Ambitious plans to electrify Africa launched in Davos
Ambitious plans to power Africa were inaugurated at the World Economic Forum (WEF) in Davos, Switzerland by the African Development Bank Group on 21 January. The New Deal on Energy for Africa will unite the private sector and local governments on energy capacity building projects to achieve universal access to energy in Africa by 2025.
“It is time to take decisive action (…) to light up and power Africa and accelerate the pace of economic transformation, unlock the potential of businesses, and drive much needed industrialisation to create jobs,” said the President of the African Development Bank, Akinwumi Ayodeji Adesina during the launch.
The New Deal has four major goals for electricity expansion by 2025: add 160 gigawatt of on-grid generation; create 130 million new on-grid connections (160 percent more than today); increase off-grid generation to add 75 million connections (20 times that of today); and increase access to clean cooking energy for around 130 million households.
Plans of action under the New Deal will rely on a platform, the Transformative Partnership on Energy for Africa, to coordinate energy generation and transmission projects across private-public partnerships and existing African energy programmes. The African Development Bank will oversee this mechanism in close collaboration with the Head of State, Minister of Energy, and Minister of Finance in each country. The partnership also aims to help governments coordinate regionally, so that countries can trade energy resources across borders.
Economies left in the dark
The current lack of electricity on the continent has far reaching implications. Over 645 million Africans have no access to electricity, which is 53 percent of the global population without electricity. Moreover, the lack of electricity holds African economies back. The AfDB estimates that energy-sector bottlenecks and power shortages are estimated to cost African countries some 2-4 percent of GDP annually. Companies in Tanzania and Ghana are losing 15 percent of sales value as a result of power outages.
“The need for energy is growing by 25-30 percent, which is beyond the growth rate in the country. It means that we need to move very fast in energy development if we want to move even faster in development,” said the Prime Minister of Ethiopia Hailemariam Desalegn at a WEF debate on Africa’s Next Challenge.
Untapped potential to move forward
Africa is rich in untapped renewable resources that could close the gap between energy supply and demand. The continent has well over 10 terawatt of solar potential, 350 gigawatt of hydroelectric potential, 110 gigawatt of wind potential and an additional 15 gigawatt of geothermal potential. However, the New Deal calls itself “energy resource neutral” and will encourage countries to develop infrastructure based on their competitive advantages without bias, in renewables and non-renewables alike.
Harnessing this potential to achieve the targets set by the new deal will require energy infrastructure investments of US$40-70 billion annually. Between 2016 and 2020, the African Development Bank alone will invest about US$12 billion and leverage about US$50 billion in public and private financing for investments in the energy sector. Such funding will be channelled through private sector organisations. Adesina additionally elaborated at a press conference for the New Deal that African countries will individually direct a greater share of their GDP towards the energy sector, from the current 0.3 percent to about 3.4 percent.
ICTSD reporting: “ ‘New Deal for Energy’ a Big Deal for Africa, Off-Grid,” Huffington Post, 25 January 2016. “The New Deal on Energy for Africa: A transformative partnership to light up and power Africa by 2025,” AfDB, January 2016. “ ‘Africa's Next Challenge’ - in Televised Debate, Adesina, Kagame and Desalegn Underscore Urgent Need to Power Africa,” AllAfrica, 28 January 2016. “AfDB presents New Deal on Energy for Africa and the Transformative Partnership on Energy in Davos,” AfDB, 21 January 2016.