SOME of the new favourite buzzwords to come out of the UN development summit in Ethiopia are “blending”, in terms of the type of finance for development coming from private and public funds, and “partners”.
This was particularly evident at a side event on the Africa-EU partnership (AEEP) where the highly-animated Roberto Ridolfi, the European Commission’s Director for Sustainable Growth and Development, was keen to shed the use of the word “donor”, insisting instead that Western states be instead referred to as partners.
He explained that this is because it cannot be denied that all states have their own “political, economic and commercial” interests too.
When looking at the financing of development in relation to Africa’s energy sector, it is evident that all players were keen to get a slice of Africa’s energy action. Though the debate was centered on the EU-Africa partnership, the US’s new “Power Africa” group was also in strong attendance with their Chief of Staff, Melanie Vant, sitting on the panel.
An indication of the type of commitment the EU is looking to provide to developing countries as a whole post-2015 could be seen in their report titled “Financing Global Sustainable Development after 2015: Illustrations of Key EU Contributions”.
Here they state that through blending the EU will mobilise over 100 billion Euro by 2020 and will invest in key sectors such as infrastructure and energy - with support to over 500 projects in small and medium enterprises. At least 20% of the EU’s assistance, about 14 billion by 2020, will address climate change objectives.
Through support to Sustainable Energy for All (SE4ALL), the EU is looking to leverage about 30 billion Euro in energy investments in developing countries. The EU is also looking to support renewable and sustainable energy in developing countries, through their ElectriFI initiative, with a total of 270million Euro by 2017.
So what have the EU been up to in financing Africa’s energy sector so far?
The AEEP was established in 2007 at the Africa-EU summit in Lisbon with the principle aim to improve access to reliable, secure, affordable, cost effective, climate-friendly and sustainable energy services for both continents.
What makes it even more difficult to track the progress of the 2020 goals is the inability to quantify just how much investment is taking place. The latest AEEP status report was unable to even attach a figure to the role of European institutions, member states and their corporate and individual citizens in Africa’s energy infrastructure and capabilities citing a “lack of complete records” and the ability to track the “financial instruments that [are] fed into each of the several thousand projects recorded.”
The group did however give a few examples of their success stories since its inception.
Lake Turkana Wind Farm
This was financed by European Investment Bank and EU grant funding blended in combination with private investment. It is expected to benefit hundreds of thousands of people in Kenya as well as the country’s overall economy.
Spain-Morocco Electricity Interconnection
The economies of North Africa and their northern neighbours have been developing a significant network of gas pipelines and electricity interconnections. One example is the Mediterranean Energy Ring (Medring) which shares and trades energy between the two continents. Morocco and Spain are two of the main players in this trade – though this relationship has existed for over a decade, before AEEP’s inception. The Moroccan state utility and Spain’s Red Electrica de Espana have a connection across the Strait of Gibraltar though which 700MW can now be traded and there are plans to double this to 1,400MW.
Geothermal Risk Mitigation Facility (GRMF)
In April 2012, the EU and AU partners launched a facility to stimulate investment (particularly through public/private partnerships) in East Africa’s untapped geothermal resources. GRMF helps with the high costs and reduces risks of early exploration and drilling, allowing project developers to more find funding more easily. The GRMF programme currently comprises 50 million EUR available for funding.
Mobilising Private Investment
AEEP is keen to bridge the gap in attracting private capital to Africa’s energy sector. To facilitate this it hosts events and produces publications so that investors have a better idea of market entry points. They admit they need to intensify efforts in facilitating cooperation among African and European private sector investors.
ECOWAS regional renewable energy policy
The Economic Community of West African States (ECOWAS) has abundant renewable energy and potential, to tap into this West African and European Organisations developed the ECOWAS Regional Renewable Energy Programme (EREP) which looks to develop standards in the region, promotes a regional market for investment, ensures cohesion with national strategy, provides renewable energy targets and an action plan.
Creating opportunities for renewable energy
Funded by the European Commission, Germany, Austria, Finland and the Netherlands, the Africa-EU Renewable Energy Cooperation Programme (RECP) is expanding to support vocational training and higher education in the field of renewable energy, along with private sector cooperation.
So far the partnership has gotten off to a relatively mixed start - with some target indicators reflecting successes while others show a much needed boost in effort in order to achieve 2020 targets.
One area to keep an eye on will be the list of 51 projects that the AU’s Programme for Infrastructure Development in Africa (PIDA) has earmarked in its “priority action plan”. 15 of the named projects are in the energy sector, nine of which are high on AEEP’s agenda.