Renewable energy projects in sub-Saharan Africa received welcome encouragement during this year’s Africa Energy Forum in London, when projects from Nigeria, Madagascar and Sierra Leone won the 2016 Access Co-Development Facility (ACF) competition, a financial support mechanism for renewable energy projects in Africa.
While sub-Saharan Africa is home to just 13 percent of the world’s population, it accounts for 48 percent of people worldwide who lack access to electricity. Development of the region’s massive resources in solar energy, wind power, hydropower, and biomass is viewed as a sustainable, cost-effective alternative to oil and natural gas, whose price fluctuations can wreak havoc on local economies.
“Sub-Saharan Africa is starved for electricity. The region’s power sector is significantly underdeveloped, whether we look at energy access, installed capacity, or overall consumption. The fact that sub-Saharan Africa’s residential and industrial sectors suffer electricity shortages means that countries struggle to sustain GDP growth,” New York management consultants McKinsey & Co. says in its report, Brighter Africa: The growth potential of the sub-Saharan electricity sector.
Indeed, the African Development Bank estimates that energy-related bottlenecks such as power shortages and pricey services cost African economies 2 percent to 4 percent of their gross domestic product every year.
Launched just a year ago by Dubai-based Access Power with $5 million in prize money, the ACF competition is designed to provide local power project developers and originators in Africa with the technical experience, expertise and funding needed to bring their renewable energy projects to life. Access Power, is a developer, owner and operator of renewable power projects in emerging markets. The 2016 winners are Africa Growth and Energy Solutions (AGES) PLC’s 25 mega-watt solar project in Sierra Leone; Mentach Energy’s 50 MW wind project in Nigeria; and Stucky Ltd.’s 25MW hydro and solar project in Madagascar. They bested 96 entries to win a share of the $7million prize, which also includes a package of technical support, financial structuring and development process management for their projects under a joint development agreement with Access Power.
The winning projects collectively will deliver 100 megawatts of electricity to 340,000 homes. Access Power will take an equity stake in each of the three projects and will fund third-party development costs, such as feasibility studies, grid studies, environmental and social impact assessments and due diligence fees.
The 2016 ACF competition saw “unprecedented participation,” with a 75 percent increase in applications from the inaugural ACF 2015, with submissions from 25 African countries, representing a 40 percent jump in the number of countries involved, Access Power says. In addition, 95 percent of the projects submitted this year came from sub-Saharan Africa, a key growth area for Access Power. For example, Kenya and Tanzania’s participation more than doubled from last year, driven by the improving regulatory environment and appetite for small-scale project tenders. Similarly, the number of entries from Senegal increased more than any other country, potentially energized by a recent influx of funds from development finance institutions to support renewable programs.
“There is still a massive, urgent need for electrification in Africa and we firmly believe that renewable energy will be a significant part of the solution. This year’s ACF competition introduced us to almost 100 projects, demonstrating the scale of entrepreneurialism and ambition across the African continent to meet the electrification challenge,” says Reda El Chaar, Access Power’s executive chairman.
The 2016 ACF winners were announced at the 18th Annual Africa Energy Forum in June, following presentations by five shortlisted developers to judges from the African and Dutch development banks, Access Power, and Proparco, a development financial institution. They were selected based on commercial, technical and environmental merits, as well as the local regulatory environment and capability of the project team. The shortlisted projects included Tessa Power’s 20MW solar photovoltaic project in Niger and Astonfield Sosian Solar Ltd.’s 40MW solar PV project in Kenya.
The Africa Energy Forum brings together European and African developers and investors in Africa’s power, energy, infrastructure and industrial sectors, and representatives of governments, utilities and regulators from across the African continent. It is a key global platform for staying ahead of industry developments, meeting decision makers, examining the major challenges facing the power generation and investment sectors and discussing business opportunities.
