The Power Africa Model Is Working

By Andrew Herscowitz
Coordinator for Power Africa and Trade Africa

Just over one year ago, President Obama officially launched the Power Africa initiative during his visit to Cape Town, South Africa on June 30, 2013.  The President challenged members of his administration, the American and African private sectors, and governments leaders of the six Power Africa focus countries -- Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania -- to come together to double the amount of electricity available to people in sub-Saharan Africa in part by increasing the number of megawatts (MW) available by 10,000 and adding 20 million electrical connections.  

President Obama also mentioned Power Africa in his State of the Union address when he said: "Across Africa, we’re bringing together businesses and governments to double access to electricity and help end extreme poverty.”

In the past year, we have made real progress towards achieving these goals.  The initiative emphasizes success based upon actual results.  Power Africa has already contributed to the financial close or is involved in the planning stages for transactions amounting to roughly 80% of the initial 10,000 MW goal. 

Since the last Power Africa newsletter was released in March, much has transpired for efforts to advance the initiative’s goals.  For example, during the recent U.S.-Africa Energy Ministerial in June, Energy Secretary Moniz officially launched “Beyond the Grid,” a new Power Africa sub-initiative specifically designed to increase access to cleaner, more reliable and efficient electricity specifically for off-grid and small-scale energy solutions. 

This new off-grid access framework will utilize Power Africa’s unique transaction focused model to unlock investment and growth opportunities to help many of the estimated 240 million people who live without access to electricity in rural and peri-urban communities in sub-Saharan Africa.  Beyond the Grid has already seen more than 25 founding private sector partners commit a total of more than $1 billion to the effort.  Senator Robert Menendez also wrote a letter to President Obama praising Beyond the Grid.

Our colleagues on Capitol Hill are also following Power Africa's progress closely and are aligning their own efforts.  On May 8, the U.S. House of Representatives passed the Electrify Africa Act and the U.S. Senate Foreign Relations Committee recently voted the Energize Africa Act out of committee.

But just as importantly, Power Africa is laying the foundation for future sustainable growth in the six focus countries by working with host governments and multilateral organizations on a variety of reform and policy measures.  You will read in this newsletter how the U.S. Government is supporting the African Development Bank's African Legal Support Facility (ALSF), which provides top quality legal counsel to our host government counterparts.  The Ethiopian government has already used ALSF for its ongoing negotiations with Reykjavik Geothermal for its Corbetti Geothermal entity, related to the first privately-owned energy development project in that country.  This project, when completed, could bring online an additional 1,000 MW of cleaner geothermal energy. 

In early June, the U.S. Trade and Development Agency (USTDA) provided several more Power Africa related grants.  For example, in Tanzania, a USTDA grant will fund a feasibility study for the University of Dodoma to evaluate the technical and financial feasibility of implementing a 55 MW solar project on campus.  This grant will be cost shared with Hecate Energy, an American energy developer.

And also in early June, the board of directors for the Overseas Private Investment Corporation (OPIC) approved an investment guaranty of up to $250 million in support of the Lake Turkana Wind Power Project in Kenya.

Furthermore in our last newsletter, we told you about how the US African Development Foundation (USADF) partnered with GE for their “Off Grid Challenge.”  Since that time, the challenge has grown in size and now includes the involvement of USAID.  In this newsletter, you will read about the progress the Off-Grid Challenge has made in just a few short months.  Furthermore, you will see in this newsletter, how the President’s Cape Town speech helped inspire a Tanzanian born and American raised energy consultant to join our team as a transactions advisor. 

Additionally, just weeks ago, as you can see from our cover photo, Commerce Secretary Pritzker signed two memoranda of understanding (MOUs) with the Government of Ghana (GoG) involving the country’s energy sector.  These signed MOUs signal that Ghana is expected to allocate substantial resources to further develop its nascent power sector.  In addition, the MOUs helped firm up the GoG's commitment to implementing the reforms needed to drive meaningful policy change tied to increasing electricity access.  In late April, an interagency U.S. Government team sponsored a workshop for the Ghanaian Government to raise awareness of certain challenges tied to state-run electrical corporations transitioning to private operations. 

But perhaps the greatest sign of progress is something more intangible.  When we travel to the six focus countries, more and more government ministers and companies are telling us that the Power Africa Model is working.  These words matter much more when the leaders take action and make difficult decisions that will strengthen their electricity sectors, but that may be either politically unpopular, such as raising tariffs, or that may require the government to give up control over entities that it has overseen for decades through privatization of generation, distribution, or transmission resources.  As President Obama said in Cape Town “we are moving beyond the simple provision of assistance, foreign aid, to a new model of partnership between America and Africa -– a partnership of equals that focuses on your capacity to solve problems, and your capacity to grow. “

Power Africa has faced some challenges, with the greatest ones centered around the high demand for information on the initiative.  We frequently hear from companies, “How do I find out more about Power Africa,” and from countries, "How can we participate?"  Our team is ramping up our efforts to engage with the private sector, academic institutions, host country governments and others to further inform them about what Power Africa is all about.   In the coming weeks, you will hear more about road shows and Power Africa's outreach plans for the coming year.

Our team will spend most of the summer preparing for the U.S. Africa Leaders Summit hosted by President Obama on August 5 and 6.   There will be meetings where officials from governments and the private sector can learn more about Power Africa.  President Obama noted in Cape Town that America’s vision is to strive for "a partnership with Africa that unleashes growth, and the potential of every citizen, not just a few at the very top.  And this is achievable.  There’s nothing that I’ve outlined that cannot happen.  But history tells us that true progress is only possible where governments exist to serve their people, and not the other way around.”

As always, if you have any questions, please e-mail powerafrica@usaid.gov and follow the latest news about Power Africa at @aherscowitz