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A closer look at Obamas $7 billion plan to bring electricity to Africa

By Brad Plumer, Published: July 2 at 1:27 pm E-mail the writer

Here's a picture of the hotel in Tanzania where President Obama stayed during his trip through Africa this week:

(David Nakamura)

Notice anything? My colleague David Nakamura, who traveled with Obama, reported that their hotel had a few kinks: "I'm staying in the same hotel as Pres. Obama in Dar es Salaam and lights just cut off in our rooms," he tweeted. And: "Earlier today at press hotel reporters were stuck in elevator briefly when power went off." The periodic outages underscored the fact that Africa has a massive electricity problem. Flickering lights are the least of it. In Tanzania, only 14 percent of people get any electricity at all. Across sub-Saharan Africa, fully 590 million people lack access to power. And it's a life-or-death issue: Indoor air pollution from wood stoves now kills 3.5

million people per year, more than AIDS and malaria combined. So it's noteworthy that the Obama administration wants to make a push to change all this. On Sunday, Obama promised $7 billion in financial support over the next five years to bring "electricity access" to 20 million new households in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania, as well as help countries like Mozambique develop their oil and gas resources. The money will mostly come from existing U.S. development banks, so it doesn't require new spending from Congress. For instance, the Export-Import Bank, a governmentbacked lender, will finance $5 billion in projects by U.S. companies. On top of that government financing, the White House has also lined up at least $9 billion in privatesector pledges so far Husk Power Systems will install 200 "decentralized biomassbased mini power plants" in Tanzania. Obama argued that the push would require more than just money. "Were not just building power plants ourselves, he said. Were working with the various governments that are involved to think about what are the laws and regulations that are required to sustain it, and how do we leverage the private sector to put more money in." Congress is also showing some interest in the broader endeavor. In the House, Rep. Ed Royce (R-Calif.) and Eliot Engel (D-N.Y.) have introduced a bipartisan bill that would lay out longer-term goals to bring electricity to 50 million people in Africa by 2020. Africa experts I spoke to mostly seem excited about these initiatives. But there were a few key questions: 1) Could expanding energy access in Africa conflict with Obama's climate goals? It's unlikely that Africa can power itself through wind and solar power alone. Tanzania, for one, is eager to exploit its large offshore natural gas reserves. So how does all this square with Obama's pledge to curtail greenhouse-gas emissions? Tom Hart, the executive director of the ONE Campaign, an advocacy group, thinks that the two goals don't necessarily need to conflict. "We think an exception can be made for poorest and least-emitting countries," he says. "If you provided 580 million Africans with basic energy access, that would increase global carbon emissions by just 1 percent." In other words, if Obama wants to tackle global warming, Africa isn't the place to start. It's possible, however, that some environmental rules could limit U.S. involvement. The Overseas Private Investment Corporation (OPIC), which just pledged $1.5 billion in energy projects for sub-Saharan Africa, currently has an internal cap on greenhouse-gas emissions. Those rules would prevent OPIC from financing more than one mediumsized natural-gas plant, for example. Todd Moss of the Center for Global Development has proposed lifting OPIC's emissions cap slightly for the poorest, least-emitting countries in Africa. "More than half the people in low-income neighborhoods in Nairobi and Dakar have no access to electricity," he told me earlier this year. "For reaching urban centers and powering industrial zones,
Power lines running to a coal power station in the early morning light near Johannesburg, South Africa. (EPA/KIM LUDBROOK)

you'll likely need traditional large-scale power plants. And current U.S. rules are keeping businesses out of that area." That said, Moss adds that OPIC's heavy focus on clean energy is appropriate in many cases: "In some places, when people are far from the power grid and it makes more sense to invest in off-grid renewables, absolutely." (The International Energy Agency, for instance, has found that renewable power could be the most cost-effective option for expanding energy access in about 70 percent of rural areas in developing countries.) 2) What counts as "electricity access"? Access to electricity means different things to different people and there's no clear definition. In some parts of Africa, it might mean enough to light two light bulbs and charge a cell phone. Here in the United States, access to electricity obviously means much, much more. Roger Pielke Jr., an environmental studies professor at the University of Colorado, has pointed out that the international communitys definition of modern energy access tends to be quite scant it means providing people with a mere 2.2 percent of the energy that the average American uses. Hart says that how "access" gets defined is something he'll be watching very closely in U.S. plans to promote electricity in Africa. 3) How much money would it take to make sure everyone had access to electricity? The answer is a lot. Let's put Obama's proposal in context. Right now, 1.2 billion people around the world are still stuck in the dark with about 550 million of those in Africa. A recent report from the World Bank and International Energy Agency found that it would take a truly enormous push to close that gap by 2030. That's because current rates of electrification are actually slower than population growth. "With regard to universal access, the report notes, business as usual would leave 12 percent ... of the worlds population in 2030 without electricity. The report estimated that it would likely take between $120 billion and $160 billion per year over and above existing levels to bring energy access to everyone by 2030. (And, again, that's a relatively stingy definition of "energy access.") That would include both government financing and private investment. It would also likely mean changing all sorts of regulations and institutions in poorer countries. Money certainly isn't the only obstacle. So Obama's announcement $7 billion, plus at least $9 billion in privatesector financing is a step, but a small one so far. As for Africa itself, this technical paper in the journal Utilities Policy estimated that Africa would need a tenfold increase in installation capacity to bring everyone power by 2030. To get all of sub-Saharan Africa up to South African levels, for instance, would require 330 gigawatts of new capacity. For context, the new White House plan would bring about 10 gigawatts. Further reading: --Can we tackle climate change and energy poverty at the same time? --Here's why 1.2 billion people still don't have access to electricity.
Not as easy as it looks. (AP)

Brad Plumer covers energy and environmental issues, which ends up including just about everything from climate change to agriculture to urban policy and transportation. Follow him on Twitter at @bradplumer. Email him here.

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Sort: dov et a i l 217 w r ot e:

7/4/2013 4:31 PM EDT

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What a crock of pure and utter b.s. You can't pay your own American DOD civilians the salary they were hired at, but there is always millions and billions just laying around for every other loser who needs some.
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bst on e1931 w r ot e:
7/3/2013 8:18 AM EDT

The administration and government agencies can sugarcoat it as much as they like, but those of us who are not braindead or wallowing in the glory of the administration will understand that eventually the taxpayer will pay the cost, private industry does not and cannot because of their investors give anything away for free.......so every time Obama gives something away, remember you the taxpayer will suffer in the long run.......
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McA r gu m en t r espon ds:

7/3/2013 9:22 AM EDT

Private Investors give away things for free all the time. There are several good reasons for this: 1) Good PR. Companies contribute to charity all the time to make them seem less faceless. 2) Good Government Relations. If you're on board with a pet project of a congressman or the president, you're more likely to be listened to when you want. 3) Good Long Term Investment. If you can get in on the ground floor in an emerging nation, you may end up cornering the market, even if you lose money at first.
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For m er Fed79 r espon ds:

7/3/2013 10:53 AM EDT

Besides all that from McArgument, this was the same braindead argument made when Wilson opened the door to China. And gave the US a huge new market for exports, building the domestic GDP by oh I don't know, maybe a thousand-fold?
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pa t r i ot 1 r espon ds:
7/3/2013 12:00 PM EDT

To bs: If you read about expenses to add security to the Mexican/Amer. border, those on the left are up in arms for the spending and believe the money will go to companies that are friends of the GOP. I guess they have no problem spending 7 billion for friends of the Dems, to be used for Africa. Additionally, I look upon these "do good deeds" we do for other countries with a jaundice eye. Many times the money goes to corrupt officials and the people aren't helped. I'll believe it when I see it. Additionally, does Obama really care about the American people and taxpayer. A county in NJ, recently reported 56 bridges needed repair or replacement. They are thinking of raising property taxes. How many other counties in the USA have this problem along with other needs. Where is the stimulus money for these projects that Obama promised? The American taxpayer gets it at both ends. He pays for Africa and his home county.
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t a xi n h ol d w r ot e:
7/2/2013 7:21 PM EDT

this is a great idea....lets see how it works out. as long as its concentrated on renewables its wonderful. and 10 GW's is nothing. lets hope 80% is water, turbine, rooftop PV, wind or concentrating solar stuff. there arent any distribution lines now so it needs to be "last mile" stuff. not like we're going to see whole sale installation of new T&D lines throughout Africa. and even 100MW of above technologies is hundreds if not thousands installations. so if we finance 10 @ 800MW natl gas fired baseload plants located in major cities with all power consumed within 10 mile radius, we'd drive so much GDP-expanding activity it'd be ridiculous. and if we did, we'd be making most of the population customers for life which like it or not, is what this is about. that and helping to shift the marginal cost/revenue curve to the right and lower, meaning cost of manufacturing gets lower and keeps the cost of renewables vs conventional getting better. but make no mistake, to be really modern, baseload is the ONLY way we can reliably get there.
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da l y pl a n et w r ot e:
7/2/2013 6:56 PM EDT

10 GW for 7 Billion is assuming the cheapest gas turbine and no transmission lines.
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da l y pl a n et r espon ds:
7/2/2013 7:11 PM EDT

Probably 5.5 GW of combined cycle and some kilometers of distribution.for 7 billion.

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Br a dPl u m er r espon ds:

7/2/2013 7:13 PM EDT

That's $7 billion of U.S. government financing plus additional private-sector funding. I noted that, but reading over, I could've been clearer.
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da l y pl a n et r espon ds:
7/2/2013 8:15 PM EDT

I was imagining that Husk Power was another project.

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r h eckl er 2002 w r ot e:
7/2/2013 6:50 PM EDT

More USA corporate welfare. Taxpayers getting stuck with the bill no matter how it is presented.
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da l y pl a n et w r ot e:
7/2/2013 6:42 PM EDT

7 billion is about 12 dollars a person for those without electricity in Africa..This is enough to buy some flashlights and batteries.
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jden n i sg w r ot e:
7/2/2013 4:47 PM EDT

Mini off-grid renewable energy sources is a good idea. Anything that gives ANY of this money to the corporations that build power plants and distribution systems would be a gross error, and compound the climate problems we now face. A huge problem with energy use is the centralization of generation and the power-sucking grids that distribute that power generated. All this requires large investments, ling lead times, and big companies. All three of these should be anathema to the idea of "helping" Africa. FIRST, do no harm. SECOND, provide what is really needed, not what Americans think that they need. All this requires a novel approach, which is highly unlikely. But it certainly would be a refreshing change, and welcome!
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BJ DH r espon ds:
7/22/2013 3:14 AM EDT

Exactly, like say for Liberia for instance, much of the country's grid was destroyed by the wars, so to recreate an entire interconnecting grid would be a huge waste of money up front. They should adopt a distributed system for efficiency sake, and then when the opportunity presents itself once profitability is obtained then interconnect if they must, but overall if we invest in many of these infrastructures, the return would be huge, we can shave off some of our debt, and help bring countries who want to participate into the 21st. Many of the people complaining on here lack any type of formal economics training to comprehend investing in a place where there is nothing, is a huge opportunity and risk of course, but if a success as many pointed out, would be a huge boost for everyone involved.
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coa kl w r ot e:
7/2/2013 4:45 PM EDT

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If these countries and their internal groups would stop having frequent wars with each other, you will find plenty of money for electricity. The same goes for the ultra-wealthy and dictators who squirrel away their nation's cash flow for their own personal needs. Much of Africa's problems are of their own making.

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Obama's $7 billion belongs at home, in America, not in some foreign dictator's back pocket.
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ja y 2dr u m m er r espon ds:

7/2/2013 4:54 PM EDT

You do realize that per dollar foreign aid does more for homeland security than defense spending? This $7 billion helps Americans big time. Along with building friendships (most terrorists come from the worst, most desperate situations), building these economies means these people can

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afford to work for more than pennies, getting rid of the incentive for outsourcing, and helps them buy products made in the US.
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Joseph Di l l a r d w r ot e:
7/2/2013 4:34 PM EDT

A boondoggle for GE and other carbon pollution creators to invest in technologies that neither Africa nor the world can afford and that will be outdated, replaced with cheap solar, before they can be paid for. Alternatives? Consider getting power to people off the grid, like I did by donating to Kiva to this worthwhile project: http://www.kiva.org/lend/577600
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wei wen t g w r ot e:
7/2/2013 3:40 PM EDT

Certainly it would be easier to achieve our climate goals if we keep Africa in constant and permanent poverty and misery, but you can make a better moral case for immiserating Americans and Europeans first.
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jsch m i dt 3 w r ot e:
7/2/2013 2:56 PM EDT

Addressing energy access is a critical issue that deserves attention. I'm glad that President Obama and Members of Congress are focused on this a bit more. I hope it lasts and that it leads to real investments that support the poor in these countries. Not all efforts over the years to "help the poor" have delivered true help to poor. But you didn't really explore this issue in as much depth as it deserves For example, you briefly touched upon the definition of "energy access" but the answer to that question is important. For example, the IEA found that 70% of the needed investments for energy access need to go to "mini" and "off-grid" solutions. Very expensive to build transmission lines to far flung communities and expensive to invest in a centralized power plant. In addition, the one proposed reform you identify - reform the OPIC cap -- isn't explained in depth. Why is the OPIC cap portrayed as the "barrier"? There are a lot of barriers on the ground and we must focus on those. Finance -- and finance from US-backed guarantees -- isn't the "only solution". Proponents of the "reform OPIC cap" haven't articulated a vision on why this is "the barrier".
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Br a dPl u m er r espon ds:

7/2/2013 4:48 PM EDT

The OPIC cap certainly isn't the only barrier--and I don't think I ever said so. It's an interesting issue, but OPIC is only $1.5 billion of the broader $7 billion plan in any case.
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jba n gs r espon ds:

7/2/2013 6:55 PM EDT

"To get all of sub-Saharan Africa up to South African levels................" I suppose the interesting question is "If South Africa can do it, what are the reasons other African countries are not able to do it?" If I recollect South Africa has two nuclear reactors generating electricity. Why do we need Obama getting involved? Frankly, his time would be better spent rebuilding our own infrastructure.
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Don A l l en r espon ds:

7/2/2013 7:43 PM EDT

Why can't they do it themselves? Why does the current system cut off daily? Would the rates charged be enough to pay off the investment and provide money for maintenance? How can already very poor people pay for something else? There are more fundamental problems that need to be answered and solved before a 7 billion dollar electric infrastructure should be put in place.
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For m er Fed79 r espon ds:

7/3/2013 10:58 AM EDT

Yep, good thoughts. Let's become isolationist again. That worked well for us the first time.
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