Energy experts say there is an urgent need for additional public and private investment to bring more electricity to Africa. They say governments need to work with the private sector to bridge power capacity gaps.
While sub-Saharan Africa has enormous untapped resources of gas, oil, coal, geothermal, solar, hydro and wind power, World Bank experts say one out of three Africans lives without electricity. Stephen Njiru, a director of Kenya’s Geothermal Development Company and an energy advisor to the country’s president, said governments have put the appropriate laws, initiatives and regulations in place, but still need private sector involvement to build capacity.
At a recent Washington conference on powering Africa, Njiru said officials need to brainstorm on ways to attract private sector investment and expertise to serve a huge market.
His country, Kenya, was one of the first nations to participate in President Barack Obama's Power Africa partnership, which aims to increase electricity capacity and access. The partnership brings together African governments, private companies and U.S. government agencies.
Power Africa has attracted more than $20 billion in private sector investment for new electricity projects. Andrew Herscowitz, President Obama’s coordinator for the Power and Trade Africa initiatives, said he’s excited about projects like Solar Reserve, a U.S. company based in Santa Monica, California, that just won an award to build a 100-megawatt concentrated solar project in South Africa.
Gigawatt Global, a Dutch-American company, has just started a solar-power operation in Rwanda. "That’s 8.5 megawatts of power for thousands of people," Herscowitz said. “There are plenty of people who want to invest in Africa who have great ideas for projects."
One way of fostering partnerships is to put players together, said Veronica Bolton Smith, program development manager at EnergyNet, the organizer of the Washington conference. Ultimately, she added, the goal is to remind investors and governments that “if you have access to electricity, you are able to read at night, able to cook properly. There’s a realm of things that happen through access to electricity like creation of jobs, rural electrification.”
But getting there isn't easy. Liberata Mulamula, the Tanzanian Ambassador to the U.S., said governments need help sorting through the many proposals.
“You know all these business people, all they want to come with projects, projects, projects. And most of our governments have limited capacity, we need financing, but financing for very credible projects, especially if we have to transform the power sector in our countries, we really need critical intervention but very coordinated interventions," she said.
Many governments turn to institutions such as the African Development Bank, the Millennium Challenge Corporation and the World Bank, for the skills to help African countries negotiate good, bankable and sustainable projects, the ambassador said.
Richard Bernard McGeorge, the lead infrastructure finance specialist at the World Bank, said to speed up private investment, government officials should put themselves in the shoes of the private financiers. He explained that those financiers usually look for clarity, predictability and repeatability when deciding whether to commit resources to an individual project or to a country.
While industry experts say the African energy market is ripe for private sector participation, some investors fear they will be hurt by high costs, lengthy negotiations and potentially high risks. But development experts and Africa government leaders say the risk of inaction is higher - leaving millions of people without the electricity needed to improve their lives.