A little over a year after President Obama announced the initiative to help “plug Africa into the grid of the global economy” by doubling the number of people on the continent with access to electricity, Power Africa is already a high-voltage operation.
Working closely with six partner countries — Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania — and the private sector, the ambitious effort is well on its way to achieving its initial target of adding 10,000 megawatts (MW) of electricity within five years.
About two-thirds of the population of Sub-Saharan Africa — or about 600 million — without electricity, including more than 85% of people living in rural areas. Bringing access to more than 20 million households will require a multi-pronged approach, unlocking the continent’s abundant resources that range from solar and wind power to recently discovered oil and gas reserves.
It also means leveraging private-sector investment to ensure fast-growing African economies get the investment they need to foster sustainable development that benefits the whole population, says Andrew M. Herscowitz, the coordinator for President Obama’s Power Africa and Trade Africa initiatives.
“It’s largely about trying to stimulate economic growth, but it’s also figuring out what we can do to develop the grid and the off-grid in a more intelligent way,” explains Herscowitz, who is responsible for coordinating the efforts of all 12 government agencies involved in Power Africa.
With more than 50 heads of state from across Africa converging on Washington, D.C. this week for the U.S.-Africa Leaders Summit, Herscowitz talked to Ideas Lab about what Power Africa has achieved so far and how he plans to keep up the momentum:
It’s been a little over a year since the President announced the Power Africa initiative. Are you satisfied with the efforts underway to double the number of people with access to power by 2030?
I am satisfied with what we’ve accomplished to date, because we’ve really peaked the interest of the private sector to invest heavily in the energy sector in Sub-Saharan Africa. That’s the only way you’re going to get a doubling of access to power.
The approach that we’ve taken is, we’ve set these less ambitious but attainable 10,000 MW goals for the six focus countries, and taking a diverse group of countries to figure out what models work. To date, we have already worked to help achieve financial close for nearly 2,800 MW of the initial goal of the 10,000 MW.
Now, some of those projects were already in the pipeline, but we’ve also helped to identify another 5,000 MW worth of projects that we’re going to be continuing to work toward reaching financial close, as well.
In doing that, it’s helped us remove some obstacles, and it has helped show the private sector that our partner governments are truly committed to accepting this private-sector investment in Sub-Saharan Africa.
A good example would be in Ethiopia, with the Corbetti geothermal transaction. Ethiopia has never had a major privative sector investment like Corbetti and has always focused heavily on hydro projects. Now, for the first time, they are not only looking at an independent power producer coming in to produce close to 1,000 MW over time of clean geothermal energy, but also diversifying their energy portfolio.
You¹re trying a different approach to development with this initiative, seeking to leverage private-sector investment by focusing on key projects already in the works. Has this helped to kickstart the effort, and how to you ensure investment will continue to grow beyond these initial projects?
What you do is use the demonstration effect. When Ethiopia can show that they can move forward on a phased geothermal project that can get up to 1,000 MW and make it profitable for the private sector to invest, I think the geothermal industry worldwide will suddenly have a renewed interest in trying to figure out how to tap into the 15,000 MW of really high quality geothermal resources that you’ve got in East Africa’s Rift Valley.
Similarly, there’s a company called NextGen Solar that has a 5 MW solar project in Tanzania. They have been a very close Power Africa partner, tapping into different tools that we offer. And they actually expect to flip the switch on coming to project before the end of the calendar year. As a result, the government of Tanzania is seeing this and they’ve expressed some interest in seeing if they can work with NextGen Solar on other projects, as well.
So our hope is that, by sort of opening the door and helping force some of the reforms that are necessary to get private investment to move forward, our assistance won’t necessarily be essential to pushing the other deals. And that’s how you get to the doubling of access. It’s not necessarily that we’re going to be involved in every project, but we have these groundbreaking projects that open the door to additional investments.
What does President Obama hope to accomplish this week, in terms of creating momentum for Power Africa?
I think the president will recognize Power Africa’s accomplishments over the last year and also acknowledge that we’ve demonstrated the first year that this model is in fact working.
He’ll acknowledge the fact that there’s a strong appetite for Power Africa, which will be demonstrated through the announcement of other strategic partnerships, as well. And basically, just to figure out what we can do to bring more and more partners — private sector, public sector, donors, host governments, etc. — into Power Africa so that we can advance this model.
You’ve talked about energy as a major impediment to growth, which was also the topic of GE’s Africa Ascending conference on Monday. What is your message to the private sector about the opportunities — and challenges — of investing in Africa’s energy infrastructure?
The message to the private sector is: The investment is happening, and if you wait on the sidelines you’re going to miss out on some fantastic opportunities. Just becoming more familiar with the sector and the players involved, you’ll see that these are really fantastic investments. There’s risks involved in every investment, but you ask the right questions and you do your due diligence on the projects. There will be challenges and it may not move as quickly as you may be accustomed to.
A key part of what Africa is doing is not just removing obstacles to energy projects, but also figure out what can we do to shave a day, a week, a month, a year off a project. Sometimes it’s little things, sometimes it’s bigger things. Sometimes it’s just a study that needs to be done related to gas supply, but once that gas supply study is done, that will benefit not just the immediate project, but future projects, as well.
Do you see energy development as holding the potential to enable entrepreneurs around Africa to leapfrog global competitors, much in the way mobile technology has done? Or is it more about lifting all boats and creating an environment for a growing African middle class?
It’s a lot of both. It’s creating the environment, because you need energy to create jobs. For example, when Power Africa was announced, Trade Africa was announced at the same time. And one of the Trade Africa projects that we’ve got in Kenya is a factory that produces about 80,000 garments a day. And I asked them, what happens when the power goes out and they have to run backup generators? It’s very difficult to remain competitive when you’re paying for backup generators.
That was one of the key drivers behind Power Africa — to drive the economic growth. But in order to have economic growth, you need people to be able study at night and to be healthy — which means you need health clinics and hospitals that are reliable. So it’s largely about trying to stimulate economic growth, but it’s also figuring out what we can do to develop the grid and the off-grid in a more intelligent way. Because we’re not saddled in Africa with the aging grid that we have in Europe and the United States, so it helps us be more creative.
And that’s the key reason why we launched Beyond the Grid in June, because we recognized that there were certain people in Africa — millions of them — who live off-grid and weren’t even part of the countries’ master plans to be part of the grid over the next few years.
Andrew M. Herscowitz is the coordinator for President Barack Obama’s Power Africa and Trade Africa initiatives. Prior to this appointment, he served as USAID’s mission director in Ecuador from 2011 to 2013, and as deputy mission director in Peru from 2009 to 2011.