World Bank, AfDB aim to bring electricity to 300 million Africans

The World Bank has announced an ambitious plan to provide affordable electricity to 250 million people across Africa by 2030. In partnership, the African Development Bank will bring electricity to an additional 50 million people. The 300 million target was announced by World Bank President Ajay Banga during an event at the institution’s Washington headquarters offices during the Spring Meetings on Wednesday. It marks a major step up from Banga’s previous pledge, made in December, to allocate $5 billion to connect 100 million people in Africa to power by the end of the decade. All-new power generation will come from renewable energy sources, such as solar PV, hydro, and wind, and the bank will work to help countries still reliant on fossil fuels to “green” their electricity production, a senior bank staff member said during a press briefing earlier in the week. To meet the 250 million target, the bank will double its annual spending on energy access, utility reform, power generation, transmission, and distribution in the region from $3 billion to $6 billion, the bank staff member said. But it will take $30 billion of public money to reach 250 million people with electricity, Banga said during the session. Of this, approximately $20 billion will come from the International Development Association, or IDA, the bank’s concessional lending arm for the world’s lowest-income countries, he added. It is hoped that the private sector will then come in to scale the effort. However, experts have major questions about how the initiative will be implemented and paid for — as well as how it will be any different from a previous, much-vaunted program called Scaling Solar launched in 2015 by the International Finance Corporation, the World Bank’s private sector wing, to drive private investment into expanding solar energy across Africa through public-private-partnerships. “The World Bank should absolutely be doing more to deliver electricity in Africa. Unfortunately, the World Bank’s signature initiative [Scaling Solar] to build utility-scale solar has been going for eight years and has only a tiny handful of pilots,” said Todd Moss, head of think tank the Energy for Growth Hub. “I’ll be watching what the World Bank intends to do differently over the next six years to deliver on this big promise,” he said. United Nations Sustainable Development Goal 7 calls for universal access to modern energy by 2030. However, nearly 600 million people in Africa — including half the population of sub-Saharan Africa — currently lack access to electricity. Furthermore, power in Africa tends to be expensive and unreliable, with households in many African countries paying more than rich countries in the global north for their power. This creates significant barriers to health care, education, productivity, digital inclusivity, and ultimately job creation, according to the bank. The new energy commitment is part of the World Bank’s push to do more on climate change, which includes a new climate-oriented vision statement for the bank to “create a world free of poverty on a livable planet,” and a pledge to spend 45% of its annual financing on climate-related projects in the next fiscal year, up from its previous 35% target. A ‘human right’ Speaking during Wednesday’s event, Banga described electricity as a “human right,” and fundamental to development. “Electricity is the basis by which people can access to health, people can get access to education, people can get access to the ability to innovate and manufacture and build productivity. … Without affordable access to energy, nothing is possible,” he said. “No economy can grow in the dark. No economy can industrialize in the dark. No economy can be competitive in the dark,” said African Development Bank Group President Akinwumi Adesina, who also spoke during the session. He also said that the partnership will eventually help achieve universal access to electricity for 600 million Africans and announced an Africa energy summit to be held later this year “to come up with an Africa energy compact.” Talking about how to reach the ambitious goal with only six years to go, Banga said it would take policy action from governments, financing from multilateral development banks, and ultimately, strong backing from the private sector. Connecting 250 million people will open up opportunities for private sector investment — including $9 billion in distributed renewable energy, Banga said, alongside opportunities to invest in grid-connected renewable energy. The bank’s new one-stop guarantee platform, launching in July, will play a key role in incentivizing the private sector to come in by making the bank’s various guarantee products easier and faster to access, Banga added. Renewables only While the official announcement Wednesday was scant on details, more information was provided during an earlier press briefing in which senior World Bank staffers said that the bank planned to support a mix of off-grid and on-grid solutions powered by renewable energy. The bank’s offer will include long-term financing, risk mitigation, and technical support, alongside efforts to improve government policy and regulation, including tariff reforms for utilities. For those living in remote areas where on-grid solutions don’t make sense, the bank will support mini-grids, fed by solar, wind, or small hydro, and household solar options. For people with access to the grid, the bank’s work will focus on grid extension and condensification and bringing down the cost of energy generation by introducing more renewables and connecting to regional power generation opportunities, such as large hydro. Working with utilities — half of which currently fail to recover their costs, making them unattractive to investors — will be a key part of the bank’s work. This includes improving tariff collection while also designing sustainable pro-poor tariffs and pay-as-you-go options. Technical advances, such as geospatial mapping tools, which provide granular information on the best ways to connect communities and households, alongside reductions in the cost of solar panels and improved battery storage capacity, will lower the cost of expanding energy provision and make it more reliable, they said. Scant on details Climate campaigners from the Big Shift Campaign, which is staging several protests outside the World Bank offices in Washington D.C. during the week, welcomed the announcement but lamented the lack of detail. “No concrete plans were presented. The World Bank president mentioned financing as a key ingredient yet there was no road map as to how this will be tangibly achieved for Africa.” “However, Ajay Banga highlighted that the energy crisis is a human right and this remark is promising and perhaps could be a stepping stone to having human rights operationalised within the World Banks Operations in the Global South,” Dean Bhekumuzi Bhebhe, a campaigner for Power Shift Africa, told Devex by email. However, not everyone is happy to see the bank focus exclusively on renewables. Gyude Moore, former minister of public works in Liberia and now a senior policy fellow at the Center for Global Development, said the bank’s commitment to electrifying Africa was “commendable” but called for an energy mix that includes fossil fuels, especially natural gas. This is what African leaders want, Moore said. “I can understand wanting to be less reliant on fossil fuels, but we are still not at a point where renewables and storage are cost-effective in the African market,” he said, adding that intermittent power from renewables makes it difficult for African mineral exporters, who need high temperatures to convert ores to metals, will be able to do business without access to fossil fuels. “The bank’s insistence on not financing fossil fuels at all will be at odds with what African governments have expressed themselves and the direction they’re going in,” he added.