Moderator: Good afternoon to everyone from the U.S. Department of State’s Africa Regional Media Hub. I would like to welcome our participants dialing in from across the continent and thank all of you for joining this discussion.
Today, we are very pleased to be joined by Mr. Andrew Herscowitz, Coordinator for Power Africa, a U.S. Government-led initiative to double access to electricity in Sub-Saharan Africa by 2030. Mr. Herscowitz will discuss the recent release of the 2019 Power Africa Annual Report and Power Africa’s results to date. Mr. Herscowitz is speaking to us from Washington, D.C.
We will begin today’s call with opening remarks from Mr. Herscowitz and then we will turn to your questions. We will try to get to as many of them as we can during the time that we have, which is approximately 45 minutes. If you would like to join the conversation on twitter, please use the hashtags #LightsOn and #AFHubPress and follow us on @PowerAfricaUS and @AfricaMediaHub.
As a reminder, today’s call is on the record, and with that, I will turn it over to Mr. Andrew M. Herscowitz.
Mr. Herscowitz: Great. Thanks so much, everyone, for joining. I would encourage anyone who has access to your phone or your laptop, if you’d like to, if you haven’t done it already, to go ahead and just Google “Power Africa Annual Report,” and you can pull up a copy of our annual report, which might generate some additional questions. But I’ll go over a lot of the content in that report.
Just to give everybody some background, Power Africa was launched in 2013 with the goal of doubling access to electricity in Sub-Saharan Africa. In 2014, we made the more specific goal of trying to add 30,000 megawatts of new power generation and 60 million new electrical connections by 2030.
In 2016, the U.S. Congress passed the Electrify Africa Act, which had the goal of adding 20,000 megawatts of new power generation and 50 million new people getting access to electricity. So I know it’s a little confusing, but they’re different goals. What’s important, though, is that we’re making tremendous progress. Our model has been different than other development models in the past, and it’s one that’s being replicated across the U.S. government and even with other countries. And it’s taking a private sector driven approach.
What we do is we bring the tools of 12 U.S. Government agencies, 18 different development partners, including the World Bank and the African Development Bank, and bilateral partners like Sweden and Norway and the U.K., France, Japan, Korea, Canada, Israel. We bring all of these tools together and allow businesses to come to us with requests to help them drive their deals related to power sector development in Africa.
To date – and this is in the annual report – you’ll see that 124 power generation projects have reached financial close. That will comprise over 10,000 megawatts of new power generation. The more important number, though, is that 56 of those power projects have actually been commissioned, which have already added over 3,000 megawatts of new power generation. We also realized that our initiative was originally designed to drive economic growth and keep Africa countries on the rapid growth trajectories, realizing that power sector was a key constraint to that economic growth. But we also recognize that there was 600 million people – or actually now we estimate about 550 million people who don’t have access to electricity in Sub-Saharan Africa. And to date, the nearly 15 million new electrical connections that we’ve helped achieve both on-grid and off-grid will bring electricity to nearly 70 million people– already is bringing electricity to nearly 70 million people.
Important to the model, though, is to again recognize the significant role of the private sector. While governments and development organizations do spend quite a bit of funding to solve this problem, we don’t have the money by ourselves or let alone with the governments themselves to meet the needs for the continent, which is why it’s critical that the private sector play a key role in the development.
The 124 power projects that have reached financial close are worth over $20 billion. The commitments that we’ve received from our public and private sector partners are over $54 billion. This is the largest public-private partnership for development that we’re aware of in history. And it’s producing results.
So with that, I’ll go ahead and open up the floor to some questions.
Moderator: Thanks very much. We will now begin the question and answer portion of today’s call. For those asking questions, please state your name and affiliation and limit yourself to one question related to the topic of today’s briefing, the 2019 Power Africa Annual Report, and the initiative’s results to date.
So our first question will go to Kevin Kelley. He’s with the Nation Media Group based out of New York. Operator, can you open the line, please?
Operator: Yes, your line is open.
Question: Okay, thank you and thanks for doing this today. So the Trump administration announced yesterday that it’s withdrawing from the Paris climate accord a year from now. To what extent does Power Africa have cognizance of the relationship between fossil fuel-driven power output and climate change? It seems like the Trump administration doesn’t have much concern about that, or maybe even belief that it’s actually linked in that way.
Is Power Africa following that position, that climate change is not a serious problem, that it’s mostly a hoax, and that it doesn’t need to be heeded in African power development? Thanks.
Mr. Herscowitz: Thanks for the question. We take a technology agnostic approach to the work that we’re doing. If you look at the power projects that we’ve supported, by megawatts, the majority have involved fossil fuels, mostly gas, which is cleaner technology than others. But in terms of number of projects, we’ve supported more renewable projects. And we see that – we see that there’s going to be an uptick. Our number one concern is getting people access to electricity so that they can emerge from poverty, and we realize that countries need to use the technologies that make the most sense to them. And what we’re finding is that renewable prices, frankly, are just coming down. So they just make more economic sense.
One of the initiatives that we’re really working hard on with the Governments of Botswana and Namibia is a mega-solar initiative. If you look throughout the world, in Chile, in India, in the United States, in the Middle East, other regions have had large-scale solar initiatives that have helped achieve really rock bottom prices. Most recently in the United Arab Emirates, there was a bid that came in at 1.7 cents per kilowatt hour. It’s becoming increasingly difficult for any technology to compete with many of the renewable technologies and as battery prices come down more and more, it’s really going to become nearly impossible. So a lot of fossil fuels, they’re important – but they’re not going to play the absolute central and critical role.
But we’ll continue to support fossil fuels, and I’ll tell you why, because especially in the off-grid space, if you – we’ve done quite a bit of work of helping people in the off-grid areas, people who live far from the grid get access to electricity with solar home systems. But the problem is, is that things as simple as cooking and heating water are energy intensive and having an 80 watt panel isn’t sufficient. It may be sufficient for you to turn on a television, watch TV, and power a mobile phone, but it takes about 700 watts of power to boil a pot of water. And if someone wants to make tea, we got to come up with cleaner solutions.
One of the issues that we see is that we can call it a great success when people have electricity in rural areas, but as long as they’re cooking with biomass and charcoal for the next 20, 40 years, those aren’t modern energy services. So we are trying to come up with cleaner solutions, like LPG. In fact, we recently launched a window for a grant initiative to see if we can get solar home system companies to link distribution of LPG with the solar home systems so that people can get electricity from solar and cooking from gas instead of using biomass and charcoal.
Moderator: Thank you. Kind of to follow up on that question, the U.S. listening party in Bamako, Mali – at the embassy in Bamako, Mali – had a journalist who asked the question – I think you pretty much answered it. It said: Did the Power Africa – does it contribute to reducing the price of electricity in the beneficiary countries? But also asks: Will this initiative take into account municipalities and medium-sized cities?
Mr. Herscowitz: Sure. So the issue of price is probably one of the most exciting stories of Power Africa. If you look at where the power sector was in Africa for power generation and prices were seven years ago versus where they are today, they’ve dropped dramatically.
It used to be that a company would come into a country and offer to build out a power project for 20, 25 cents a kilowatt hour, and people would sign those power purchasing agreements. But what we’ve done through our support of public tendering in many countries across the continent – working with the World Bank and International Finance Corporation and other development partners – is we’ve built the capacity of governments to run auction programs which have really driven down the price of power.
A few examples would be in – first, the IFC and the World Bank Scaling Solar program that we’ve supported achieved about 100 megawatts of solar power in Zambia and the price is ranging between 6 and 8 cents per kilowatt hour. Then in Senegal, we saw prices come in below 5 cents per kilowatt hour. And more recently in Ethiopia, we’re seeing between 3 and 4 cents per kilowatt hour. So the story – the good news story is that we’ve put so much information out there and built so much capacity that very few governments are entering into any power project for more than about 10 cents a kilowatt hour. And they’re realizing that these are deals that are going to be lasting them for 20, 30 years sometimes.
In terms of working with municipalities, we have teams located all over the continent. We have hundreds of people working on Power Africa. Most of them are located on the African continent, spread out everywhere. And what we do is we ask our country teams to tell us what’s most needed in that country. In South Africa, we’ve worked at the national level to help most recently 27 renewable projects reach financial close that are going to add 2,400 megawatts of new electricity. But we’ve also worked with the City of Cape Town. We’ve worked with the municipality of Windhoek in Namibia, as well.
So we work with municipalities and state governments as well based on the recommendations of our teams on the ground of where we can have a great impact.
Moderator: Thank you. Our next question will go to Evans Kennedy Banda. Operator, can you open the line, please?
Operator: And just one moment. My line is stuck. One moment, please. Okay, thank you. Your line is open now.
Question: Okay. This is Evans Kennedy Banda from Zambia and Diamond TV. My question [inaudible] regarding the efforts that you’ve been working on as Power Africa —
Mr. Herscowitz: I’m sorry. I can’t hear.
Question: Okay. I’m saying I wanted to find out from the efforts that you are doing on your project which has been mainly focused on benefiting the African continent. Speaking of the southern part of our continent, which Zambia is part of it, there have been the issues of the power difficulty going on which has affected most of the country, not only Zambia. But I wanted to find out if you are working close with the governments and to ensure that the people benefit, and also to find out if you have projects particularly targeting the people that are in living in the rural area. That’s what I wanted to find out.
Mr. Herscowitz: Yeah. So the vast majority of the new electrical connections that we’ve helped achieve – over 13 million – have been off-grid connections of people working in rural areas. We first launched Power Africa when we were focused mostly on new big power generation, but we recognized that there, at the time, there were still 600 million people who didn’t have access to electricity and that’s why we launched Beyond the Grid.
We do everything from supporting solar home systems to mini grids, but we also recognize that we have to help the distribution companies do a better job of bringing access to electricity to people in a way that helps them actually make money and not lose money. So we’ve been working closely with many different governments in this regard. In Nigeria, we’ve done a few things, for example. One, we put teams of people in four of the power distribution companies to help them improve collections and reduce losses, and we helped them generate over $150 million of new revenues in just about two years. But at the same time, we’ve worked with a rural energy agency to help them convert some of the markets in rural areas from diesel generation to be solar powered. And then we work with off-grid companies, solar home system companies all over the continent as well.
There’s been tremendous success with solar home system companies in East Africa, but we started creating incentives for many of them to expand to West Africa and to Southern Africa. Company like Fenix International, for example, was having great success in Uganda and we helped them expand into Zambia. So we’re always looking for ways to get power to people and electricity to people in rural areas, and we don’t want people just getting a basic lightbulb. We want people to have productive use. We want to help stimulate the economy. We want to figure out how people can have enough power to operate a solar-powered water pump for irrigation if necessary, or enough electricity to run a wood shop or to run a barber shop.
So it’s really critical for us – and we’re not going to just – we could’ve easily just gone out and bought lamps for everybody on the continent and called it a day, but rather, we want to make sure that the type of electricity that people get is productive electricity that will help individual people, individual countries, and the entire continent emerge not just from energy poverty, but from poverty.
Moderator: Thank you. Our next question will go to the listening party at the U.S. embassy in Addis Ababa, Ethiopia. Operator, can you open the line, please?
Operator: Okay, one moment. Your line is open.
Question: Thank you. I’m Sisay from the Daily Monitor Newspaper based in Addis Ababa. My question is: As we know, as the power sector in Ethiopia is dominated by government sector, and even if it’s not fulfilling the interest of the public, is there any initiative to support Ethiopian business to engage in the power sector, and what it looks like in the previous experience? As we know, the power sector – Power Africa supports us in Africa through public-private partnerships. Thank you.
Mr. Herscowitz: I’m sorry, I didn’t quite catch the question. You’re asking if we’re working with governments as well as the private sector? Is that what the question is?
Mr. Herscowitz: Okay.
Mr. Herscowitz: Absolutely. One of the keys to our success in helping the private sector making the investment is helping build the capacity of governments to manage this privately – this – not completely privatized, but a power sector with significant private sector investment.
So we have advisors who are embedded in – embedded within governments, within the ministries, within the utilities, within the transmission companies, depending on what the needs of the country are. Not only that, we have worked through the African Development Bank to help fund lawyers to represent governments when they’re negotiating power projects for the first time. We make sure that the funding goes through the African Development Bank so that there’s independence and people can’t claim that the U.S. Government tried to influence the outcome. We want to make sure that the best quality international lawyers are representing the governments, while at the same time, training local lawyers so that we don’t need the international lawyers in the future to be involved in these negotiations.
Today, we’ve published five books that are all designed for capacity-building. One is titled, the “Understanding Power Purchasing Agreements,” and what it did is it goes through sort of the critical clauses of negotiating a power sector deal. And it offers the perspective of the government, of the investor, of the bank, of the project developer and says, “All right, this is what you want to negotiate on this deal,” and gives a very, very neutral type of point of view. We brought together representatives from all those different types of entities to draft this book. There are over 40,000 copies of that book in print in French and English across the continent.
We did another book on understanding power sector financing, we did one on procurement, we did one understanding gas and LNG. And then one of the books that I’m most proud of is a book that we did in Kenya specifically on community engagement. We want to make sure that project developers and governments are engaging the communities when they’re developing power projects at every step of the way. It’s very, very important – and we did this book working with civil society to make sure that power projects don’t fall apart in these regions, because we’ve seen this happen from time to time.
Moderator: Thank you. Operator, our next question will go to Pearl Matibe from NewsDay Zimbabwe. Could you open the line, please?
Operator: Thank you. Your line is open.
Question: Thank you very much. My name is Pearl with NewsDay Zimbabwe. I do appreciate this call and your availability, so thank you very much.
I see that you are doing a lot of work with Power Africa which is great, but however, there are still large swaths of Africa that are completely being left behind. My question to you, specifically going to Southern Africa: There are people in Zimbabwe right now who go with 18 hours of no electricity, no power whatsoever. Do you have any recommendations or any discussions that you are currently trying to put into place in your policy that might go towards not leaving people behind? Maybe in a humanitarian manner or any things you might be examining in terms of hydro or solar? I see the work you’re doing in Zambia, the Victoria Falls area.
Are you looking at what’s being left behind? I’d appreciate your thoughts on that. Thank you so much.
Mr. Herscowitz: So absolutely we’re working at the people who’ve been left behind. That’s the whole idea behind the Beyond the Grid initiative. But it’s not – look, Beyond the Grid is just off-grid electricity, not even mentioning the vast majority of the electrical connections that we’ve achieved have been working with private companies that are going into areas and providing people – usually through some sort of leasing or lease-to-own arrangement – a small solar panel that can help them charge their mobile phone, light their house so that children can study at night, power a television so people are connected. We helped run a competition to come up with more efficient refrigerators so that people could refrigerate their food in areas or even have businesses have refrigeration to sell cold drinks. So we’re always looking at ways to benefit people who have been left behind.
You mentioned a humanitarian context. We launched about two years ago with the Mastercard Foundation something called the Smart Communities Coalition. That coalition is geared towards benefiting people who are living in refugee settlements and benefiting internally displaced people. We’re looking at models where some of these off-grid companies, the microgrid companies, and the solar home system companies might be able to bring services within these refugee settlements. The U.S. African Development Foundation, which is one of the 12 U.S. Government agencies that is part of Power Africa, has been giving grants to local companies to provide these types of services.
So while we focus on these large-scale big power generation projects, a significant portion of our time, effort, and resources are spent on trying to bring electricity to the last mile customer. When I look at our map in our annual report of places where we’ve helped projects reach financial close, I feel frustrated that there are countries that don’t have a dot on them. Frequently, that’s because of the country’s own issues. Sometimes a political issue or issues of corruption have made investment very difficult, and also sometimes it’s because a private sector doesn’t have the interest. We’re always looking for ways to drive more and more investment into new countries.
So one of my biggest goals over the next year is to fill up that map quite a bit more so that we see power projects moving across the finish line in a transparent manner, in a sustainable manner in those other countries. Because what we found is our model is helping a country get its first power project or few power projects across the finish line through a transparent, sustainable, competitive process, building the capacity of the people in the country to manage it, and then we move on and then focus in other places as well.
Moderator: Thank you. I’m going to read a few of the questions. That was the last of our live questions for journalists.
A question came in from Nairobi, from David Herbling at Bloomberg. He asks: Which are the Kenyan projects under Power Africa and what explains that no Power Africa projects have been connected to the grid in Kenya thus far?
Mr. Herscowitz: Okay. I would encourage everyone if you have an iPhone, we have an app called the Power Africa Tracking Tool that you can download, and it lists all the different power projects that we’re tracking across the continent. With respect to Kenya, it’s actually not accurate that nobody has been connected as a result of the work that we have been doing. The Lake Turkana project where we played a significant role is operational. It took some time. And there are several other projects that are under construction right now. We’ve got 461 megawatts under construction in Kenya that we’ve supported, including 240 megawatts of geothermal, 100 megawatts of wind, and 120 megawatts of solar, all of which will be connected to the grid.
We’re supporting a total of 11 projects right now that are close to financial close as well. Those again are about 180 megawatts of geothermal, 60 megawatts of wind, 80 megawatts of solar, and about 15 megawatts of small hydropower.
On the geothermal side, we’ve been working closely with KenGen, the – which is the Kenya Electricity Generating Company – to help structure the 140-megawatt Olkaria VI plant. And KenGen is currently constructing 83 megawatts at the Olkaria I Unit 6 plant.
On solar, we’ve got projects with Malindi, Radiant, and Eldosol.
And then on wind, we played a critical role in helping the 100-megawatt Kipeto wind project reach financial close.
One of the things that we did was there were issues related to a migratory vulture species that were going to be impacted by that project, so we stepped in and did the mitigation plan and study, which was recently featured I believe in The Financial Times. Power Africa wasn’t mentioned specifically, but we’re the ones who came in and actually did the mitigation plan that the article that recently was written said not only will mitigate the impact on vultures but actually may improve sort of the conditions for them as well.
Those are just a few examples of what we’ve been doing in Kenya, but we have quite a robust program there.
Moderator: Thank you. Your annual report mentions an updated Power Africa 2.0 strategy. Could you describe the priorities of that new strategy?
Mr. Herscowitz: So one of the things we realized is that when Power Africa was launched along with a lot of other initiatives, everyone was very excited about trying to push new power generation projects. We’re now tracking internally over 900 power generation projects that have some possibility of reaching financial close. Publicly, we’re tracking over 400 if you look at our app. The issue that we found, though, is that in driving down prices and getting governments to sign up more agreements, the demand that’s projected isn’t going to keep up with the new power generation, yet you still have over 500 million people who don’t have access to electricity.
So we realized that the critical flaws in the ecosystem involved the transmission of power, both domestically within countries, as we saw with Lake Turkana when the power generation asset was completed but the transmission infrastructure wasn’t completed, and the distribution – how do you get power from – to the people and to the businesses? And one of the critical issues that’s facing most of the utilities on the continent is solvency. So we’re working with many of the utilities, like we did in Nigeria, to help them reduce losses and generate new revenues and look at new business models so that they can be solvent.
I believe that once we can solve these issues of utility solvency, once we can encourage countries to trade power so they can take advantage of the least-cost power, and to build the infrastructure, the transmission lines that are necessary, because of the capacity that we’ve already helped countries build in doing new generation projects, those new – more generation projects will come online more quickly as well. But we have to work on the whole system. It’s not enough to just focus on power generation; you have to get that generation to people and to industry.
This is why we launched a transmission roadmap just about a year ago at last year’s Africa Investment Forum, where we laid out 18 critical interventions that need to take place to really unleash more power generation for the continent.
Moderator: Thank you. I will read one last question. Journalists, if you are interested in further questions, I’m not seeing your – oh, there is a question. I think I will go to that question, live.
If quickly – Mr. Herscowitz, if you could – you mentioned AIF last year. I know that Power African – that Power Africa representatives will be attending next week’s Africa Investment Forum, the 2019 version. Can you just go over briefly what the initiative hopes to accomplish at the event?
Mr. Herscowitz: Sure. So AIF has demonstrated to be quite an exciting event that brings together the private sector and the public sector, and during the event this year we’re going to be working with one of our partners, the International Renewable Energy Agency, and the African Development Bank, to try to drive investments into particular power projects.
Some examples will be – I’m sorry, some examples of that are going to include investments in – I’m sorry, one second. I just want to pull up the list of projects that I’ve got here so I can be more specific for you. Okay. We’ve got a project in Sierra Leone, a 27-megawatt hydro project in Sierra Leone that received a million-dollar grant from the U.S. Trade and Development Agency. There’s a 70-megawatt biomass project, a cocoa biomass project in Cote d’Ivoire that also received a million-dollar grant from the U.S. Trade and Development Agency. And then there is going to be about a 30-megawatt hydro project also in Cote d’Ivoire that Power Africa’s transaction advisors through the U.S. Agency for International Development have been supporting.
So we’re also going to continue to work with the African Development Bank on its Desert to Power Initiative by participating on several of the – by participating in a steering committee to drive that new initiative.
Moderator: Great, thank you. Our next question will go to the listening party at the U.S. Embassy in Addis Ababa, Ethiopia. Operator, could you open the line, please?
Operator: Your line is open.
Question: So this is Nardos from Reporter in Ethiopia, Addis Ababa. So my question is: I’ve been hearing so many things about Power Africa doing a project in Ethiopia. So can you mention the projects you are doing, specifically, and how much money do you invest on the project? And if it’s possible, may I know the people – how many people will benefit from this initiative?
Mr. Herscowitz: Okay. So again, if you look at the – our app, there are quite a few projects that we’ve listed, but we have been working hard on the Corbetti and the Tulu Moye geothermal projects for over seven years now. We’ve had an advisor who’s been embedded with the government. We’ve helped draft new geothermal laws and regulations. We’ve provided legal assistance to the government. Our partners have provided grants for the project as well. So we’re really hoping that this year, these projects are finally going to reach financial close, which will have a significant impact because they would be the first privately funded power projects to reach financial close. And in the process of making that happen, that’s going to impact not just the power sector but all other markets, because we have to help the Ethiopians address issues such as currency convertibility and repatriation.
Recently in Ethiopia, the – a solar project that we were supporting and working on with the International Finance Corporation through its Scaling Solar program was announced – a bid, as I mentioned, for below 4 cents per kilowatt-hour for a solar project. We’ve been working on electrical connections with the utility there. We’ve been working with solar home system companies to get into the market there. And so we’re actually benefiting quite a number of people in Ethiopia to date.
But the thing is once Ethiopia itself opens up the market and demonstrates that private sector investment can be moved forward, there is the potential to rapidly bring electricity to tens of millions of people.
Moderator: Thank you very much. That was our last question, so I think I will ask you, please, for some closing remarks for our journalists.
Mr. Herscowitz: Okay, great. So thank you, everyone, for the interest in Power Africa and for reviewing our annual report. We’re really proud of what we’ve accomplished in terms of helping the market, bringing more information into the market so that governments themselves are able to make more educated decisions and enter into deals that are sustainable. Our model is one that really is based on transparency and building the capacity of Africans themselves to manage their own resources. Our goal is to help governments negotiate their own deals and then eventually they don’t need our technical assistance. Our goal is to help Africans build the projects, Africans run the projects, and make sure that these projects are going to last for generations to come.
We want to make sure that African countries are taking advantage of their own resources – taking advantage of the sun, the hydro, the gas where they have gas, the wind power. And at the household level, we want to make sure that people are able to get electricity as quickly as possible and not wait around necessarily for government to run a wire to their house, but if they can work with a private company to put a small solar panel on their house and charge their mobile phone in their home rather than walking several kilometers to go charge it somewhere else, or watch television and be connected so they become more aware politically, or simply light their home so that their children can study at night and not have kerosene, which is dirty and dangerous, that’s empowering people. And that’s our model, is to work with the private sector and as many partners as possible to bring electricity to as many people as quickly as possible and to quickly end energy poverty.
All the tools are available. It’s just a question of having willing partners willing to make difficult decisions and being open to letting the private sector come in and solve a lot of these problems.
So thank you, everyone, and if anyone has any final questions, I’m happy to entertain them.
Moderator: Thank you very much. That concludes today’s call. I would like to thank Mr. Andrew Herscowitz, Coordinator for Power Africa, for joining us, and thank all of our callers for participating. If you have any questions about today’s call, you may contact the Africa Regional Media Hub at email@example.com. Thank you.
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