IEEE Spectrum - North American - March 2014 - 14

The amount is small compared to developedworld standards: The U.S. electric power industry had capital spending of $90.5 billion
in 2012, according to the Edison Electric Institute. And it is a drop in the bucket of what's
needed. "Power infrastructure in sub-Saharan
Africa suffers from massive degrees of underinvestment as compared to the developed
world," says Andrew Herscowitz, coordinator for Power Africa. According to the International Energy Agency, sub-Saharan Africa
will require more than $300 billion to achieve
universal electricity access by 2030. Nevertheless, the investment would be a significant
improvement. According to figures from the
World Bank, the six countries have averaged a
combined investment of just over $3 billion a
year in their electricity infrastructure.
The White House touts the initiative as a new
model of foreign aid. Rather than just giving

that will stimulate more private sector investment in these countries," says Herscowitz.
What are the key reforms? It depends on the
country, but few doubt that widespread corruption has inhibited investment in the past
and could continue to do so. Herscowitz says
that where corruption is a problem, Power
Africa is pushing for greater transparency.
Nigeria is an example of both the progress
and the challenges. In that country, "massive,
widespread, and pervasive corruption affected
all levels of government," according to a report by the U.S. State Department. But the
Nigerian government, now a democracy, has
made progress in privatizing its power industry. Paul Hinks, CEO of U.S.-based Symbion
Power, which is involved in several Power
Africa projects, says Nigeria "is probably going to become a model for the rest of Africa"
in that regard. In one Power Africa project,

POwer AfricA in PerSPecTive

$300 billion:

$7 billiOn:
U.S. government
investment in
Power Africa
$14 billiOn:
US $3.4 billiOn:
Private investment,
Average yearly capital
such as loan guarantees,
expenditure for
in Power Africa
electricity in six
African countries

grants and loans, Power Africa is aimed at fostering collaboration among U.S. government
agencies and corporations in an effort to increase private investment that could lead to
better access to electricity. "We're taking all
our tools and working together on common
goals," says Herscowitz. For example, Tanzania's standard power purchasing agreement
was for 15 years, but in order to obtain financing, one solar power deal needed a 20-year
agreement. Power Africa helped convince the
government to make a 25-year deal, he says.
"At the same time, we're trying to use these
[financial] transactions to push key reforms

15 companies plan to participate in this privatization program, according to the White House.
The "unique political environment" in
some countries is one of the main challenges
for private investors, says Bob Chestnutt, a
project director with Aldwych International.
This London-based boutique firm develops
power projects focused on sub-Saharan Africa. In Kenya, for example, both President
Uhuru Kenyatta and his deputy president,
William Ruto, are charged with inciting violence that killed at least 1300 people in the
wake of a disputed election in late 2007. If the
trial in the International Criminal Court goes

nEwS

MaR 2014

nORTh aMERICan

estimated need
to provide all
sub-Saharan
Africans access
to electricity
by 2030

SPECTRUM.IEEE.ORG

forward, it could destabilize the investment
environment within Kenya, says Chestnutt.
Hinks, who is also chairman of the nonprofit Corporate Council on Africa, admits that
corruption is a problem but asserts that's no
reason not to invest. "You can do business in
Africa without getting involved in corruption,"
he says. "A lot of U.S. companies say they don't
do business in Africa because of corruption.
But those same companies do business in...
other places where there is also corruption."
The other big challenge for expanding
electricity access in Africa is logistical, says
Chestnutt. The places with the least access are in rural, remote areas. Aldwych is
planning two wind farms under the Power
Africa initiative-one in Tanzania and one
in Kenya. The company hopes to start construction on a 300-megawatt installation
at Lake Turkana, Kenya, in April. However,
it's located "in a barren desert wasteland.
It's 1200 kilometers from the nearest port,
and the last 200 km of roads will need to
be upgraded," explains Chestnutt.
Such logistical problems are why Power Africa has a strong focus on off-grid and minigrid
projects and on using renewable energy sources. For example, General Electric and the U.S.
Africa Development Foundation launched a
competition, called the Off-Grid Energy Challenge, to encourage African individuals and
companies to come up with innovative approaches to generation and distribution. In the
first contest, held last fall, three Kenyan and
three Nigerian groups were awarded grants
of up to $100 000 to develop their projects.
At this stage Power Africa is focused more on
measuring the closing of financing deals than
on the start of construction. As of February,
26 deals were in the works for projects that
could provide 5.2 GW of electricity. Power
Africa officials expect to have 4 GW reach
"financial close" by the end of the year.
At the very least, Power Africa has served
to stoke interest in the continent by U.S.
companies and investors. "Power Africa
has prompted a sea change in the attitude
of U.S. institutions," says Chestnutt. "There
is much more focus and drive coming from
the United States because of this initiative."
-ta m h a r bert

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