Our journey to electrify the continent: Five years of the New Deal on Energy for Africa (By Dr. Kevin Kariuki)
The NDEA called for a substantial increase in investments to realize the Bank’s High 5 priority to “Light Up and Power Africa”
ABIDJAN, Ivory Coast, July 1, 2020/ -- By Dr. Kevin Kariuki
Five years into the African Development Bank’s (https://www.AfDB.org/) ambitious New Deal on Energy for Africa (NDEA), the Bank’s investments
are set to provide electricity access to around 13 million people and
deliver about 55,000 km of distribution lines, and 6,700 km of
transmission lines, of which 3,200 km are for regional interconnections.
The NDEA called for a substantial increase in investments to realize the Bank’s High 5 priority to “Light Up and Power Africa,” which aims to
mobilize finance and expertise to expand access to reliable, sustainable energy for more than 200 million Africans through investments in power
generation, inter-connections, transmission and distribution. This
effort is critical to unlocking Africa’s vast economic potential,
enabling the growth of value-adding industries and services, and, most
importantly, unleashing the ingenuity of the continent’s 1.3 billion
people.
The strategy was grounded in the recognition that partnerships are
central to its success. In collaboration with African countries, the
Bank’s interventions have ranged from setting up the right enabling
policy environment, supporting utilities, to increasing the number of
bankable energy projects. Additionally, the Bank is accelerating major
regional projects and driving integration through the Program for
Infrastructure Development in Africa, whilst also supporting
bottom-of-the-pyramid energy access programs.
Priority was given to investments in low-carbon technologies, set to
contribute to over 2 GW of additional generation capacity by harnessing
the large, hydro, solar, geothermal and wind resources of the continent. Yet this is only the beginning, as much of the work to date has been
centered on setting up the right frameworks to mobilize different
partners and alternative forms of capital to tackle the various
challenges in the sector at country, sub-regional and regional levels.
Indeed, mobilizing partnerships and rolling out countrywide energy
transformation are continuous works in progress. In 2019, as testament
to the Bank’s efforts in enhancing dialogue and consensus, the G5 Heads
of State endorsed the Bank’s Desert to Power initiative, intended to
build the world’s largest solar zone across the Sahel by adding up to 10 GW of solar generation capacity through public and private
interventions. The Yeleen Solar Program in Burkina Faso – the first of
dozens of similar projects expected to flourish across the Sahel region – will provide energy to 150,000 households in rural areas through solar
mini-grids and solar home systems, and an additional 52 MW of
grid-connected solar generation, enough to power 30,000 new households.
Achieving the objectives of the New Deal on Energy for Africa will
require a significant increase in private sector investments. The Bank
catalyzes more private investments into independent power producers and
off-grid projects through partnerships with project developers,
commercial banks, private equity funds, institutional investors and
other development finance institutions. Over the past five years, the
Bank’s interventions reached $1.5 billion in private sector operations,
corresponding to 1.7 GW additional generation capacity through
independent power producers.
In addition to mobilizing concessional resources through bilateral and
multilateral sources – notably from the European Union, Green Climate
Fund and Climate Investment Funds – the Bank hosts the Sustainable
Energy Fund for Africa (SEFA), one of the largest multi-donor technical
assistance and concessional capital funds in the continent, designed to
catalyze private sector participation in renewable energy.
In 2019, the Bank converted SEFA into a special trust fund to widen its
interventions into green mini-grids to accelerate energy access to
underserved populations; green baseload to support clean generation
capacity; and energy efficiency to optimize energy systems and reduce
energy intensity. SEFA is expected to contribute to the electrification
of more than 7 million households by 2030.
The Bank is also actively supporting the mobilization of commercial
capital through blended finance solutions. The Facility for Energy
Inclusion, which was operationalized in 2019, is a $500 million
investment platform organized around two funds – off-grid and on-grid –
to provide flexible debt products, including in local currency, to
emerging business models in the small-scale renewable energy space. The
Facility for Energy Inclusion will contribute to more than 3 million new connections by 2030.
To enhance institutional performance and improve the enabling conditions to attract much needed investments, the Bank has also implemented
initiatives such as the Electricity Regulatory Index to monitor and benchmark regulatory performance against best practices, the Sustainable Utilities Transformation Agenda, to build sustainable utilities and energy institutions, and the Africa Energy Portal to provide accurate, up-to-date data on Africa’s energy sector.
In 2019, the African Development Bank reported that an additional 96 million African households (https://bit.ly/2CYZW0I) had gained access to electricity between 2015 and 2019, with countries
like Rwanda on track to achieve universal access by 2025. Despite this
encouraging progress, close to 600 million Africans still lack
electricity access and achieving universal access goals under SDG7 still requires greater and swifter efforts to meet the demands of Africa’s
growing population.
Addressing electricity access remains a costly enterprise, with the International Energy Agency placing the price tag at around $120 billion annually through 2040, four times higher than current levels (http://bit.ly/37TlIfS).
While our direct financial contribution is modest by comparison, we are
confident that its judicious application to catalytic power projects,
innovative financial structures, sector reform processes and
acceleration of decentralized solutions will get us far in our mission.
Dr. Kevin Kariuki is the Vice President, Power, Energy, Climate Change & Green Growth, at African Development Bank.
Distributed by APO Group on behalf of African Development Bank Group (AfDB). About the African Development Bank Group:
The African Development Bank Group (https://www.AfDB.org/) is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African
Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground
in 41 African countries with an external office in Japan, the Bank
contributes to the economic development and the social progress of its
54 regional member states.
For more information: https://www.AfDB.org/
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