A closer look at Obama’s $7 billion plan to bring electricity to Africa

Here's a picture of the hotel in Tanzania where President Obama stayed during his trip through Africa this week:

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(David Nakamura)

Notice anything? My colleague David Nakamura, who traveled with Obama, reported that their hotel had a few kinks: "I'm staying in the same hotel as Pres. Obama in Dar es Salaam and lights just cut off in our rooms," he tweeted. And: "Earlier today at press hotel reporters were stuck in elevator briefly when power went off."

The periodic outages underscored the fact that Africa has a massive electricity problem. Flickering lights are the least of it. In Tanzania, only 14 percent of people get any electricity at all. Across sub-Saharan Africa, fully 590 million people lack access to power. And it's a life-or-death issue: Indoor air pollution from wood stoves now kills 3.5 million people per year, more than AIDS and malaria combined.

So it's noteworthy that the Obama administration wants to make a push to change all this. On Sunday, Obama promised $7 billion in financial support over the next five years to bring "electricity access" to 20 million new households in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania, as well as help countries like Mozambique develop their oil and gas resources.

The money will mostly come from existing U.S. development banks, so it doesn't require new spending from Congress. For instance, the Export-Import Bank, a government-backed lender, will finance $5 billion in projects by U.S. companies. On top of that government financing, the White House has also lined up at least $9 billion in private-sector pledges so far — Husk Power Systems will install 200 "decentralized biomass-based mini power plants" in Tanzania.

Obama argued that the push would require more than just money. "We’re not just building power plants ourselves,” he said. “We’re working with the various governments that are involved to think about what are the laws and regulations that are required to sustain it, and how do we leverage the private sector to put more money in."

Congress is also showing some interest in the broader endeavor. In the House,  Rep. Ed Royce (R-Calif.) and Eliot Engel (D-N.Y.) have introduced a bipartisan bill that would lay out longer-term goals to bring electricity to 50 million people in Africa by 2020.

Africa experts I spoke to mostly seem excited about these initiatives. But there were a few key questions:

1) Could expanding energy access in Africa conflict with Obama's climate goals? It's unlikely that Africa can power itself through wind and solar power alone. Tanzania, for one, is eager to exploit its large offshore natural gas reserves. So how does all this square with Obama's pledge to curtail greenhouse-gas emissions?

Power lines running to a coal power station in the early morning light near Johannesburg, South Africa. (EPA/KIM LUDBROOK)

Tom Hart, the executive director of the ONE Campaign, an advocacy group, thinks that the two goals don't necessarily need to conflict. "We think an exception can be made for poorest and least-emitting countries," he says. "If you provided 580 million Africans with basic energy access, that would increase global carbon emissions by just 1 percent." In other words, if Obama wants to tackle global warming, Africa isn't the place to start.

It's possible, however, that some environmental rules could limit U.S. involvement. The Overseas Private Investment Corporation (OPIC), which just pledged $1.5 billion in energy projects for sub-Saharan Africa, currently has an internal cap on greenhouse-gas emissions. Those rules would prevent OPIC from financing more than one medium-sized natural-gas plant, for example.

Todd Moss of the Center for Global Development has proposed lifting OPIC's emissions cap slightly for the poorest, least-emitting countries in Africa. "More than half the people in low-income neighborhoods in Nairobi and Dakar have no access to electricity," he told me earlier this year. "For reaching urban centers and powering industrial zones, you'll likely need traditional large-scale power plants. And current U.S. rules are keeping businesses out of that area."

That said, Moss adds that OPIC's heavy focus on clean energy is appropriate in many cases: "In some places, when people are far from the power grid and it makes more sense to invest in off-grid renewables, absolutely." (The International Energy Agency, for instance, has found that renewable power could be the most cost-effective option for expanding energy access in about 70 percent of rural areas in developing countries.)

2) What counts as "electricity access"? Access to electricity means different things to different people — and there's no clear definition. In some parts of Africa, it might mean enough to light two light bulbs and charge a cell phone. Here in the United States, access to electricity obviously means much, much more.

Roger Pielke Jr., an environmental studies professor at the University of Colorado, has pointed out that the international community’s definition of “modern energy access” tends to be quite scant — it means providing people with a mere 2.2 percent of the energy that the average American uses. Hart says that how "access" gets defined is something he'll be watching very closely in U.S. plans to promote electricity in Africa.

3) How much money would it take to make sure everyone had access to electricity? The answer is a lot. Let's put Obama's proposal in context. Right now, 1.2 billion people around the world are still stuck in the dark — with about 550 million of those in Africa.

Not as easy as it looks. (AP)

A recent report from the World Bank and International Energy Agency found that it would take a truly enormous push to close that gap by 2030. That's because current rates of electrification are actually slower than population growth. "With regard to universal access,” the report notes, “business as usual would leave 12 percent ... of the world’s population in 2030 without electricity.”

The report estimated that it would likely take between $120 billion and $160 billion per year over and above existing levels to bring energy access to everyone by 2030. (And, again, that's a relatively stingy definition of "energy access.") That would include both government financing and private investment. It would also likely mean changing all sorts of regulations and institutions in poorer countries. Money certainly isn't the only obstacle. So Obama's announcement — $7 billion, plus at least $9 billion in private-sector financing — is a step, but a small one so far.

As for Africa itself, this technical paper in the journal Utilities Policy estimated that Africa would need a tenfold increase in installation capacity to bring everyone power by 2030. To get all of sub-Saharan Africa up to South African levels, for instance, would require 330 gigawatts of new capacity. For context, the new White House plan would bring about 10 gigawatts.

Further reading:

--Can we tackle climate change and energy poverty at the same time?

--Here's why 1.2 billion people still don't have access to electricity.

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Neil Irwin · July 2, 2013