Guest Article #87
Kenya and Morocco: Breaking a Trail to Step Up Affordable Green Power
Africa is a continent that has achieved significant socioeconomic development during this century. The continent experienced an annual GDP growth of above 5% for the period 2001 – 2008[i] and, although impacted by the global financial crisis, it is expected to achieve GDP growth of 4.5% this year and 4.8% in 2013[ii]. The continent has also seen excellent progress toward achieving a number of MDGs[iii].
In addition, the opportunity for the growth of energy generation and supply is particularly compelling. There is the opportunity to bridge Africa's existing energy gap while attracting significant private sector investment and thus contributing to job creation and continent wide poverty reduction.
The African continent boasts abundant renewable energy potential in the form of water, wind, sun and biofuel stocks. Much of this potential remains largely untapped and the level of electrification and generation is inadequate. But let me refer to two recent AfDB flagship projects – the Menengai Geothermal Project in Kenya and the Ouarzazate Concentrated Solar Power Plant in Morocco – that have the ability to reshape their respective country's energy landscape.
The core benefit of both of these projects is three fold; they are expected to drive down the cost of energy over the medium to long-term, drive up sustainability and increase access to energy supply. Beyond this triple impact, both projects highlight how similar initiatives can be implemented across Africa and also illustrate how public, private and concessional funding can be used to mitigate the challenges that need to be overcome in similar projects.
The Menengai Geothermal Development Project came about as a result of the Kenyan Government's Vision 2030 development plan, which recognized the need to generate cost effective electricity. Menengai should ultimately produce 400 MW of geothermal power for supply to the Kenyan national grid. Menengai also focuses on gradually changing the base source of electricity from hydropower to renewable geothermal power; a more sustainable source than the increasingly drought-prone hydro-based system[iv].
A major challenge in realizing the Menengai project was minimizing exploration risks and removing financial barriers. Financing provided by the AfDB is doing exactly this. It will provide an enabling environment for private sector participation to develop Kenya's full geothermal potential and will likely lead to lower electricity tariffs.
Further, the vision of the Kenyan Government extended to associated co-benefits; infrastructure development such as road and water access in areas where access was very limited; opportunity for direct utilization of geothermal heat and condensate for industrial and agricultural based activities leading to employment creation and income generation; increased security in the area as a result of increased economic activities and the associated growth in social amenities. Added to these benefits is also the fact that the project is expected to lead to the creation of 500,000 new electricity connections among households, 300,000 new connections among businesses and the creation of approximately 800 jobs.
The Ouarzazate project is rooted in the 2009 Morocco Integrated Solar Plan aimed at contributing to the diversification of the country's energy sources (97% fossil-fuel based) and promoting local development through industrial integration. The plan has the goal of installing 2000 MW of solar power capacity by 2020 and Ouarzazate will account for 500 MW of the total capacity once the two phases are implemented. This project has the potential to contribute to the realization of the commercial viability of CSP power and illustrate its importance as an energy source for the entire MENA region[v].
With Qarzazate, Morocco expects to test and demonstrate the storage technology component, trigger important cost reductions, foster associated economic benefits; such as local manufacturing industries, as well as test a business model that could attract and increase private-sector backing and enhance the availability of capital and ‘know-how' to support the development of a CSP portfolio. Given the current high costs of CSP technology the use of climate finance (Clean Technology Fund in this case) and of AfDB financing, along with other financiers, is critical to reduce the project costs.
The vision demonstrated by these two African Governments combined with the benefits and technological novelty of the projects highlight the change taking root in Africa. Countries are embracing solutions that answer their specific needs and are broadening their vision to include the achievement of sustainable and equitable economic development.
[i] AfDB, African Development Report 2010, 2010
[ii] African Economic Outlook , Macroeconomic Propects, http://www.africaneconomicoutlook.org/en/outlook/forecast/
[iii] AfDB, Energy Policy, August 2012
[iv] CIF, SREP Investment Plan for Kenya, September 2011
[v] San Giorgio Group, Case Study: Ouarzazate I CSP, August 2012