Obama’s ‘Power Africa’ Initiative Showing Results, Draws Criticism

Since US President Barack Obama announced “Power Africa” last summer, things seemed to have moved painfully slowly. But that doesn’t mean they’re not moving.

“A lot of those things are things that they are working on and they are at different stages of the process,” Adi Raval, Communications Spokesperson for Power Africa at the U.S. Agency for International Development (USAID) told AFKInsider. “Obviously, as you know, you can’t just snap your fingers and have a power plant suddenly appear.”

In his June 30 speech in South Africa, President Obama launched “Power Africa” with a pledge of $7 billion in government funding – with another $9 billion of private money – over five years to double access to electricity in the six sub-Saharan countries of Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania using “clean energy” to support economic growth.

Now, some eight months later, a few success stories have begun to emerge.

On February 14, the African Development Bank affirmed its continued support for Power Africa with a commitment of more than $600 million.

Then on  Feb 19, it was announced that the first GE Africa-USADF Power Africa Off-Grid Energy Challenge is beginning to yield results as one of the winners of the contest; Green Village Electricity Project, recently completed the pilot phase of its off-grid community electrification project in the Egbeke community of Rivers State, Nigeria.

And when the White House hosts 47 African countries for the first US-Africa Leaders Summit in Washington, D.C. on Aug. 5 and 6 to advance U.S. trade, investment and security ties with Africa, the Overseas Private Investment Corporation and U.S. Agency for International Development will jointly host an African energy and infrastructure investment conference to bring investors, developers, and companies together with U.S. and African government officials to demonstrate the resources available from the U.S. government and other partners.

With USAID acting as the lead agency, there are 12 agencies involved.

“Power Africa and the US government is playing more of a convening role in making sure it’s one-stop shopping, so if you talk to the Millennium Challenge Corporation and you have questions for USAID, the information from MCC will get to USAID,” Raval told AFKInsider.

From the US government, the $7 billion in funding is broken up among six sources:

USAID will provide $285 million; the Overseas Private Investment Corporation (OPIC) will commit up to $1.5 billion; the US Export-Import Bank will make available up to $5 billion; the Millennium Challenge Corporation will invest up to $1 billion; OPIC and the US Trade and Development Agency  will provide up to $20 million in feasibility and technical assistance grants; and, the US African Development Foundation  will launch a $2 million Off-Grid Energy Challenge.

An additional $9 billion will be leveraged from private sector partners that will support the development of more than 8,000 megawatts of new electricity generation in sub-Saharan Africa.

According to the USAID Power Africa website, “For sub-Saharan Africa the scale of investment needed to achieve universal energy access is about $15-$20 billion per year, every year, through 2030. The only way to achieve that is to use public fund to leverage private investment. Ultimately, Power Africa depends on the successful engagement of the private sector to address Africa’s energy needs.”

Of the current 36 private sector partners, U.S.-based General Electric and Washington D.C.-based Symbion are the two largest energy participants. Nevertheless, the list of the 36 firms and their planned projects is impressive as is the current list of success stories that have been funded.

“To date, our private sector Founding Partners have pledged to develop nearly 10 GW of critical generation projects in the five of the Power Africa focus countries, resulting in over $14.7 billion in investment in these countries’ power sectors,” notes the Power Africa website update.

First Transaction

The first official transaction came in September, when it was announced Power Africa will provide transactional and technical advice to the Government of Ethiopia and the Ethiopian Electric Power Corporation, which entered into a project agreement with Reykjavik Geothermal to establish the Corbetti Geothermal Power Plant – the first independent power project in Ethiopia’s history.

“Power Africa brings significant resources and high-level support to the geothermal efforts in Africa, and we are working to encourage the US geothermal industry to engage in their development.” Karl Gawell, Executive Director, Geothermal Energy Association told AFKInsider. “We recently formed an East African Geothermal Partnership with USAID and the US Energy Association, and it will be a vehicle for channeling US and industry assistance.”

In November, Power Africa supported the initial phase of privatizing the Power Holding Company of Nigeria and is backing efforts to improve operations and maintenance, as well as obtain additional investment for a 2,000 megawatt increase of power generation by 2018.

Power Africa closed on agreements with the Government of Kenya and Aeolus Kenya Ltd. for construction of the 60 megawatt Kinangop Wind Park and is also supporting implementation of a grid management program for integration of renewable energy into Kenya’s grid.

Another recent Power Africa project included approving a loan guarantee for the Kiwira River Hydro Project in Tanzania, which will allow the project to facilitate local commercial finance. Tanzania is the focus of Power Africa’s “Big Results Now!” program, “which is establishing new delivery units within government ministries.”

And the winners of the first round of the GE Africa – USADF Power Africa Off-Grid Energy Challenge were announced in November, resulting in $100,000 grants each to six African-led private companies and organizations in Kenya and Nigeria, including Solar World, Afrisol Energy and Mibawa in Kenya, and Green Village Electricity Projects, Trans Africa Gas and Electric, and Afe Babalola University in Nigeria. The second round is underway.

Other notable renewable projects in the works include: NextGen Solar is developing several solar power plants, including 70 megawatts in Tanzania, 50 megawatts in Kenya, 35 megawatts  in Ethiopia, 30 megawatts in Ghana and 15 megawatts in Nigeria, representing total investment of $600 million; Nigeria Solar Capital Partners, a joint venture with US-based Industry Capital, is proposing to develop and operate up to 500 megawatts of  utility-scale solar facilities in Nigeria by 2020; Hecate Energy is completing a 50 megawatt PV solar project in Tanzania; Harith General Partners is investing $70 million in the 300 megawatt Lake Turkana Wind Power project in Kenya; and, Aldwych International is investing is developing 400 megawatts of wind power in Kenya and Tanzania.

Oil and Gas Development?

Power Africa’s fine print also includes separate deals with Uganda and Mozambique for “responsible” oil and gas development through their involvement in the  Governance and Capacity Initiative (EGCI), a US Department of State-led interagency effort to provide technical and capacity building assistance to help these countries establish the capacity to manage their oil and gas sector resources responsibly.

“The commitment of $7 billion to Africa’s power infrastructure will obviously have an impact, but this amount is not solely allocated toward renewable energy capacity building,” Gareth Blanckenberg, Industry Analyst for Energy & Power at Frost & Sullivan Africa told AFKInsider.

“It sounds consistent with the Obama administration’s domestic ‘all of the above’ energy initiatives,” Tyson Slocum, Director of Washington, D.C.-based Public Citizen’s Energy Program told AFKInsider. “Since 2009, the Obama administration has had a very active [oil and gas] fracking program out of the State Department that works in Europe, South America and Asia.”

Uganda and Mozambique have “world class hydrocarbon resource potential and expect to receive sizable, near-term financial windfalls from the development of their oil and gas resources,” according to the US State Department’s Governance and Capacity Initiative website, which notes to program is to “ensure sound and transparent energy sector governance for the benefit of national economic development.” The program also “supports a broad range of U.S. foreign policy objectives and is tightly coordinated with our overall bilateral energy relationships.”

Part of the problem critics have with this part of the Power Africa program is that it seems to play on Washington’s fear of China, which is pouring billions of dollars into the continent – particularly for oil development. 

The White House Power Africa Fact Sheet mentions “recent discoveries of oil and gas” and “use of natural resources” six times as playing a “critical role” in “near-term global energy security.”  Indeed, new oil and gas finds offshore of Mozambique have drawn international attention. According to a United Nations report released January 28, foreign direct investment to areas outside of North Africa rose from $39 billion in 2012 to $42 billion in 2013, with $7 billion going to Mozambique alone.

It may be a stretch to think Power Africa is a “Green Trojan Horse” to get fossil fuel energy embedded in the grid infrastructure before renewable energy like solar can actually gain favor, but critics do have other issues with the program.

Critics Still See Problems

“After six months, I’m struggling to figure out what it is, or rather what it would do,” Steve Sawyer, Global Wind Energy Council Secretary General told AFKInsider. “The US is coming rather late to this game, but even so, if that means that there are more players and more reasonably priced finance available in the African market, then it will probably help.”

Power Africa is based on passage of the “Electrify Africa Act of 2013,” introduced the day after Obama arrived in Africa “to support affordable, reliable electricity” development.

While only a quarter of the region has electricity, the legislation isn’t so benevolent: “Africa’s consumer base of 1,000,000,000 people is rapidly growing and will create increasing demand for United States goods, services, and technologies, but the current African electricity deficit limits this growth in demand,” reads the legislation text.

In fact, of the $7 billion the government agencies are pitching in, $5 billion is from the U.S. Import-Export Bank, which guarantees loans if the receiving country uses basically American companies.

Another criticism is that “distributed generation” – off-grid projects in very remote areas – is getting short changed under the Power Africa plan. While the bulk of Power Africa is focused on expanding electricity services for those in or near urban areas, the vast majority of people who suffer from energy poverty live outside the reach of any power grid. Yet, only $2 million was allocated to launch the Off-Grid Energy Challenge to provide grants to develop off-grid electricity in rural areas.

“You’ve got to have power. And yet two-thirds of the population in sub-Saharan Africa lacks access to power – and the percentage is much higher for those who don’t live in cities,” said President Obama in his June 30, 2013, remarks launching  Power Africa.

“So we’re very concerned because we are just as interested in getting power into the hands of the poor, we think that the best, most effective, nimble and fast way to get power into the hands of the poor is to focus on distributed renewable energy technology,” Justin Guay, Associate director for international programs at the Sierra Club told AFKInsider.

Power Africa counters by noting on their website that private sector partners that are focused on mini-grid and distributed power services to rural populations have commitments to “700,000 new households and businesses served and over $1.1 billion in investment.”

Some critics have also pointed to Power Africa’s “clean energy” definition. In fact, in the two “Power Africa” speeches given during his trip to Africa in June 2013, President Obama never mentions solar, wind and geothermal power. In fact, the closest he comes is saying investments will include “cleaner energy.” President Obama told his African audience that “Power Africa” will supply “the energy needed to lift people out of poverty” and “support clean energy to protect our planet and combat climate change.”

Looking at the list of proposed projects from the 36 private partners, burning natural gas and biomass fuels are considered “clean energy” under the Power Africa rules.

Just days after Obama left Africa, the U.S. Embassy in Liberia sponsored a July 11 workshop with three U.S. companies to hype biomass gasifier technology for powering remote areas. The problem is that that technology is a double climate change whammy since it burns biomass to manufacture “syngas,” which is then sold to be burned again as fuel, according to a November 2012 National Renewable Energy Laboratory review of gasifier technology.

There are other proposed Power Africa projects being questioned as being “clean” energy.

Under Power Africa, US-based Symbion Power aims to catalyze $1.8 billion, including acquiring a 972 megawatt gas-fired power plant in Ugheli, developing a 100 megawatt fast-track gas-fired generation project in Ajaokuta, and is developing a 450 megawatt gas-fired power plant in Ghana.

KMRI, in partnership with its joint venture partner in Tanzania, Symbion Power, seeks to complete in the next 18 months the Kigoma Project – a 4 megawatt biomass power plant, the Tunduru Project – a 1 megawatt biomass power plant, and aims to develop 15 megawatt of biomass installations in Ghana.

IAP Worldwide Services is using natural gas and other available fuels to power turbine and engine driven generators.

Husk Power Systems seeks to complete installation of 200 decentralized  biomass mini-power plants in Tanzania.

GG Energy Holdings will develop and operate facilities utilizing biomass, as well as natural gas technologies.

In East Africa, Black Rhino seeks to complete the Pagak Petroleum Refinery – an integrated energy security project creating the trade of low cost fuel and low cost power between Ethiopia and South Sudan.

Some of the “new” projects were actually under way before Power Africa was announced, and there are other concerns that Power Africa is being co-opted by huge corporations like GE. President Obama’s choice to give a second energy speech in Tanzania was during a tour of the diesel-powered Ubungo electric plant recently upgraded by GE and Symbion Power.

“I think that a big part of what’s happening is that companies like GE see a tremendous opportunity to sell oil and gas technology,” Sierra Club’s Guay told AFKInsider. “So yeah, I think there’s a bit of rhetoric saying that is all about powering poor citizens, but there is a lot of reality which is oil and gas companies seeing huge profit opportunity.”

Of course, GE is also involved with some Power Africa renewable energy projects, supplying 38 wind turbines to Kenya’s Kinangop wind power project, as well as providing training for local technicians and maintenance for 10 years. And the company is the major sponsor of the two-year, Off-Grid Challenge to bring power to remote areas in Kenya and Nigeria.

There are also questions about how the 12 different agencies involved will interact, how transparent and flexible the process will be, and even how much of the funds will actually leave the US. Raval at USAID says the 12 agencies “work as a team,” and they do that on a regular basis through power Africa working group meetings so they all are on the same page.

“This is not necessarily the first time we’re doing it, but it is certainly fairly new in terms of how the US government is funding overseas development projects and that is having part of the money come from the private sector and having more of the impetus upon them,” USAID’s Raval told AFKInsider. “And that helps them obviously in terms of American jobs, in terms of sustainability, and in terms of the fact that a lot of these companies have been in Africa on the Continent for many years.”

But the bigger question for Power Africa’s priorities still remains: Is running wires to expand the electric grid from village to village really the best way to go in a rapidly developing Africa?

“What we see as part of Power Africa is it is essentially 20th century solutions to a 21st-century problem,” Guay told AFKInsider. “What we’re saying is that the world’s most sophisticated technologies are the best development tools for the poor. We’ve already seen that with mobile phones and there’s no reason that clean energy can’t and won’t have the same type of leapfrog impact.”