On World Water Day, 22 March 2014, the African Development Bank (AfDB) celebrates the role water plays in generating electricity and the role of energy in the development of the continent.
According to the AfDB, the lack of access to modern energy services severely impedes social and economic development, undermines competitiveness and access to regional and global markets for African producers. The African continent has the lowest electrification rate of all regions. It is estimated that only 43% of the population has access to electricity, compared with 77% in the developing world. In Sub-Saharan Africa the ratio is much lower, at 32% and only 18% in rural areas. “It is critical and urgent to address the continent’s energy needs in order to unlock its development potential,” the AfBD said in a statement. The AfDB says Africa has important exploitable hydropower capacity, yet only about eight% of the continent’s hydropower potential has been harnessed. Hydropower is readily available and produces cleaner electricity than coal and oil. “Eastern, southern, central and parts of western Africa have many permanent rivers providing excellent opportunities for hydropower development.” The African Water Facility The African Water Facility is a multilateral fund administered by the AfDB which supports the optimisation of energy production, especially via multi-purpose dam projects. “Multi-purpose dams help reuse water to increase water, energy and food security, and to spur economic growth, they are also an excellent way to build resilience to climate change. Such projects are especially important in rural areas, which are home to the most underserved communities,” says the AfDB.
African Renewable Energy Fund
The African Renewable Energy Fund (AREF), which is focused on Sub-Saharan Africa, has committed capital to support small- to medium-scale independent power producers (IPPs). The newly established fund will be headquartered in Nairobi and will target IPPs with an ideal size of between 5 and 50 MW and a commitment per project of between US $10 million and US $30 million, with the capacity to source further funding from co-investors where necessary for a larger investment. The fund is targeting a final close of US $200 million within the next 12 months to be invested in grid-connected development stage renewable energy projects including small hydro, wind, geothermal, solar, biomass and waste gas. It has already committed US $100 million to support small- to medium-scale IPPs. The AREF will be managed by Berkeley Energy Africa Limited (Berkeley Energy), a fund manager focused on developing and investing in renewable energy projects in emerging markets. The fund is sponsored by the AfDB and its Sustainable Energy Fund for Africa (SEFA). Each have contributed an equity investment of US $25 million and mobilised US $4.5 million from the Global Environment Facility (GEF). SEFA will additionally fund a US $10 million Project Support Facility (PSF), which will provide resources to be deployed at an early stage to structure bankable deals. The total AfDB-mobilized package amounts therefore to US $65 million and has provided the foundation for further commercial and institutional investment. “Over the past decade, the AfDB has established itself as a prime catalyst for renewable energy investment on the continent and is currently hosting the Africa Hub for the Sustainable Energy for All (SE4All) initiative. As Africa’s largest infrastructure finance partner, we understand the value of supporting both large-scale and small-scale projects as part of our strategy for Africa to promote inclusive and sustainable growth,” said Gabriel Negatu, AfDB Regional Director for the East Africa Regional Resource Center.
