Powering Africa through Clean Energy: It’s Possible

08/06/2011
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The shift to clean energy solutions will enable Africa to take advantage of the concessional resources available, which reduce the costs and risks of such investments while at the same time providing leverage for mobilizing private sector resources.

It was an idea that emerged from the High-Level seminar "Powering Africa: Financing Energy and Green Growth" held on 8 June 2011 during the 2011 Annual Meetings of the African Development Bank (AfDB).

This is particularly the case for the US $ 4.3 billion Clean Technology Fund, which is expected to mobilize at least four times this amount for investments in energy efficiency, renewable energy and sustainable transport.

Nevertheless, given the high cost of these solutions and the existing funding gap, there need to be a range of funding sources that will meet current and future demand on a sustainable basis.

For Africa, the average total cost of electricity is extremely high: $ 0.18 per kWh, compared with a rate US $ 0.04 per KWh in Asia US $ 0.07 in South and East Asia.

These exceptionally high costs are mainly due to relatively small of national electricity grids and the widespread use of diesel for  electricity generation, an expensive and polluting form of energy.

Other handicaps include insufficient use of budgets for energy investment, inadequate maintenance, lack of efficiency and losses in distribution; and electricity pricing below the cost of production, which encourages waste.

As is the case in some developed countries, developing countries should rely first on hydroelectric power. Construction costs are high, but operating costs are low and the price is generally competitive.

Large-scale projects must also be combined with small-scale projects.

The strong economic growth achieved by Africa during the last decade means that now more than ever it needs new facilities to support its rising energy consumption.

Abundant natural resources on the African continent, coupled with the development of innovative financial instruments to combat climate change, make the continent capable of significantly reducing its energy deficit.

A Green Fund for Africa

With growth to be based on a low-carbon and clean energy, Africa should generate more interest than ever from donors and private investors.

To this end, the AfDB proposes the creation of a special fund, the Africa Green Fund, as a funding mechanism to address the needs of low-carbon growth in Africa.

The fund would be mainly financed from resources allocated to Africa under the Copenhagen agreement. It will strengthen the appropriation of resources by African countries and African participation in decision-making about the use of these resources for the continent.