The hundreds of delegates pouring into the
glittering Marriott Marquis hotel for this month’s Powering Africa Summit were experiencing a stark, if unstated, contrast. On a
good day this year, Nigeria – the largest per capita of Africa’s 55 countries,
produced enough electricity to operate around five ‘eco-friendly’ hotels, the
size of the three-year old Marriott.
The market opportunities are massive,
participants agreed; the challenges equally large. By the end of two days of
discussions, a consensus emerged around three themes:
1) There is a ‘wall of money’ available to electrify Africa with bankable projects
2) There is hopeful optimism that U.S. President
Trump’s administration might be supportive, and
3) There are enormous opportunities for those with ideas,
stamina and, most of all, patience to make money while doing good – on and off
the grid.
“To unlock that wall of money,” says Standard
Bank’s head of power and infrastructure, David Humphrey, “Africa has to grow,
develop, and become a place where that wall of money is happy to invest, and
can take and understand the associated risks.”
Mr. Humphrey’s assessment is underpinned by 150
years of African experience by Standard Bank, Africa’s largest bank by asset.
Power Africa, an initiative to‘light up’ Africa launched by President Barack Obama during a visit to
three African countries in 2013, aims to see 60 million newconnections and 30,000 megawatts (MW) “of new and cleaner power
generation.”
Nigeria, Africa’s most populace nation, is key to
meeting those goals, Andrew Herscowitz, the Power Africa coordinator, told attendees. “If we succeed in
Nigeria, we can be successful anywhere in the continent,” he said.
Nigeria has some 12,000 MW of installed
generation capacity and can transmit 7,000 MW on the existing grid, he said.
Typical output ranges from 3,000 to 4,000 MW, of which only about 2,000 MW is
being paid for.
Investors and developers new to Africa often need
reminding that there are 55 countries on the continent, which compares in land
area to the United States, China, Japan, Mexico, India and eastern and western
Europe combined. There are tremendous variations by region and often within
individual countries. Some countries have policy, regulatory and community
frameworks already in place which make it easier to do business. But ‘easier’
is still not ‘easy’ compared to more developed regions, conference participants
noted.
“In economic terms,” says Mr. Humphrey, “Africa
is at the crossroads.”
“We’ve seen a lot of progress with democracy and
democratic institutions, whether in Nigeria, Uganda, even in The Gambia where
[a recent coup attempt] was peacefully resolved. There have been peaceful
transitions in Zambia and in Ghana.” Those trends, he says, have made a
difference in investor interest.
“Twenty years ago an investor might ask why would
I go to Africa”, he says.” Now we’re having interesting conversations at the
individual government level and individual client level about how you unlock
that potential.”
There’s a lot at stake for Africa’s people. More
than 620 million live without electricity. The people of Gbarnway, Liberia, a
rural community about 100 miles from the capital Monrovia, illustrate the problems
and opportunities. The Liberian government estimated that it could take at
least 10 years for the national grid to reach Gbarnway and other rural areas –
and that was before the setbacks brought on by the Ebola crisis of 2014-16.
Power Africa’s more than 100 private sector
partners have committed to develop some 16,000 MW of generation. These include
a number of non-profits focusing on delivering ‘off-grid’ power to Africa’s
rural population.
One of these, the National Rural Electric Cooperative Association (NRECA), has committed $400,000 to bring reliable and
affordable electricity to Liberia with a solar-diesel hybrid system. The
fifty-four-year-old not-for-profit U.S. organization has helped Liberians
launch three electric cooperatives and has provided training in maintenance,
service provision and financial management.
Gbarnway now enjoys electricity with solar panels
that NRECA supplied. Korto Gizzie, a resident, says “We were living in
darkness, and living in this place was hard. The houses were dark for the
children. But now, we have light here, and this place is just like a city. I am
so happy to see a town like this.”
Gizzie’s power came as part of USAID’s Power
Africa “Beyond the Grid” project. The Obama administration launched the Power Africa
initiative in 2013 with the goal of connecting 60 million people to power by
2030 through public/private partnerships.
One of the questions buzzing among delegates in
between panels, round tables and keynote addresses, was the future of the
initiative under the new U.S. administration. Power Africa, the initiative
housed at USAID, involves many options including development finance and Independent
Power Producers (IPPs)—all of which are favourable to businesses. The hope is
that President Trump, with his background, might see a good opportunity for
U.S. business.
Republican Congressman Ed Royce, Chairman of the
House Foreign Affairs Committee, in a Summit keynote, extolled the chance “to
create technology and long term power deals while increasing global security
and social stability.”
He said that for American companies who maintain
their competitiveness, opportunities abound as Africa’s economies grow.
“You can’t run a factory on a generator,” he
said, referring to the private generators that currently provide much of the
electricity to African homes, schools, clinics, offices and businesses,
including banks.
Mr. Royce was lead sponsor of the Electrify Africa Act of 2015, which supports and broadens the Power Africa
initiative.
African consumers are driving an accelerating
process of renewable energy installations, while African governments and big
utility companies are often stuck in the grid paradigm, some delegates said.
Almost everyone wants the ability to be connected to a reliable electricity
grid. But as a result of Africa’s sheer size, the number of rural residents,
and the lack of existing generating and distributing capacity, it is likely
that many millions of people will get electricity from emerging, clean
technologies including solar, wind, hydro and biogas, before a grid reaches
them.
The cost of these technologies is dropping,
making off-grid and mini-grid renewable energy affordable, even for the very
poor. Some require little upfront capital investment and have the advantage of
delivering energy quickly, replacing costly and unhealthy fuel sources like
firewood and kerosene.
Originally published on PREMIUM TIMES BLOG
