Competing to ‘light up’ Africa

5 October 2007

The Bank’s latest carbon reduction credentials include a report on reduction in gas flaring as part of the global gas flaring reduction partnership, and a new initiative to ‘light up’ Africa. Such positive developments are offset against the institution’s continued funding for large-scale, grid-based energy sector loans, while a Greenpeace report adds to calls for development banks to scale up renewables lending and phase out support for polluting energy projects.

In September, the World Bank and IFC launched Lighting Africa, a programme to supply energy to 250 million Africans by 2030 as part of its Investment framework on clean energy and development (see Updates 55,53) and Africa energy access scale-up plan. The Bank estimates that 500 million Africans out of a total population of 743 million currently lack access to a reliable source of “modern energy”. The initiative aims to “develop market conditions for the supply and distribution of new, non fossil-fuel lighting products, such as fluorescent light bulbs and light emitting diodes, in “areas of the region that are not connected to the electricity grid”, using renewable energy or mechanical sources.

Its three priorities are: a competition for the design and delivery of low-cost, high-quality, non-fossil fuel lighting products; market research in Kenya, Ghana, Tanzania, and Zambia; and a web portal to encourage private sector partnerships. Supporters of the initiative include the Energy Sector Management Assistance Programme, the Global Environment Facility, the Public-Private Infrastructure Advisory Facility, Good Energies Inc, the governments of Norway and Luxembourg, the European Commission and the Renewable Energy and Energy Efficiency Partnership.

the Bank's financing for big fossil fuel projects beat renewable and energy efficiency projects by 17 to 1

Efforts to scale up off-grid and non-fossil-fuel-based electricity supply in Africa are welcome, given the high levels of energy poverty on the continent, the costs that African consumers are forced to pay for fuel-based lighting such as kerosene lamps, and/or a largely unreliable supply of poor quality electricity. Private investors are eager to tap into a potentially lucrative rural lighting market, but questions remain over whether the private sector alone can effectively meet the aims of this initiative. Also the Bank concedes that, “the initiative is not a substitute for clean, reliable electricity on a large scale” and the Bank still intends to rely on large-scale hydroelectric projects and “possibly new solar technology that is cost effective”.

A new Greenpeace report takes a close look at the investment pathways of the power sector. It builds the report Energy [R]evolution, published earlier this year, which presented an alternative to the International Energy Agency’s world energy outlook, and a practical blueprint for how to cut energy related CO2 emissions by 2050. Futu[r]e Investment demonstrates how renewable energy forms a tiny part of the World Bank’s energy portfolio, pointing out that in 2002-2003 the Bank’s energy financing for big fossil fuel projects beat renewable and energy efficiency projects by a 17 to 1 ratio. The report urges all IFIs to increase lending for renewable energy and energy efficiency projects as a percentage of their overall energy sector lending, and rapidly phase out subsidies for conventional polluting energy projects.

Powering the market

Scepticism remains over whether a recently approved Bank (IDA) grant for $300 million for the ‘regional and domestic power markets development project’ in the Democratic Republic of Congo (see Update 56), which includes the rehabilitation of the Inga dams, (see Update 56) will ensure that power is provided to those who need it most. The project states it will increase low cost and environmentally-friendly electricity in DRC and elsewhere in southern and central Africa, thanks to the rehabilitation of the Inga 1 and 2 power plants, the construction of a second transmission line to the capital Kinshasa, and the rehabilitation and extension of the distribution network in Kinshasa. However high tension power lines taking electricity to neighbouring countries pass right over many villages which are off-grid. The majority of the DRC’s population do not have access to electricity, but the country exports much of its energy to Zimbabwe, South Africa and Zambia. Jean-Thomas Lokala, technical director of Congo’s national power company, said Congo was simply not equipped to divert the line’s load to supply the local population. “It requires technology we don’t have,” he said. “We had a surplus, so we had to export.”