown much interest to invest in power sector in Africa due to its long return period. We the African governments also have not created the necessary environments to ease the risk associated with long term investment.”
Africa is rich in energy. There are enormous untapped resources of gas, oil, coal, geothermal, solar and wind power that could easily meet the region’s requirements.
Analysts say the big obstacle to electrification in Africa is not constructing power stations and building overhead power lines. It is working out how to help the region’s households – many with limited and irregular cash flows, little collateral and no access to credit – to pay for the huge investment needed to bring electricity to them.
“Power Africa basically gives every developer who is trying to build power in Africa a red phone a red line directly to the US agencies and say ‘hey I have a project in Africa can you look at it?’ And what it does is it moves your project to the front of the line.”
Critics say that another major problem for investors is that customers often fail to pay utilities. Unless the payment and credit problem can be resolved, electrification is unlikely to make much progress.