Our collective work in June — including very productive events at the Global Entrepreneurship Summit in Palo Alto and the Africa Energy Forum in London — yielded a number of successes.

By Andrew M. Herscowitz

Dear Partners,

Our collective work in June — including very productive events at the Global Entrepreneurship Summit in Palo Alto and the Africa Energy Forum in London — yielded a number of successes. Power Africa and partners signed new deals to advance renewable power projects in Nigeria, and celebrated the announcement of $0.06 solar in Zambia.

We also launched a Grand Challenge for off-grid energy innovation with the the UK and the Shell Foundation, which will coordinate investments to connect more households and businesses to electricity, faster. Finally, we initiated the joint YALI/Power Africa Energy Institute for young African leaders, designed to build local capacity across the African energy sector.

Here are some highlights from the last month:

First, a recap from two important conferences we participated in last month:

USTDA Grants in Ghana

At the Africa Energy Forum (AEF) in London last month, the United States Trade and Development Agency (USTDA) announced two grants in Ghana. The first grant of $899,995 to Village Corps will partially fund a feasibility study for a 20 MW bamboo-to-power project. Locally grown giant bamboo on a 12,000 acre deforested site will be the feedstock for this steam-based power plant. Since bamboo typically grows back to full size within 9-12 months and only about 30% of a bamboo plant is harvested, the plant should achieve net zero emissions. The second grant of $950,000 is for technical assistance to eleQtra to assess the viability of a 50 MW wind project. These are the 42nd and 43rd projects that USTDA has supported within Power Africa's pipeline.

Women in African Power

Power Africa partner Abraaj Capital hosted an excellent Women in African Power (WIAP) breakfast, where participants discussed the importance of bankability for energy projects, and learned about a proposed new power trading mechanism for Southern Africa. Power Africa will continue to convene WIAP events that feature Africa’s female energy leaders, and work to open doors of opportunity for women across the continent. Join the WIAP LinkedIn group to network with colleagues around the world.  

Scaling Off-Grid Energy Grand Challenge for Development

Two weeks ago, President Obama hosted his 7th and final Global Entrepreneurship Summit (GES) at Stanford University in California. Power Africa launched the Scaling Off-Grid Energy Grand Challenge for Development, a partnership with USAID, the U.K. Department for International Development (DFID), and the Shell Foundation. Power Africa will invest $36 million in promising enterprises, innovative technologies, and partnerships to scale up clean energy solutions to reach 20 million households that live off grid. In support of our Beyond the Grid initiative, this effort will bring together entrepreneurs, investors, philanthropists, and governments to support the growth of innovative ventures that are making off-grid solutions affordable for rural families and catalyze private investment to help these enterprises reach new markets. Articles on the Grand Challenge appeared in NPR, Forbes, Devex, and Disrupt Africa, and the USAID Administrator's blog. Plus The Global Development Lab's Ann Mei Chang and I posted a blog on Medium. Also at GES, President Obama announced a number of other efforts to encourage increased investment in small-scale energy entrepreneurs from developing countries, particularly in sub-Saharan Africa.

Power Africa YALI Energy Institute at UC-Davis

On the sidelines of GES, The University of California-Davis (UC-Davis) kicked off the YALI/Power Africa Energy Institute. For the next six-weeks, these fellows will be exposed to many different aspects of energy in Africa, including lectures with UC professors, meetings with practitioners in Silicon Valley, and visits to Power Africa partner offices in the Bay Area. In addition, the Commercial Law Development Program’s two Power Africa books: Understanding Power Purchase Agreements and Understanding Power Project Financing have been distributed with the course materials. We expect that this first Energy Institute will be just the beginning of Power Africa’s academic and vocational outreach. Stay tuned for more to come.

Support for Global LEAP

During the seventh Clean Energy Ministerial in June, Power Africa announced a $1.5 million multi-year commitment to the Global Lighting and Energy Access Partnership (Global LEAP), led by the U.S. Department of Energy, to support the expansion of Global LEAP+RBF to East Africa. Global LEAP+RBF is an innovative new partnership to drive and demonstrate scale in the global off-grid appliance market. These efforts support the development and deployment of highly-energy efficient appliance products designed for use with small-scale distributed solar systems. The third round of the Global LEAP Awards features competitions for the world’s highest quality, most cost-effective and energy efficient off-grid appliances. The 2016-17 awards will be supported by Power Africa, through the U.S. Department of Energy, and the US Agency for International Development’s (USAID) U.S. Global Development Lab.

NEWS FROM THE FIELD

Nigeria Solar Advancements

One of the best Power Africa developments of the month is a result of tireless, hard work from our Nigeria team and partners. Power Purchase Agreements (PPAs) for 13 independent power producer (IPP) transactions were inked recently. Power Africa worked closely with Nigerian Bulk Electricity Trading (NBET) to advance solar Independent Power Projects totaling 1,075 MW of incremental generation capacity that had been stalled. The projects represent more than $1.5 billion of combined domestic and foreign direct investment. Multiple project developers cited Power Africa support as a critical success factor in reaching this milestone, with the team at DuSable Capital noting that, "This is an historic moment for utility-scale solar in Africa, and it would not have been possible without Power Africa and your team in Nigeria.  I seriously hope this becomes a HBS case study of how public/private partnerships can work."

Waiver for Power Sector Lending in Nigeria

In 2015, to control access to limited U.S. Dollars and to prevent “round tripping” when exchanging Dollars into Naira, the Central Bank of Nigeria (CBN) issued a circular preventing banks from lending U.S. Dollars to entities with revenues solely in Naira. Two facilities with Zenith Bank, a US$90 million facility supported by USAID’s DCA guarantee for lending to GenCos and DisCos and another US$100 million of concessional funding for DisCos from the Agence France de Developpement (AFD), were therefore unable to lend funds. The Power Africa team in Nigeria worked with the CBN on this issue, and the CBN Governor recently approved a waiver for both facilities.

USTDA Grants in Kenya

The USTDA Board has approved two more grants in Kenya. One for the proposed Gitaru 10 MW solar power project and another to Zarara Oil and Gas Limited to fund a feasibility study to evaluate the technical, economic, environmental and other critical aspects of the proposed 50-200 MW Lamu gas-to-power project.

New Law for Private Investment in Malawi

The Parliament in Malawi recently passed the Electricity (Amendment) Bill of 2016, which allows for private sector participation in the electricity sector and enables the restructuring of electricity supply in Malawi by allowing IPPs to have non-discriminatory access to the transmission network and electricity market, creating a transparent procurement process for IPPs and creating a single buyer model. The Amendment adds to the list of reforms the Government of Malawi has made with the assistance of Power Africa, through MCC, to create an environment conducive for privatized generation. We are hoping to see these reforms pay dividends as negotiations continue for the first PPA in the history of Malawi with Power Africa providing commercial and legal assistance to the state utility (ESCOM) during these negotiations.

Support for Expansion in Senegal

The Overseas Private Investment Corporation (OPIC) approved US$53 million in debt financing and US$18.2 million in insurance to Power Africa partner ContourGlobal to permit a 33 MW expansion to the existing 53 MW combined cycle thermal power plant located in Cap des Biches, Senegal. The project will provide efficient and reliable power to Senegal’s grid by adding a total of 86 MW in generation capacity, an approximate 30% increase in overall functioning capacity of the existing grid.  

Sweden’s Beyond the Grid Fund for Zambia

The Swedish Development Agency “Sida,” a Power Africa partner, announced on June 22 the opening of the first round of funding from the Beyond the Grid Fund for Zambia, which aims to bring clean energy services to rural Zambia through off-grid energy solutions applications. The Fund offers two types of financing: start-up services, to help companies establish operations in the country, and a scale-up component to companies looking to grow their customer base. Power Africa’s Beyond the Grid team will work with the Renewable Energy and Energy Efficiency Program (REEEP) -- the agent for the Fund -- on qualifying bidders for financing eligibility under the program.

How did Zambian Solar get to $0.06?

Since the Government of Zambia and the IFC announced the results of the USAID-supported Scaling Solar competitive tender in Zambia, many have been wondering how the prices ended up being so low. Bloomberg New Energy Finance “reverse engineered” the process and provides an analysis of the result. The general conclusion is that the cost of capital on the projects is brought down significantly by World Bank financing and that the cost of the project is brought down further by the provision of sites that are easily connected to the grid.

Beyond the Grid Support in Uganda

Power Africa’s Beyond the Grid team conducted a two-week mission to Uganda to support UASID/Uganda in its efforts to develop a pipeline of projects (on and off grid) under Power Africa. The team conducted site visits to several potential projects in the hydropower and biomass sector and provided technical advice to the project developers in the form of technical reviews of feasibility studies, advice on business plan development, among others.

Highlights from our partners:

Canada: French Power Africa Toolbox now available!

Thanks to our colleagues in Ottawa we now have a French translation of the Power Africa Toolbox! Also, during the week of June 25, Power Africa participated in two African business development events hosted at Canada House in London. In addition to the areas of collaboration highlighted in the MOU, both sides noted the opportunity to work more on captive power in the mining industry given Canada’s leadership in mining and the widespread need for power solutions for mines.

European Union (EU): Power Africa contributes $10 million to ElectriFI

On June 15 during the EU’s Development Days in Brussels, USAID signed a grant agreement to provide US$10 million to support ElectriFI (EU’s early stage, blended finance facility). Already, ElectriFI has shortlisted 14 renewable energy projects in sub-Saharan Africa for potential funding. Several Power Africa partners are among the potential recipients of the ElectriFI funding. See photos from the signing event in Power Africa’s Flickr gallery.

UKAID Connects 49,000 Homes to Solar Power in Three Months in Nigeria

As described in an article in the Daily Trust, Power Africa partner DfID added 49,000 new home solar connections in Nigeria between January and March 2016 through its SolarNigeria initiative.

Best,

Andy