Fact Sheet: Powering Africa: Increasing Access to Power in Sub-Saharan Africa
On June 30, 2013, President Obama launched Power Africa, an innovative private sector-led initiative aimed at doubling electricity access in sub-Saharan Africa, where more than 600 million people currently lack access to electricity. Power Africa set an ambitious initial goal of adding more than 10,000 megawatts (MW) of new, cleaner electricity generation capacity and increasing electricity access by at least 20 million household and business connections.
Today, the President announced a renewed commitment to this initiative, and pledged a new level of $300 million in assistance per year to expand the reach of Power Africa across the continent in pursuit of a new, aggregate goal of 30,000 MW of additional capacity to Africa and increasing electricity access by at least 60 million household and business connections. The President also announced $6 billion in new private sector commitments, bringing the total private sector commitments under Power Africa to date to more than $20 billion. This includes additional commitments under Beyond the Grid, a new sub-initiative, announced at the June 2014 U.S-Africa Energy Ministerial, for fostering private investment in off-grid and small-scale energy solutions that seek to expand access to remote areas across sub-Saharan Africa.
Power Africa: Progress to Date
The U.S. Embassy teams have worked closely with their host governments and private sector partners to facilitate the financial closure of transactions that are expected to generate almost 2,800 megawatts (MW) of electricity, and Power Africa is actively supporting transactions expected to generate an additional 5,000 MW. Once completed, these transactions will represent 78 percent of Power Africa's initial 10,000 MW goal.
Twelve U.S. government agencies, whose combined capabilities form the backbone of Power Africa, are working closely with African governments to prioritize and address key legal, regulatory and policy constraints to investment, and to implement measures that will sustain growth and enable successful governance of a growing power sector throughout sub-Saharan Africa.
Growing Private Sector Commitments in Support of Power Africa
Private sector commitments to date are on track to meet Power Africa's initial 10,000 MW goal and leading the path towards achieving the goal of doubling access to electricity in sub-Saharan Africa through private sector-led investments.
Notable transactions undertaken in the first year of the initiative include the ongoing negotiation of Corbetti Geothermal, the first phase of a potential 1,000 MW geothermal generation project and Ethiopia's first independent power project; advancing nearly 500 MW of wind projects in Kenya; financial support for a 10 MW mini-hydro and a 5 MW solar project in Tanzania; and supporting power sector-wide privatization efforts in Nigeria. Additional efforts include the U.S. African Development Foundation's (USADF) Off-Grid Challenge.
Leveraging Strategic Partnerships to Maximize Impact
Over the past year, Power Africa has forged strategic partnerships with African governments, multilateral institutions, donors, and the private sector. These partnerships seek to align resources and capabilities, and coordinate our interventions to maximize our impact and accelerate private sector investment in renewable energy.
• Although the goals set out by Power Africa are continent wide, the U.S. government signed memoranda of understanding (MOU) with the initial six focus countries, which reflect the strong commitment of African governments to engage in policy and regulatory reform.
• The World Bank Group will support Power Africa by committing $5 billion in new technical and financial support, including loans and guarantees, for energy projects in the six initial Power Africa focus countries. This commitment builds on the World Bank's existing $3.3 billion commitment in the six focus countries and its broader commitment to developing the energy sector in sub-Saharan Africa.
• The African Development Bank (AfDB) already announced its support to advance Power Africa as an anchor partner, with an initial commitment of $3 billion. The AfDB has already approved approximately $670 million in support for energy sector operations in the six initial Power Africa countries, and expects to commit an additional $2 billion in support across sub-Saharan Africa over the coming year.
• President Obama welcomed the announcement that the Government of Sweden has committed $1 billion to advance Power Africa, including support for transmission and distribution upgrades, and the development of energy projects in sub-Saharan Africa.
Power Africa Transaction-based Model at Work
During the U.S.-Africa Business Forum, a number of new Power Africa transactions and energy sector initiatives were highlighted:
• The U.S. Trade and Development Agency (USTDA) in partnership with the U.S. Department of Energy led the African Leaders' Visit: Energy to Houston, Texas, where African decision makers met with government and industry leaders who highlighted their experience fostering economic growth through strategic investments energy infrastructure development.
• The Overseas Private Investment Corporation (OPIC) approved up to $250 million in financing to support the development, construction, and operation of a 310 MW wind power project near Lake Turkana, Kenya.
• OPIC also approved up to $50 million in financing for the Azura-Edo power plant, the first independent power producer in Nigeria in 10 years following recent power sector reforms. This project is expected to provide up to 459 MW of much-needed power for Nigeria.
• Under the US-Africa Clean Energy Finance Initiative (ACEF), OPIC is supporting the Participatory Microfinance Group for Africa ("PAMIGA"), a network of 15 rural microfinance institutions to expand micro-lending for solar energy and clean water investments for agricultural and household use.
• Under ACEF, USTDA funded a study for Amahoro Energy to develop a new run-of-the-river hydropower plant and capacity upgrades at five existing plants, to create 11.45 MW of new generation capacity in Rwanda.
• The USADF announced the selection of three awardees through the Liberia Off-Grid Challenge. Each awardee will receive a $100,000 grant for Liberia off-grid projects jointly funded by USADF, GE, and USAID.
• The Department of Commerce led an Energy Trade Mission including 19 U.S. companies to Ghana and Nigeria in May 2014, which resulted in the signing of $175 million in energy sector deals.
• Ex-Im Bank approved a $17 million loan guarantee for BOAD, the West African Development Bank, to support long-term financing for the expansion of the Azito Power project in Cote d'Ivoire which will increase the plant's installed capacity by 130 MW, from 290 MW to 420 MW, while reducing the carbon intensity per MW.
Beyond the Grid Initiative
Recognizing that Power Africa cannot achieve energy access goals through the use of large grid extension projects alone, the U.S. government launched Beyond the Grid, a new Power Africa sub-initiative focused exclusively on unlocking investment and growth for off-grid and small-scale energy solutions on the African continent. Beyond the Grid will partner with more than 35 investors and practitioners that have committed to invest more than $1 billion into off-grid and small-scale solutions over the next five years.
Millennium Challenge Corporation Ghana Compact Signing
Secretary Kerry and the President Mahama of Ghana presided over the signing of a Millennium Challenge Corporation (MCC) Compact through which MCC will invest up to $498 million over the next five years to support the turnaround of Ghana's electricity sector. This compact represents an example of the catalytic impact of Power Africa interventions, which help create the enabling environment and stimulate private investment in order to meet the current and future needs of households and business while also ensuring inclusive access to power by its citizens, with up to $4 billion in potential commitments already in the pipeline.
U.S.-Africa Clean Energy Finance Initiative
Secretary Kerry announced a second round of funding for ACEF, an innovative partnership launched two years ago among the State Department, OPIC, and USTDA that provides a small amount of early-stage funding to catalyze much larger private sector investment in clean energy projects in Sub-Saharan Africa. To date, ACEF has supported more than 25 projects that have the potential to create hundreds of megawatts of new power generation capacity across ten African countries. The new round of funding will allow this innovative effort to continue to leverage significant clean energy investment in Africa.
Commercial Law Development Program
The Department of Commerce's Commercial Law Development Program, through funding from USAID, is supporting the development of model legal frameworks, including annotated power purchase agreements, which accelerate the negotiation of renewable energy projects.
Clean Energy Solutions Center
The Department of Energy supported Clean Energy Solutions Center is connecting policymakers in Africa with a global clean energy experts through a web-based platform which aims to help African governments design and adopt policies and programs that support the deployment of clean energy technologies.
Focus on Regional Initiatives to Support Power Trade and Geothermal Development
Through USAID, Power Africa is deploying Regional Transaction Advisors to address issues that cross national borders, including the development of regional power pools and advancing development of East Africa's 15,000 MW in geothermal potential.
Barack Obama, Fact Sheet: Powering Africa: Increasing Access to Power in Sub-Saharan Africa Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/308570