By Franklyn Kanyako
Africa is currently home to the youngest population in the world and this is projected to double by 2045, according to experts. Poverty is still a problem, but not the poverty you are thinking of –
I am referring to energy poverty.
While the middle class has started to emerge on the continent, propelled by economic growth and urbanisation, the biggest challenge to expanding this demographic still remains the lack of access to electricity.
As part of the effort to scale up energy generation on the continent, in February of this year, President Barrack Obama signed into law the Power Africa Initiative which was launched in 2013 as an effort to promote and distribute renewable energy on the continent. Like many other initiatives that have been advocated or implemented on the African continent, it has a weakness shared with others such as the International Renewable Energy Agency Africa clean power corridor. It is still lacking what experts believe is the fundamental problem facing marketing and deployment of renewable energy on the continent: “distribution and affordability”.
The power Africa initiative, like other initiatives, is advocating for scaling up renewable energy generation. It works by leveraging financing, insurance, technical assistance, and grant tools, with a team of field-based regional and country-focused Transaction Advisors—professionals with experience in both the energy and investment sectors. These TAs will work across sub-Saharan Africa to help governments prioritize, coordinate, and expedite the implementation of power projects. The US has committed $7 billion dollars to the project so far and has already leveraged nearly $43 billion in commitments from over 120 public and private sector partners including the African Development Bank (AfDB) and the World Bank Group (WBG).
“It’s a game-changer for small businesses that have to close at dark, and school children who are often forced to study by dangerous, inefficient kerosene lamps,” said House Foreign Affairs committee chairman Ed Royce.
Africa currently has 147 GW of installed capacity, a level comparable to the capacity China installs in one or two years. Average per capita electricity consumption in sub-Saharan Africa (excluding South Africa) is just 153 kWh/year. This is one-fourth of the consumption in India and just 6% of the global average.
The goal of Power Africa is to increase installed power capacity by 30,000 MW and create 60 million new connections by 2030. While this initiative has the potential to fundamentally transform the energy landscape on the continent, it is still missing what ODI and Oxfam refer to as the biggest challenge to eliminating energy poverty, which is “getting power to real people” rather than just turning commitments into kilowatts.
Seventy percent of the continents poor live in rural areas and by 2030, many households in sub-Saharan Africa will still be too far from urban areas and major transmission lines to connect directly to the grid. Even in areas with access to electricity, poor households cannot afford connection charges even as renewable energy prices continue to decrease.
To distribute electricity to this segment of the population requires building the right financial model that takes into account affordability and energy entrepreneurship. This involves working with local governments and rural households to create an energy ecosystem that involves rural banking networks and skill building for the local people. Investing in electricity grid expansion in the major towns has to be coupled with off-grid energy distribution. This could be done through rural banking network that enables access to financing for local energy entrepreneurs. This will provide the private sector with security and guarantee to market small-scale energy generation for off-grid projects.
For instance, imagine that there is access to financing through a rural bank. A local entrepreneur could borrow money, build a charging station for solar lamps and charge a price for electricity that is at a rate comparable to the cost of kerosene per litre. This would instantly make the technology competitive while eliminating the many health issues that come from kerosene lamp pollution.
As the continent’s middle class continues to grow, the demand for energy will similarly grow. In order to end energy poverty, off-grid, renewable access should be a priority and that also means creating a means of financing for rural people through rural banks or local cooperatives to enable local energy entrepreneurship. Through these and other creative mechanisms, Power Africa has the potential to support increased energy investments and, ultimately, wider adoption of energy technologies across the continent.
(C) Politico 04/05/16
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