World Bank Sees ‘Huge Developments’ in Solving Africa’s Energy Deficit
By Gavin Serkin, OnFrontiers Editorial Director
After decades of waiting, swathes of Sub-Saharan Africa are about to light up.
The Cote D’Ivoire, Liberia, Sierra Leone and Guinea Interconnection, or CLSG, is among projects making significant progress, along with electrification in the OMVG member states of Senegal, Guinea Bissau and The Gambia, according to World Bank Senior Energy Specialist Chris Trimble.
Speaking during OnFrontiers’ #ExpertChat online forum this week, Trimble said he’s optimistic that power trade in West Africa will progress to unprecedented volumes that will fundamentally change the cost structures for importing countries and generate export revenues for exporting countries.
“It’s been a vision well known for the last 20 to 30 years but not very much was realized outside of SAPP (Southern African Power Pool) — yet in the last year there have been huge developments,” said Trimble. “Although there are extremely large deficits today in terms of energy production, there’s huge potential.”
The $750 million OMVG project, covering 1,600 kilometers of transmission line, will soon enable member countries to trade electricity for the first time.
“It’s a fantastic opportunity because you have the likes of Senegal, Gambia and Guinea Bissau producing electricity at 25, 30, 35 cents a kilowatt hour, yet they can do it from Guinea for 10 or 12 cents a kilowatt hour,” said Trimble. “That’s a fundamental change in the cost structure of the utility and helps the move towards a viable operation.
“Even though these projects have been envisioned for a long time, certainly now that we have actual financial flows — all the money is on the table — contracts are signed and the construction is about the start, it’s becoming very exiting. I think in the next few years you’re going to see massive changes in the cost structures of many utilities in West Africa.”
Trimble was among three panellists on a special #ExpertChat in Cape Town at African Utility Week’s Power Finance & Investment Forum, sponsored by OnFrontiers as official Research Partner.
“Developing the power pools is really key to the market evolving to a point which benefits everybody,” said Cathy Oxby, Commercial Director for Africa GreenCo. “Part of the role we see for Africa GreenCo is helping to stimulate the trading on these power pools and ultimately move to a position like in Europe where you have a power market rather than projects being funded on the back of a long-term power purchase agreement, which requires a government guarantee and often further gold-plated support from the World Bank group or the African Development Bank.
“If sufficiently deep and liquid, the market can be the primary off-taker or at least the backstop, so that these massive contingent liabilities aren’t burdening governments, and that then frees up capacity in government to focus on other areas that are much harder for the private sector to do, such as underlying transmission infrastructure or energy access.”
Further potential comes from turning waste into energy, according to Mamadou Biteye, Managing Director for the Rockefeller Foundation’s Africa office. However, “financing is a challenge because to take them to the required scale to make a difference, and to really contribute to access to energy, it needs to be affordable.
“There is very innovative technology but it’s very costly and to has yet to be made commercially viable — but there is a huge opportunity there.”
Next #ExpertChat: Frontiers in an Upside Down World
Join us for a one-on-one live discussion with the co-founder of Ashmore, one of the UK’s leading emerging market investment houses, Jerome Booth.
The founder of the New Sparta group of companies, Booth is the author of “Emerging Markets in an Upside Down World: Challenging Perceptions in Asset Allocation and Investment.”
OnFrontiers Editorial Director Gavin Serkin will host the 30-minute discussion.
Register for free to attend and submit questions.
When: Tuesday 6th June at 11:30 AM (ET) 4:30 PM (BST)
This post has been updated.
Originally published at onfrontiers.com.