By Judith Pryor
Vice President, Office of External Affairs, Overseas Private Investment Corporation
It’s been one year since President Obama announced the ambitious Power Africa initiative to double access to power in Sub-Saharan Africa, where the majority of people live without lights, refrigeration and most of the other fixtures of modern life.
Bringing about change on such a vast continent where the numbers on energy poverty are staggering will take time, but I’m heartened by the strong level of interest among businesses that recognize both the great need and the great investment potential in Africa. Last month, I spoke at the Africa Energy Forum in Istanbul where more than 1,200 representatives of business and government gathered to discuss opportunities for energy investment on the continent. Additionally, it was the first time the U.S. government’s Power Africa team participated as one collective body.
I’m also happy to report on the progress OPIC has made over the past year on a number of fronts:
- We committed financing to our first large-scale Power Africa project by providing financing for a major wind farm in Kenya that will boost that country’s installed energy capacity by 20 percent. This latest commitment builds on OPIC’s long history of supporting large infrastructure projects in Africa, from solar power in South Africa to gas-fired power in Togo.
- We’ve supported several other early stage projects from Ethiopia to Namibia through our work with the U.S.-Africa Clean Energy Financing Initiative (US-ACEF) by providing project preparation funding to a range of projects from biomass and wind power plants to businesses distributing home solar kits.
- We’ve leveraged our decades of experience doing business in emerging markets by creating innovative tools and processes to help support investment in Africa. Chief among these is a little document – 10 Elements of a Bankable Power Purchase Agreement – that we created with some other U.S. government agencies to encourage more power projects by providing a framework for building a Power Purchase Agreement.
- This document clearly outlines what’s needed to secure a long-term agreement between a power producer and an offtaker, such as a country’s government, that distributes electricity to the population. Power Purchase Agreements are important in all markets, and especially so in emerging markets, in order to ensure fair and viable pricing and to make sure that spikes in demand or dips in production can be managed.
- In order to be closer to the deal making in Africa, we’ve dedicated one of our staff members to the continent full time. My colleague Peter Ballinger works in Johannesburg in the U.S.–Africa Clean Energy Development and Finance Center. The center is an initiative of OPIC, the U.S. Trade and Development Agency and the Export-Import Bank of the United States, to provide a coordinated approach to clean energy project development in Sub-Saharan Africa. Peter spends most of his time traveling around the continent meeting with investors who are interested in illuminating Africa.
As I noted at the outset, our work on this important initiative really is just beginning. Below you’ll find an image that helps readers understand the severity of Africa’s energy shortage. The number of people in Africa who essentially live in the dark exceeds the population of the United States, South America and Europe. The problem will not be fixed overnight, but we’ve had a very productive first year, and I look forward to continuing to work to bring power to Africa.