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Wednesday, June 10, 2015

Power for Africa

When it comes to electrical power, much of sub-Saharan Africa is living in a different world. A report from the African Progress Panel, People, Power, Planet: Seizing Africa's Energy and Power Opportunities, provides a nice overview of the situation. The African Progress Panel is a group of 10 prominent individuals ranging from Kofi Annan to Bob Geldof. I presume that the actual report was mostly written by staff, including Caroline Kende-Robb, Kevin Watkins, and Maria Quattri.

The report offers some eye-catching facts about the lack of electrical power in sub-Saharan Africa. Here's a selection (footnotes omitted, along with references to figures and infographics):

Measured on a global scale, electricity consumption in Sub-Saharan Africa excluding South Africa is pitifully low, averaging around 162 kilowatt hours (kWh) per capita a year. ... One-third of the region’s population lives in countries where annual electricity use averages less than 100 kWh each. The global average consumption figure is 2,800kWh, rising to 5,700kWh in the European Union and 12,200kWh in the United States. Electricity consumption for Spain exceeds that of the whole of Sub-Saharan Africa (excluding South Africa).
To put the figures in a different context, 595 million Africans live in countries where
electricity availability per person is sufficient to only light a single 100-watt light bulb
continuously for less than two months. It takes the average Tanzanian around eight years to consume as much electricity as an American uses in one month. When American households switch on to watch the Super Bowl, the annual finale of the football season, they consume 10 times the electricity used over the course of a year by the more than 1 million people living in Juba, capital city of South Sudan. Ethiopia, with a population of 94 million, consumes one-third of the electricity supplied to the 600,000 residents of Washington D.C. ...
Sub-Saharan Africa is desperately short of electricity. Installed grid-based capacity is around 90 gigawatts (GW), which is less than the capacity in South Korea where the population is only 5 per cent that of Sub-Saharan Africa. Moreover, South Africa alone accounts for around half of power-generation capacity. With 12 per cent of the world’s population, the region accounts for 1.8 per cent of world capacity for generating electricity and the share is shrinking. 
Installed capacity figures understate Africa’s energy deficit. At any one time, as much as one-quarter of that capacity is not operational. In terms of real output, South Korea generates over three times as much electricity as Sub-Saharan Africa. ... Around 30 countries in the region have grid-connected power systems smaller than 500 megawatts (MW), while another 13 have systems smaller than 100MW. For purposes of comparison, a single large-scale power plant in the United Kingdom generates 2,000MW. It is not just comparisons with the rich world that highlight the gap. Nigeria has almost twice as many people as Vietnam but generates less than one-quarter of the electricity that Vietnam generates. 
For those who prefer their striking facts in graphical form, here are a couple of examples. On average, 32% of the poulation in sub-Saharan Africa has access to electricity. As is the way with averages, in a number of countries the percentage is even less. For comparison, 60% of the popoulation in low-income Bangladesh have access to electricity.


Here's a figure showing the electricity generated on a per capita basis between sub-Saharan Africa and other regions of the world. The progress on power for Africa is slow, and the gap is worsening.

Finally, here's a figure showing how households in a number of countries in sub-Saharan Africa get their light. Kerosene lamps and candles play a major role. In Ethiopia, more households get light from moonlight/firelight than from a light bulb in a socket or lamp.



The costs of this lack of electricity are enormous and far-reaching. For industry, it means a combination of continual power outages and the need to invest in expensive stand-alone generators. The report notes that the Power Holding Company of Nigeria (PHCN) has been baptized with the nickname “Please Have Candles Nearby.”
"Frequent power cuts result in losses estimated at 6 per cent of turnover for large firms and as much as 16 per cent for enterprises in the informal sector. Unreliable power supply has created a buoyant market in diesel-powered generators. Around 40 per cent of businesses in Tanzania and Ethiopia operate their own generators, rising to over 50 per cent in Kenya. In Nigeria, around four in every five SMEs [small and medium enterprises] install their own generators. On average, electricity provided through diesel-fuelled back-up generators costs four times as much as power from grid. Diesel fuel is a significant cost for enterprises across Africa, even in less energy-intensive sectors such as finance and banking. ...  Lack of reliable and cost-effective electricity is among the top constraints to expansion in the manufacturing sector in nearly every Sub-Saharan country."
With a lack of electricity, low-income households gather firewood, which takes time, inflicts environmental damage, and when burned leads to a household air pollution problem.

Data from 30 countries showed that the average share of household spending directed to energy was 13 per cent. The poorest households typically spend a larger share of their income on energy than richer households. In Uganda, the poorest one-fifth allocated 16 per cent of their income to energy, three times the share of their richest
counterparts. Women and girls spend a lot of time collecting firewood and cooking with inefficient stoves. Factoring in the costs of this unpaid labour greatly inflates the economic costs that come with Africa’s energy deficits. Estimates by the World Bank put the losses for 2010 at US$38 billion or 3 per cent of GDP. ...
Africa is on the front line of the HAP [household air pollution] epidemic. The World Health Organization estimates that 600,000 Africans die each year as a result of it. Almost half are children under 5 years old, with acute respiratory tract infection the primary cause of fatality. If governments in Africa and the wider international community are serious about their commitment to ending avoidable deaths of children, then clean cooking facilities must be seen as a much higher priority. Put differently, achieving universal access to clean cooking stoves, allied to wider measures, could save 300,000 young lives a year. Apart from saving lives, reducing the use of biomass by 50 per cent would save 60-190 million tonnes of CO2- equivalent emissions, as production and use of solid fuels for cooking consumes over 300 million tonnes of wood annually in Sub-Saharan Africa.
The problems of a lack of electricity are widespread. It affects health care, because vaccines can't be refrigerated and equipment can't be run. It affects schools and the ability to read and study at home when there's no reliable light. The report makes a strong and persuasive claim about teh overarching importance of electrical power across many dimensions:
[T]here is an abiding sense in which power generation is seen as a peripheral concern, in contrast to priorities in areas such as education, health, nutrition, water and sanitation. It is difficult to think of a more misplaced perception. Without universal access to energy services of adequate quality and quantity, countries cannot sustain dynamic growth, build more inclusive societies and accelerate progress towards eradicating poverty. Productive uses of energy are particularly important to economic growth and job creation. Energy services directly affect incomes, poverty and other dimensions of human development, including health and education. Expanded energy provision is associated with rising incomes, increased life expectancy and enhanced social well-being.
What needs to be done? In a physical sense, there seems little doubt that sub-Saharan Africa has abundant energy resources, including the conventional sources like coal, natural gas, and hydropower, as well as abundant possibilities in certain locations for geothermal, solar, and wind power. But a dramatic rise in electricity generation and distribution will require a dramatic rise in investment in this area. The report argues that the current plans for expansion of electricity production and distribution in Africa are wildly insufficient. "According to the International Energy Agency (IEA), 645 million Africans could still lack access to electricity in 2030." As an alternative vision of the future, the report argues: 
First, overall power generation needs to increase at least 10-fold by 2040 if Africa’s energy systems are to support the growth in agriculture, manufacturing and services needed to create jobs and raise living standards. Second, if governments are serious about the 2030 commitment of “energy for all”, they must adopt the strategies needed to extend provision through the grid and beyond the grid. ...  There is no shortage of evidence to demonstrate what is possible. Brazil, China and Indonesia have achieved rapid electrification over short time periods. Vietnam went from levels of access below those now prevailing in Africa to universal provision in around 15 years. The country expanded electricity consumption fivefold between 2000 and 2013. Bangladesh has increased electricity consumption by a factor of four over the same period. ...
Current spending on investment [in the electricity sector] is around US$8 billion a year, or some 0.49 per cent of GDP. Public financing accounts for around half of overall investment and Chinese investment, public–private partnerships and concessional development finance cover the rest. Covering the costs of investment in plant, transmission and distribution would require an additional US$35 billion annually. Adding the full costs of universal access would take another US$20 billion. The total investment gap of about US$55 billion a year represents around 3.35 per cent of GDP. This figure does not take into account spending on operations and maintenance.
Where is the money to come from? It seems clear that a hearty dose of private sector funds will be needed. Such funds can also bring the virtue of outside oversight and pressure on timelines and contracts. But private funds won't be forthcoming in sufficient quantity until it's clear that governments across Africa have the willingness, the capabilities, and the vision to support moving ahead with these large-scale investments. As one possible source for finance, and also for governments of Africa to show their commitment to expanded electricity production, the report points to the large subsidies often paid across Africa to power-sector utilities, as well as for fuel sources like gasoline. These subsidies disproportionately benefit those with high incomes. Just phasing out these subsidies could raise more than $20 billion per year that could be redirected to supporting generation and distribution of electricity for all.
Power-sector utilities constitute a major fiscal burden for many countries. In 2010, Sub-Saharan Africa’s energy utilities were operating with deficits estimated at 1.4 per cent of regional GDP, some US$11.7 billion. This represented five times the level of publicly financed investment in the energy sector. ... In addition to financing loss-making utilities, many governments subsidize kerosene. According to the International Monetary Fund (IMF), the average subsidy applied to kerosene and other oil-based products amounted to 45 per cent of its market price in 2013, or US$10 billion.
The report acknowledges in a number of places the importance of moving ahead with environmentally-friendly and low-carbon sources of energy where possible, even discussing that Africa might over time be able to "leapfrog" to these alternatives. But the report is also fairly blunt in pointing out that when development finance agencies start imposing rules that limit finance for coal or natural gas, they are imposing a double standard:

It is striking that there has been little debate over whether limiting development finance for fossil fuels, including coal, in the name of cutting greenhouse gas emissions might hamper efforts to achieve universal access to energy for all. Viewed from a Sub-Saharan African perspective, it is difficult to avoid being struck by some marked double standards. Coal-fired generation occupies an important share in the energy mix of countries such as Germany, the United Kingdom and the United States, where it has a far greater share than in most countries of Sub-Saharan Africa. Yet the same countries are able to use their shareholder domination of the World Bank to limit support to Africa. One perverse side-effect is to leave African governments without the finance that might enable them to invest in more efficient coal-fired power plants with lower emissions. ...
Donald Kaberuka, the President of the African Development Bank: “It is hypocritical for Western governments who have funded their industrialization using fossil fuels, providing their citizens with enough power, to say to African countries, ‘You cannot develop dams, you cannot develop coal, just rely on these very expensive renewables’… To every single African country, from South Africa to the north, the biggest impediment to economic growth is energy, and we don’t have this kind of luxury of making this kind of choice.”