Renewable Energy Prospects in Africa

With a sixth of the world’s population, Africa generates a measly four percent of the world’s electricity, three-quarters of which is used by South Africa and northern Africa. According to World Bank statistics, more than 500 million Africans (almost two-thirds of the total population) have no access to “modern energy.” Hydropower accounts for around 45% of electricity generation in sub-Saharan Africa (SSA) while biomass (mostly firewood) constitutes about 56 percent of all energy use in sub-Saharan Africa. Large-scale use of forest biomass is accelerating deforestation, and the World Bank estimates that 45,000 square kilometers of forest were lost between 1990 and 2005 across all low-income countries in Africa.

Africa has huge renewable energy potential with some of the world’s largest concentration of alternative energy resources in the form of solar, wind, hydro and biomass energy. Overall, 17 countries in sub-Saharan Africa are in the top-33 countries worldwide with combined reserves of solar, wind, hydro, and geothermal energy far exceeding annual consumption. Most of the sub-Saharan countries receive solar radiation in the range of 6-8 kWh/m2/day, which counts among the highest amounts of solar radiation in the world. Until now, only a small fraction of Africa’s vast renewable energy potential has been tapped.  The renewable energy resources have the potential to cover the energy requirements of the entire continent.

Several African counties, such as South Africa, Egypt, Morocco, Kenya, Senegal, Madagascar, Rwanda and Mali have adopted national targets for renewable energy, and feed-in tariffs for renewable energy electricity have been introduced e.g. in South Africa and Kenya.   Countries such as South Africa, Morocco, Egypt, Cape Verde, Ethiopia, Kenya and Tanzania are developing wind farms.  Geothermal investments are increasing in the Rift Valley area of Eastern Africa.  The pipeline of investments in Africa in hydropower, wind farms, solar PV and concentrated solar thermal, geothermal power and biomass energy underlines the huge potential for a future expansion of renewable energy across the continent.

The African Development Bank, through its public and private sector departments, is currently implementing several clean energy projects and programs to address these priorities particularly in the energy and forestry sectors. The Bank's energy portfolio currently stands at about USD 2 billion. The AfDB provides two lending windows. The first is a public window, with mostly concessional funds available to governments. The second is a private window, which offers debt and equity on commercial terms. 

Hydroelectric power generation represent an attractive investment in Africa because of tremendous hydropower generation potential, 60% of which is locked within Guinea, Ethiopia and the Democratic Republic of Congo. The AfDB has committed its support to developing the Gibe III hydroelectric dam, in Ethiopia. Wind farms are another lucrative investment arena for AfDB, as shown by AfDB’s commitment for 300MW Lake Turkana Wind Farm in Kenya.  Lake Turkana Wind Power (LWTP) consortium is constructing a wind farm consisting of 353 wind turbines, each with a capacity of 850 kW, in Northwest Kenya near Lake Turkana. The wind power project is expected to reach full production of 300 MW by the end of 2012.  LTWP can provide reliable and continuous clean power to satisfy up to about 30% of Kenya’s current total installed power. 

The Ain Beni Mathar Integrated Solar Thermal Combined Cycle Power Station is one of the most promising solar power projects in Africa.  The plant combines solar power and thermal power, and is expected to reach production capacity of 250MW by 2012. African Development Bank, in partnership with the Global Environment Facility and Morocco's National Electric Authority, is financing approximately two-thirds of the cost of the plant, or about 200 million Euros.

With growing concerns about climate change, AfDB has compiled a strong project pipeline comprised of small- to large-scale wind-power projects, mini, small and large hydro-power projects, cogeneration power projects, geothermal power projects and biodiesel projects. The major priorities for the Bank include broadening the supply of low-cost environmentally clean energy and developing renewable forms of energy to diversify power generation sources in Africa. The AfDB’s interventions to support climate change mitigation in Africa are driven by sound policies and strategies and through its financing initiatives the Bank endeavors to become a major force in clean energy development in Africa.

 

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African Development Bank and Renewable Energy

Africa has huge renewable energy potential with some of the world’s largest concentration of alternative energy resources in the form of solar, wind, hydro, and energy. Overall, 17 countries in sub-Saharan Africa are in the top-33 countries worldwide with combined reserves of solar, wind, hydro, and geothermal energy far exceeding annual consumption. Most of the sub-Saharan countries receive solar radiation in the range of 6-8 kWh/m2/day, which counts among the highest amounts of solar radiation in the world. Until now, only a small fraction of Africa’s vast renewable energy potential has been tapped.  The renewable energy resources have the potential to cover the energy requirements of the entire continent.

The African Development Bank has supported its member countries in their energy development initiatives for more than four decades. With growing concerns about climate change, AfDB has compiled a strong project pipeline comprised of small- to large-scale wind-power projects, mini, small and large hydro-power projects, cogeneration power projects, geothermal power projects and biodiesel projects. The major priorities for the Bank include broadening the supply of low-cost environmentally clean energy and developing renewable forms of energy to diversify power generation sources in Africa. The AfDB’s interventions to support climate change mitigation in Africa are driven by sound policies and strategies and through its financing initiatives the Bank endeavors to become a major force in clean energy development in Africa.

Energy projects are an important area of the AfDB’s infrastructure work, keeping in view the lack of access to energy services across Africa and continued high oil prices affecting oil-importing countries. AfDB’s Programme for Infrastructure Development in Africa (PIDA), and other programmes, are in the process of identifying priority investment projects in renewable energy, which also include small and medium scale hydro and biomass co-generation.  The Bank supports its member countries towards developing renewable energy projects in three ways:

  • By encouraging countries to mainstream clean energy options into national development plans and energy planning.
  • By promoting investment in clean energy and energy efficiency ventures
  • By supporting the sustainable exploitation of the huge energy potential of the continent, while supporting the growth of a low-carbon economy.

FINESSE Africa Program

The FINESSE Africa Program, financed by the Dutch Government, has been the mainstay of AfDB’s support of renewable energy and energy efficiency since 2004. The Private Sector department of AfDB, in collaboration with the Danish Renewable Energy Agency (DANIDA), has developed a robust project pipeline of solar, wind, geothermal and biomass energy projects for upcoming five years. 

The FINESSE program has helped in project preparation/development for Lesotho (rural electrification by means of different sources of renewable energy), Madagascar (rural water supply using solar water pumps), Ghana (energy sector review) and Uganda (solar PV for schools and boarding facilities), as well as on the development of the energy component of the Community Agricultural Infrastructure Improvement Program in Uganda (solar PV, hydropower and grid extension), the Bank’s initiative on bio-ethanol in Mozambique (including co-funding a recent bio fuels workshop in Maputo) and the AfDB Country Strategy Paper revision in Madagascar.

Clean Energy Investment Framework

The AfDB’s Clean Energy Investment Framework aims at promoting sustainable development and contributing to global emissions reduction efforts by using a three-pronged approach: maximize clean energy options, emphasize energy efficiency and enable African countries to participate effectively in CDM sector. The AfDB’s interventions to support climate change mitigation in Africa are driven by sound policies and strategies and through its financing initiatives the Bank endeavors to become a major force in clean energy development in Africa.

In order to finance energy access and clean energy development operations, the Bank Group will draw on resources from its AfDB non-concessional window to finance public-sponsored projects and programs in countries across Africa. According to the Framework, AfDB will work with a range of stakeholders (national governments, regional organizations, sub-sovereign entities, energy and power utilities, independent power producers and distributors, sector regulators, and civil society organizations) on key issues in clean energy access and climate adaptation in all regional member countries. 

Climate Investment Funds

Part of the AfDB’s commitment to supporting Africa’s move toward climate resilience and low carbon development is expanding access to international climate change financing. The African Development Bank is implementing the Climate Investment Funds (CIF), a pair of funds designed to help developing countries pilot transformations in clean technology, sustainable management of forests, increased energy access through renewable energy, and climate-resilient development. The AfDB has been involved with the CIF since their inception in 2008. 

The Bank is actively supporting African nations and regions as they develop CIF investment plans and then channeling CIF funds, as well as its own co-financing, to turn those plans into action. One of the Climate Investment Funds, the Clean Technology Fund (CTF) provides developing countries with positive incentives to scale up the demonstration, deployment, and transfer of technologies with a high potential for long-term greenhouse gas (GHG) emissions savings. 

In the Middle East and North Africa region, US$750 million in CTF funding is supporting deployment of 1GW of solar power generation capacity, reducing about 1.7 million tons of CO2 per year from the energy sectors of Algeria, Egypt, Jordan, Morocco and Tunisia. In Morocco, US$197 million in CTF funding is cofinancing the world’s largest concentrated solar power initiative. Another US$125 million is helping scale up investments in its wind energy program targeting 2GW by 2020.

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Cleantech Investment by AfDB

The African Development Bank, through its public and private sector departments, is currently implementing several clean energy projects and programs to address these priorities particularly in the energy and forestry sectors. The Bank's energy portfolio currently stands at about USD2 billion. The AfDB provides two lending windows. The first is a public window, with mostly concessional funds available to governments. The second is a private window, which offers debt and equity on commercial terms. 

The World Bank Group and the African Development Bank are in the process of applying to the Clean Technology Fund (CTF) Trust Fund Committee for use of $750 million of concessional funds for the MENA CSP Scale-up. For example, over the first half of 2012, AfDB approved USD800 million in loans to spur private investments in Morocco's renewable energy sector. The Sustainable Energy Fund for Africa (SEFA), financially supported by Denmark, aims to support the implementation of AfDB's strategy to provide grants and equity to small-scale renewable energy and energy efficiency project. 

The World Bank Group and the African Development Bank, in collaboration with other donors, are launching an initiative to scale-up Concentrated Solar Power (CSP) up to 1GW over 6-8 years by means of around ten large projects in Africa. Hydroelectric power generation represent an attractive investment opportunity for AfDB as Africa has tremendous hydropower generation potential, 60% of which is locked within Guinea, Ethiopia and the Democratic Republic of Congo. The AfDB has committed its support to developing the Gibe III hydroelectric dam, in Ethiopia. Wind farms are another lucrative investment arena for AfDB, as shown by AfDB’s commitment for 300MW Lake Turkana Wind Farm in Kenya. 

Evolution One Fund

In 2009, the African Development Bank has approved a Rand100 million investment in Evolution One Fund, the first specialized private equity fund focused on the acceleration and deployment of clean energy and sustainable technologies across southern Africa. The 10-year private equity fund, managed by Cape Town-based Inspired Evolution Investment Management, will seek to invest predominantly in growth-phase businesses, particularly in eight high-growth sectors, namely clean energy/energy efficiency (up to 50% of its investments), efficient and clean manufacturing processes and technologies, air quality and emissions control. South Africa will account for 60-75% of the fund's overall investments, while up to 25-40% will be earmarked for other Southern African Development Community countries. 

Ain Beni Mathar Solar Project

The Ain Beni Mathar Integrated Solar Thermal Combined Cycle Power Station is the Bank's first experience in solar power. It is working in partnership with the Global Environment Facility and Morocco's National Electric Authority. The African Development Bank is financing approximately two-thirds of the cost of the plant, or about 187.85 million Euros. The plant combines solar power and thermal power, and is expected to reach production capacity of 250MW soon. 

Lake Turkana Wind Project

Lake Turkana Wind Power (LWTP) consortium is constructing a wind farm consisting of 353 wind turbines, each with a capacity of 850 kW, in Northwest Kenya near Lake Turkana. The wind power project has full production of 300 MW.  LTWP can provide reliable and continuous clean power to satisfy up to about 30% of Kenya’s current total installed power. The AfDB Group is facilitating the entire project cost of US$405 million, out of which, the institution intends to provide US$135 million. The AfDB has also agreed to invest US$19 million in a wind power project in the Republic of Cape Verde, off the western coast of Africa. This total cost of the project, consisting of four wind farms with more than 120 wind turbines, is US$84 million.

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Solar Energy in Morocco

Morocco, being the largest energy importer in North Africa, is making concerted efforts to reduce its reliance on imported fossil fuels. Renewable energy is an attractive proposition as Morocco has almost complete dependence on imported energy carriers. Morocco is already spending over USD 3billion a year on fuel and electricity imports and is experiencing power demand growth of 6.5 per cent a year.

The National Energy and Energy Efficiency Plan was launched in 2008 which aims to develop renewable energy to meet 15 percent of the country’s energy demand and to increase the use of energy-saving methods.  According to the Moroccan Ministry of Energy and Mining, the total installed capacity of renewable energy (excluding hydropower) was approximately 300MW in 2011.

The Moroccan Government has already achieved its target of supplying around 8% of total primary energy from renewables by 2012 which includes energy generation, conversion and distribution. Morocco is planning USD 13billion expansion of wind, solar and hydroelectric power generation capacity which would catapult the share of renewables in the energy mix to 42% by the year 2020, with solar, wind and hydro each contributing 14%.

Moroccan Solar Plan

Morocco has launched one of the world’s largest and most ambitious solar energy plan with investment of USD 9billion. The Moroccan Solar Plan is regarded as a milestone on the country’s path towards a secure and sustainable energy supply. The aim of the plan is to generate 2,000 megawatts (or 2 gigawatts) of solar power by the year 2020 by building mega-scale solar power projects at five location — Laayoune (Sahara), Boujdour (Western Sahara), Tarfaya (south of Agadir), Ain Beni Mathar (center) and Ouarzazate — with modern solar thermal, photovoltaic and concentrated solar power mechanisms.

The first plant, under the Moroccan Solar Plan, will be commissioned in 2014, and the entire project is expected to be complete in 2019. Once completed, the solar project is expected to provide almost one-fifth of Morocco’s annual electricity generation. Morocco, the only African country to have a power cable link to Europe, is also a key player in Mediterranean Solar Plan and Desertec Industrial Initiative. The Desertec Concept aims to build CSP plants to supply renewable energy from MENA region to European countries by using high-voltage direct current (HVDC) transmission lines.

In 2010, the Moroccan Agency for Solar Energy (MASEN), a public-private venture, was set up specifically to implement these projects.  Its mandate is to implement the overall project and to coordinate and to supervise other activities related to this initiative. Stakeholders of the Agency include the Hassan II Fund For Economic & Social Development, Energetic Investment Company and the Office National de l’Electricité (ONE). The Solar Plan is backed by Germany, with funding being provided by German Environment Ministry (BMU) and KfW Entwicklungsbank while GIZ is engaged in skills and capacity-building for industry.

Ain Beni Mather Project

The Ain Beni Mather Integrated Solar Thermal Combined Cycle Power Station is one of the most promising solar power projects in Africa.  The plant combines solar power and thermal power, and is expected to reach production capacity of 250MW by the end of 2012. African Development Bank, in partnership with the Global Environment Facility and Morocco's National Electric Authority (ONE), is financing approximately two-thirds of the cost of the plant, or about 200 million Euros.

Ain Beni Mather plant, which is now supplying electricity to the Moroccan grid, uses a cutting-edge design, combining a large array of 224 parabolic mirror collectors concentrating sun energy and boosting the steam output needed to produce electricity. This area enjoys abundant sunshine and has enough water to cool the power station and clean the solar mirrors. It is close to both the Maghreb-Europe Gas Pipeline and the high voltage grid that will help to transmit the generated power.

Ouarzazate Solar Complex

The 500MW Phase-One Solar Power Complex at Ouarzazate is the world’s largest solar thermal power plant. To be built with investment of an estimated Euros 2.3 billion, the project is the first one to be implemented under the Moroccan Solar Plan. The Ouarzazate Solar Complex, with a total capacity of 500 MW, will come on-stream in 2015 and produce an estimated output of 1.2 TWh/year to meet local demand. The first phase will be a 160-MW parabolic trough facility while photovoltaic modules and CSP towers will be used in later phases.