A closer look at Obama’s $7 billion plan to bring electricity to Africa

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    A closer look at Obamas $7 billion plan tobring electricity to AfricaBy 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:

    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

    (David Nakamura)

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    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 y ears

    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 government-

    backed 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 private-

    sector pledges so far Husk Power Systems will install 200 "decentralized biomass-

    based 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 theONE 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. T he

    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 medium-

    sized natural-gas plant, for example.

    Todd Moss of the Center for Global Development has proposed lifting OPI C'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)

    http://www.cgdev.org/blog/unleash-opic-why-are-we-fighting-climate-change-back-world%E2%80%99s-poorhttp://www.cgdev.org/blog/policy-tweak-help-bring-lights-700-million-people-stuck-dark-without-baking-planethttp://www.ey.com/Publication/vwLUAssets/Natural_gas_in_Africa_frontier_of_the_Golden_Age/$FILE/Natural_Gas%20in_Africa.pdfhttp://www.cgdev.org/blog/unleash-opic-why-are-we-fighting-climate-change-back-world%E2%80%99s-poorhttp://foreignaffairs.house.gov/press-release/royce-engel-smith-bass-introduce-legislation-promote-access-electricity-sub-saharanhttp://www.whitehouse.gov/the-press-office/2013/06/30/fact-sheet-power-africahttp://www.cgdev.org/globalhealth/2012/02/saving-lives-by-counting-deaths.php
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    you'll likely need t raditional 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 env ironmental 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 everyonehad 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 55 0 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 slowerthan population growth.

    "With regard to universal access, the

    report notes, business as usualwould 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 private-

    sector 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 eas y as it looks. (AP)

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/29/heres-why-1-2-billion-people-still-dont-have-access-to-electricity/http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/10/can-we-tackle-climate-change-and-energy-poverty-at-the-same-time/http://www.sciencedirect.com/science/article/pii/S0957178711000774http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/29/heres-why-1-2-billion-people-still-dont-have-access-to-electricity/http://rogerpielkejr.blogspot.com/2012/11/against-modern-energy-access.htmlhttp://www.iea.org/papers/2011/weo2011_energy_for_all.pdf
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    7/4/2013 4:31 PM EDT

    What a crock of pure and u tter b.s. You can't pay your own Ameri can DOD civilians the salary they were hired

    at, but there is always m illions and billions jus t laying around for every other loser who needs some.

    dovetail217wrote:

    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 no t and canno t because of their investors g ive anything away for free.......so

    every time Obama gives something away, remember you the taxpayer will suffer in the long run.......

    bst one 1931 wrote:

    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 s eem les s 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.

    McArgument r esponds:

    7/3/2013 10:53 AM EDT

    Besides all that from McArgument, this was the sam e braindead argument m ade 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?

    FormerFed79r esponds:

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

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    7/3/2013 12:00 PM EDT

    To bs: If you read about expenses to add securi ty to the Mexican/Amer. border, those on the left are

    up in arms for the spending and belie ve the money will go to companies that are friends of the

    GOP. I guess they have no problem s pending 7 billion for friends of the Dems, to be used for Africa.

    Additionally, I look upon thes e "do good deeds " we do for other countries wi th 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 real ly 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.

    patriot1 r esponds:

    7/2/2013 7:21 PM EDT

    this is a great idea....lets s ee 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 s o 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 sh ift 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 m istake, to be really modern, baseload is the ONLY

    way we can reliably get there.

    taxinhold wrote:

    7/2/2013 6:56 PM EDT

    10 GW for 7 Billion is ass uming the cheapest gas turbine and no transmis sion lines.

    dalyplanetwrote:

    7/2/2013 7:11 PM EDT

    Probably 5.5 GW of combined cycle and som e kilometers of dis tribution.for 7 billion.

    dalyplanetr esponds:

    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.

    BradPlumerr esponds:

    7/2/2013 8:15 PM EDT

    I was imagining that Husk Power was another project.

    dalyplanetr esponds:

    7/2/2013 6:50 PM EDT

    rheckler2002wrote:

    Add your thoughts...

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    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/02/a-closer-look-at-obamas-7-billion-plan-to-bring-electricity-to-africa/?commentID=washingtonpost.com/ECHO/item/1372805443-677-895http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/02/a-closer-look-at-obamas-7-billion-plan-to-bring-electricity-to-africa/?commentID=washingtonpost.com/ECHO/item/1372805777-547-972http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/02/a-closer-look-at-obamas-7-billion-plan-to-bring-electricity-to-africa/?commentID=washingtonpost.com/ECHO/item/1372807290-317-435
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    More USA corporate welfare. Taxpayers getting stuck with the bill no matter how it is presented.

    7/2/2013 6:42 PM EDT

    7 billion is about 1 2 dollars a person for those without electricity in Africa..This is enough to buy som e

    flashlights and batteries.

    dalyplanetwrote:

    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!

    jde nn is gwrote:

    7/22/2013 3:14 AM EDT

    Exactly, like say for Liberia for ins tance, much of the coun try'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 s uccess as many pointed out, would be a huge boos t

    for everyone involved.

    BJ DHr esponds:

    7/2/2013 4:45 PM EDT

    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.

    Obama's $7 billion belongs at hom e, in America, not in some foreign dictator's back pocket.

    coaklwrote:

    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 m eans these people can

    afford to work for more than pennies, getting rid of the incentive for outsourcing, and helps them buy

    products m ade in the US.

    ja y 2dr um m er r esponds:

    7/2/2013 4:34 PM EDT

    Joseph Dillardwrote:

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    A boondoggle for GE and other carbon pollution crea tors 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? Conside r getting power to people off the grid, like I did by donating to Kiva to this worthwhile

    project: http://www.kiva.org/lend/577600

    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 mis ery, but you can make a better moral case for immis erating Americans and Europeans first.

    wei wen t gwrote:

    7/2/2013 2:56 PM EDT

    Address ing energy access is a critical iss ue that deserves attention. I'm glad that President Obama and

    Members of Congress are focused on this a bit more. I hope it las ts 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 powerplant. 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".

    jsch m id t 3wrote:

    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.

    BradPlumerr esponds:

    7/2/2013 6:55 PM EDT

    "To get al l o f 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.

    jba ng sr esponds:

    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 els e? There are more fundamental problems that need to be

    answered and s olved before a 7 billion dollar electric infrastructure should be put in place.

    Don Allen r esponds:

    7/3/2013 10:58 AM EDT

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

    FormerFed79r esponds:

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