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Powering Africa: The renewable energy opportunity

Third in a series looking at OPIC’s approach to powering Africa. For earlier posts see Powering Africa: The off-grid challenge, and Powering Africa: The on-grid challenge.renewable energy power africa solar

The sun shines almost daily throughout most of Sub-Saharan Africa, but most of the population – more than 620 million people — lives in the dark. This extreme energy poverty in a region so rich in radiant sunlight presents both a paradox and an opportunity for a big part of the solution in powering Africa.

Power Africa, the Obama Administration’s initiative to double the number of people in Sub-Saharan Africa who have a reliable source of power, has ambitious goals. But when viewed in the context of the continent’s available, untapped resources, these goals seem much more within reach.

Earlier this year, the International Energy Agency (IEA) released its Africa Energy Outlook, showing that while Africa currently derives less than two percent of its energy mix from renewable sources such as solar, wind, hydro and geothermal power, these resources are all abundant:

  • Most of Africa enjoys more than 320 days of bright sunlight a year.
  • The wind potential in Sub-Saharan Africa is estimated to be several times Africa’s current total electricity consumption.
  • Geothermal power is abundant in concentrated regions of the continent such as East Africa, where it makes up 15 percent of the region’s power generation capacity.

In addition to the strong supply of renewable resources, there’s another compelling reason to develop them: rapidly growing demand. As acute as Africa’s energy poverty is today, it could become even worse without aggressive efforts to develop more resources. IEA predicts that even if a projected one billion people gain access to electricity by the year 2040, rapid population growth will mean that some 530 million people will still live without it.

And as Africa shifts from a primarily rural society to an increasingly urban one, more of its people will be living middle class lifestyles that require more electricity in their homes and workplaces. With a growing number of people seeking to light their homes and generate power for businesses, farms and manufacturing, the squeeze on resources will become unsustainable unless renewable resources become part of the mix.

Since 2010, OPIC President and Chief Executive Officer Elizabeth Littlefield has stressed the importance of clean and sustainable development, and made the development of renewable resources around the world a key agency priority. OPIC is rapidly increasing its focus on renewable energy in Africa: Its 2014 agreement to provide financing and insurance to support construction of the310-megawatt Lake Turkana wind power plant in northern Kenya, is the largest renewable power plant it has committed to date in Africa, and has a projected capacity of almost triple the total capacity of renewable energy projects OPIC committed in the prior three years.

The Lake Turkana project illustrates the power and opportunity for renewable resources to make a significant contribution to total power needs: When completed, it is expected to increase Kenya’s total energy generation capacity by 20 percent.

OPIC’s other commitments to renewable energy in Africa include financing for the expansion of theOrmat geothermal plant, which sits in a national park in Kenya, and financing to support construction ofSunEdison’s 60-megawatt solar photovoltaic power plant in Free State, South Africa (pictured).

While all these projects are sizable, they collectively represent only a small portion of what will be required to meet IEA’s projection that renewables will constitute 40 percent of Africa’s power generation capacity by 2040. It is a massive opportunity for both the people of Africa, and for investors.

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