Despite $7 billion to ‘Power Africa,’ why the continent is still in the dark

July 30, 2015

Electricity cables are seen connecting power to houses within the Mathare valley slums in Kenya's capital Nairobi

Electricity cables are seen connecting power to houses within the Mathare valley slums in Kenya’s capital Nairobi, July 9, 2015. REUTERS/Thomas Mukoya

When President Barack Obama made his first presidential visit to Kenya over the weekend, he visited not just his ancestral home, but one of the target countries in his $7 billion signature foreign aid initiative, Power Africa.

Launched in 2013, Power Africa aims to boost electricity access in Sub-Saharan Africa. The initiative has prioritized expanding the continent’s capacity to generate electricity, with an additional focus on small-scale renewable energy investments. This is a useful first step. But investing in generation alone will be useless without addressing the economic and institutional obstacles to distributing electricity to homes and businesses.

Power Africa is tackling a critical global challenge. All of Sub-Saharan Africa, with 961 million residents, currently only consumes about as much power as New York City. Expanding energy access will be vital for driving Africa’s economic transformation over the coming decades.

Yet our research in Kenya shows that most households and businesses still face major barriers to accessing electricity. In recent years, hundreds of millions of dollars have been spent to expand the grid across most of the countryside, leaving the majority of Kenyans “under grid,” or within a half-mile of power grid infrastructure. The same holds in several other African countries.

Yet the electrification rate in Kenya is still only 30 percent, and in our data just 5 percent of rural households and 20 percent of private businesses within a half-mile of the infrastructure have electricity. The low connection rate holds even years after the grid is in place. Clearly, building more infrastructure isn’t enough.

Why not? In a study conducted with the University of California, Berkeley and the non-profit Innovations for Poverty Action, we document a host of challenges in trying to connect hundreds of rural Kenyan households to the grid. The price of connections remains very high for most, few financing options are available for rural families, and there are not enough skilled workers to oversee the design, construction and electrical wiring.

Even after the households in our study had paid in full for their electricity connections, it took seven months on average for electricity to flow for the first time. Once connected, households experience regular blackouts — sometimes lasting days or weeks — due to a shortage of maintenance staff and materials. Given these conditions, it’s really no wonder that so few Kenyans have chosen to connect to the power grid.

Some argue that decentralized technologies such as solar microgrids and lanterns are the solution to these problems. Yet no industrial country has ever powered its economic growth with solar lanterns. We see the popularity of these small-scale technologies as a symptom of the problems with the electrical grid, rather than their solution. While decentralized generation may be cost-effective for a small number of isolated rural communities, it can never reap the massive economies of scale of a national — or even international — power grid.

As in textbook economic models, energy companies serving more customers will rapidly see their cost per customer fall. Similarly, larger power plants are able to generate electricity at a tiny fraction of the price of small-scale systems, such as home solar, and are particularly cost effective in countries like Kenya where the network infrastructure is rapidly expanding.

One thing is clear. The electricity grid — especially one built today — does not have to be damaging to the environment or contribute to climate change. Large power plants increasingly rely on renewable energy sources, including those in Kenya, where several major geothermal and wind projects are under development. Energy infrastructure is long-lived, so the choices that Kenya and other African countries make in the next decade will have major implications for both their economic development and global climate change.

By 2060, the United Nations projects that Sub-Saharan Africans will make up nearly one in four people on the planet. Their demand for power will surely rise steadily over the coming years. But funding power generation alone will not improve African lives if electricity never reaches those who need it to work, play and study.

Powering Africa will require not just technological investments, but also economic and institutional solutions to the many barriers to access.

 

This column was written in collaboration with Catherine Wolfram, Professor of Business Administration at the University of California, Berkeley and Francis Meyo, a Research Coordinator at Innovations for Poverty Action

7 comments

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There’s always development money for the large aspects of infrastructure. You hit upon the next stage, which is delivery to the end user. This is best accomplished through small electrical contractors, which do not exist, or are very small in number. Encouraging development of small electrical contractors has the added advantage of economic development, and much less graft/corruption than the big contractors.

Training programs are not difficult to provide electricians, from whence the small contractors will emerge. I know, as I was a master electrician, contractor and apprentice educator.

Posted by aeci | Report as abusive

There’s always development money for the large aspects of infrastructure. You hit upon the next stage, which is delivery to the end user. This is best accomplished through small electrical contractors, which do not exist, or are very small in number. Encouraging development of small electrical contractors has the added advantage of economic development, and much less graft/corruption than the big contractors.

Training programs are not difficult to provide electricians, from whence the small contractors will emerge. I know, as I was a master electrician, contractor and apprentice educator.

Posted by aeci | Report as abusive

It’s always a good oppurtunity to build a new system from scratch rather correting a already setup one. The challanges are more regarding to training/awareness rather than technical.
Infrastructure is another aspect and to keep the cost low you need to have local skilled workers which is possible through setting up structured institutions.
Secondly, In earlier stages power should be distributed at subsudised cost. becuase the target is to empower poor people in continent.

Posted by SumitVerma4 | Report as abusive

7 billion dollars. Cute. That was about one afternoon in the 10-year Iraq war.

Posted by Solidar | Report as abusive

This is an area with 3 times more people than the United States. Spread out over jungles and deserts twice the size of America. It took us 100 billion dollars just fix some Hurricane Sandy damage. That was one relatively small chunk of America.

Building power infrastructure for sub-saharan Africa to make them modern customers of the world? Try 7 trillion.

Posted by Solidar | Report as abusive

I work in solar in East Africa so I will state my bias upfront. I appreciate your final statement: “Powering Africa will require not just technological investments, but also economic and institutional solutions to the many barriers to access.” Recent developments in low cost metering and pay-as-you go technology are helping to facilitate access from a technology point of view, but in much of my experience technology is the simplest challenge to overcome in the context of developing energy access in the region. Due to the diversity of non technology related challenges I am interested in the research that has led you to believe in a national or international power grid as the only viable solution. Improved and increased grid connections in urban areas and industrial hubs can certainly benefit from economies of scale. Around 75% of Kenyans and more than 80% of Tanzanians are considered rural. The upfront cost of connecting such dispersed populations is incredibly high.

Posted by S.D. | Report as abusive

Solidar’s concern about runaway foreign aid infrastructure projects only takes on greater alarm when you consider the corruption, inefficiency and lack of oversight. And … the ‘NGO industrial complex’ which has sprouted up in the last few decades needs close scrutiny. The foreign aid needs to be tightly controlled, projects should be funded by several donors, matched by the host country (some percentage) and monitored from start to finish. This particular project … electrification … can produce tangible economic development. Maybe projects of this nature should have a ‘pay back’, a loan (no interest) that kicks in once GDP starts increasing. The era of the blank check is over.

Posted by aeci | Report as abusive