Energy access has been the subject of increased talk lately thanks to President Obama’s U.S.-Africa Leader’s Summit. The Summit, which was held last month in Washington, D.C., focused on increasing ties between the U.S. and Africa, a continent that includes many of the world’s fastest-growing economies. The Power Africa initiative, a U.S. government initiative aimed at “unlocking the substantial wind, solar, hydropower, natural gas, and geothermal resources in the region,”is now poised to play a pivotal role in enabling off-grid energy access in Africa with its “Beyond the Grid”program. Power Africa Initiative
Power Africa seeks to double the number of people with energy access in sub-Saharan Africa by facilitating partnerships between governments, the private sector and international development banks. As SunFarmer has already discovered, critical service providers such as health care clinics in developing nations (particularly in rural areas) struggle to acquire reliable and affordable sources of energy.
Beyond the Grid Program
In recognition of the obstacles to grid extensions in many African countries, Power Africa recently announced its “Beyond the Grid”initiative, a program focused solely on addressing off-grid energy access. A collaboration between impact investors, venture philanthropists, clean-energy enterprises, and practitioners, 27 partners have contributed a total of $1 billion over the next five years to build upon the 25+ small-scale energy projects already in the Power Africa pipeline, and scale distributed energy solutions to millions of African homes, business, schools, and other public facilities that do not have grid access.
In addition, this $1 billion investment is set to unlock up to $50 billion in clean energy opportunities. By shifting focus away from large grid projects, off-grid solutions like solar will have the opportunity to “leapfrog” the path that most developed nations took to achieving widespread electrification. These markets are likely to see rapid growth in sales of “accessories” such as radios, televisions, fans, and refrigerators.
Using these investment dollars to increase energy access for the most underserved populations will certainly result in mutual gains. “Two out of three sub-Saharan Africans —600 million people —lack access to electricity, forcing them to spend significant amounts of their income on costly and unhealthy forms of energy, like diesel to run factory generators and smoky and scarce wood for indoor fires for cooking.”
By swapping out expensive and unhealthy forms of energy such as diesel for sustainable, off-grid energy solutions, households and businesses will reap the health and economic benefits of cleaner, more cost-effective electricity. For private investors, the Power Africa framework makes investment opportunities more attractive by leveraging grant funding and government vetting to de-risk investments, incentivizing host country government reforms, and placing in-country Transaction Advisors to coordinate power projects and provide technical assistance.
A Brighter Future
Over the course of its five-year timeframe, Beyond the Grid should effectively result in systemic reforms to facilitate future investment related to off-grid and small-scale energy solutions. As a result, millions of people in sub-Saharan Africa will gain access to reliable, sustainable, and affordable energy. In addition, it will spur future private-sector investment through pre-investment technical assistance, risk mitigations, and new financial tools for investment at scale.
The publicity gains of President Obama’s Power Africa campaign, and particularly the recently announced Beyond the Grid initiative, brings welcome attention to the importance of off-grid, small-scale energy solutions and the potential they have to improve quality of life for millions of people. As SunFarmer works to deliver off-grid solar solutions on the ground, it is helpful to know that the government of the United States is working on a parallel track to create an enabling environment for innovation and investment in this crucial sector.