Power Africa: Illuminating the Power of Partnerships for Access to Energy
Worldwide, approximately 2.7 billion people rely on traditional biomass for cooking and heating and about 1.3 billion have no access to electricity. Up to a billion more have access only to unreliable electricity network.
Access to energy is critical to economic development and social progress. While not explicitly listed, energy access is critical to achieving the Millennium Development Goals. Providing clean, reliable and affordable energy services to the billions of people who currently lack access therefore remains one of the world’s most important development challenges. Accordingly, the 2014-2024 decade has been declared by the United Nations as the Decade of Sustainable Energy for All, underscoring the importance of energy issues to sustainable development.
A light where currently there is darkness
On June 30, 2013, U.S. President Barack Obama announced Power Africa, a US$7 billion initiative to double access to power in sub-Saharan Africa over the next five years. The Power Africa Initiative, coordinated by the US Agency for International Development (USAID), is a multi-stakeholder partnership involving the US Overseas Private Investment Corporation (OPIC), the Export-Import Bank of the United States, the Millennium Challenge Corporation (MCC), the US Trade and Development Agency (USTDA) and the US African Development Foundation (USADF) in addition to a growing number of private sector companies.
The initiative hopes to add more than 10,000 megawatts of cleaner, more efficient electricity generation capacity and provide at least 20 million new households and commercial entities with electricity using on-grid, mini-grid and off-grid solutions. It also aims to enhance energy resource management capabilities, allowing partner countries to meet their critical energy needs and achieve greater energy security.
Perhaps one of the most notable aspects of Power Africa is its reliance on the private sector as a solutions provider through inclusive growth models. In fact, according to the White House, only with greater private sector investment can the promise of Power Africa be realized.
Power Africa leverages private sector investments, beginning with more than $9 billion in initial commitments, to meet basic needs while in turn creating value for the companies involved. Among the companies that have already committed to the Power Africa initiative is General Electric (GE). GE has committed to providing 5,000 megawatts of new, affordable energy through provision of its technologies, expertise and capital in Tanzania and Ghana.
According to GE Chairman and CEO Jeff Immelt, “GE is committed to continuing to deepen our engagement and investment in Africa’s future in critical sectors like power-generation, transportation, and healthcare.”
What opportunity looks like
It stands to reason, however, that companies cannot act alone in the fight for light. Power Africa acknowledges the importance of the business role, while also recognizing that there are a number of areas where investment and service provision need to come from governments and other stakeholders.
In the initial six partner countries—Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania—the nature of the regulatory and investment climate often discourages private sector investment. To address this challenge, Power Africa capitalizes on a strong network of partnerships that play a crucial role in enabling the business contribution through reducing costs and risks, improving access to knowledge and resources, and allowing companies to contribute through their core competencies.
Here at the World Business Council for Sustainable Development (WBCSD) we have long recognized access to energy as being critical to economic development and social progress. As a primary solution provider that brings to the table innovative products and services, efficient service delivery, essential technologies, management and technical capabilities, and financial resources, business is a critical actor in addressing global energy challenges.
In a report we published last year, entitled Business Solutions to Enable Energy Access for All, we identify and explore some of the major opportunity areas for scaling up the business contribution to the expansion of energy access, while emphasizing the importance of partnerships in driving progress in this crucial area. Power Africa echoes many of these ideas, and three key aspects of the initiative help to operationalize the publication’s key messages:
1. Public-private partnerships (PPPs)
Effective PPPs are particularly important drivers of progress toward universal access to energy. They leverage the efficiency, delivery capacity and resources of the private sector to support government objectives in delivering clean, reliable and affordable energy services. PPPs are a well-established and proven model in many parts of the world for financing and delivering infrastructure services. By uniting US government agencies, local governments and the private sector, Power Africa can address current limitations to investment and accelerate progress on this severe limitation to development in Africa.
2. Innovative business models
A unique element of Power Africa, Obama announced the launch of USADF and GE’s joint “Power Africa Challenge”, a three-year, US$ 2 million challenge that will award 20 or more grants of up to US$ 100,000 each to African organizations providing off-grid solutions that deploy renewable resources and power economic activities. In an entrepreneurial spirit, the Power Africa Challenge will tap into local expertise on how Africa’s challenges on power could best be solved from an African perspective.
3. Well-designed and stable policy and regulation
Power Africa is designed to help governments adopt and implement the policy and regulatory reforms necessary to attract private sector investment in the energy and power sectors. In addition to the technical assistance that will be provided by U.S. agencies, field-based Transaction Advisors, who have already begun their work in each of the partner countries, will help governments prioritize, coordinate, and expedite the implementation of power projects, while simultaneously building the capacity of existing host government ministries to deliver results.
Through these avenues, Power Africa addresses three of the major barriers to energy provision in sub-Saharan Africa.
The energy needed to lift people out of poverty
WBCSD welcomes Power Africa’s attention to the importance of energy access for socio-economic progress. Our work on access to energy continues under the leadership of GDF SUEZ and Schneider Electric, brings together a dozen member companies focused on exploring key opportunity areas to scale the business contribution through: innovative business models; enabling policy frameworks; financing mechanisms; and the establishment of partnerships.
The WBCSD is also a founding member and partner of the Energy Access Partnership, a non-profit company set up to accelerate energy access in rural Africa. The company, based in Johannesburg, aims to act as a broker between private sector utilities, governments and international finance institutions. EAP activities cover project identification and design; assistance in resource mobilization; assistance with project implementation; and monitoring and analysis of energy access activities.
Watch this space for updates on business solutions enabling access to energy!