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Why Electricity Matters

If it fails to solve its energy crisis, Nigeria could become the world’s next big security risk

If it fails to solve its energy crisis, Nigeria could become the world’s next big security risk

By | Nigeria | No Comments

Nigeria has half the population of the US but generates only 1 percent as much electricity. This is despite the fact that Nigeria has 3 billion metric tonnes of coal in the ground and some of the world’s largest gas reserves.

And it gets worse. Nigeria’s population is growing. Around 2045, the country’s population is set to surpass that of the United States, meaning tens of millions of new Nigerian consumers and job-seekers needing even greater amounts of energy.

One estimate puts Nigerian national power demand at 213 gigawatts by 2040, yet on current trends the government is likely to fall way short. Today Nigeria produces just 4 gigawatts, while a UN initiative is focused on generating 45GW from renewable energy by 2030: way below what is needed.

As development expert Dr Todd Moss told the US Senate recently, the implications of this are incredibly serious:

“The specter of a Nigeria that cannot come close to meeting its growing population’s demands for jobs and modern lifestyles—all underpinned by high volumes of energy—should be alarming.”

Without massive amounts of additional energy in the system, economic growth and job creation can’t possibly keep up with population growth, meaning a jobless and poverty-stricken future for tens of millions of young Nigerians.

The populous West African country is a vital partner in the fight against terrorism, disease and international criminal networks. We simply cannot afford for it to become a failed state like Afghanistan. Yet that’s exactly what will happen if it fails to solve its energy crisis.

Ethiopia digs for power

Ethiopia digs for power

By | Ethiopia | No Comments

When it comes to energy, Ethiopia is one of Africa’s most ambitious countries. The East African nation has committed to quadruple the electricity it generates by 2020, and has just signed a deal with an Icelandic firm to make geothermal part of the mix.

This goal matters because two thirds of Ethiopians currently lack access to electricity: a huge number in a country of over 100 million. An estimated 94 percent of all energy consumed in Ethiopia comes from traditional biomass, i.e. wood and charcoal, leading an unsustainable loss of 200,000 hectares of forest each year.

More power is also needed to deliver the country’s development plan, which is focused on raising health and educational standards, improving crop yields, and spur industrialiasation.

“The demand is growing very rapidly — 25 to 30 percent every year, so we are trying to satisfy this demand,” says Azeb Asnake, chief executive officer of state power company Ethiopian Electric Power Corp.

“We also have a lot of industrial parks coming up — agriculture industry and the like — with more than 12 under construction or under operation. We really need to provide power to all this demand.”

As part of this drive, Ethiopia, which currently gets 90 percent of its electricity from hydropower, is looking to tap into the country’s significant geothermal resources.

Geothermal energy works by using the natural heat emanating from rock structures deep underground to heat water and drive steam turbines. Like hydro but unlike wind and solar, it is considered a “baseload renewable”, meaning it can generate power whenever needed and not just when weather conditions permit. East Africa has significant geothermal energy potential owing to the great East African Rift, a zone extending thousands of kilometres where the Earth’s crust splits.

Icelandic company Reykjavik Geothermal has just signed an agreement with the Government of Ethiopia to develop two geothermal sites, which will cost $2 billion apiece and generate the equivalent power of a nuclear reactor working at full pace.

The project is expected to be up and running in the next 7 years.

Has the World Bank lost its way?

Has the World Bank lost its way?

By | Developing Countries | No Comments

The World Bank’s chief economist Paul Romer has just quit, amid intense controversy about how the Bank pursues its development mission.

According to reports, Mr Romer left following a disagreement about with the way in the Bank calculated its annual Ease of Doing Business Index, which ranks countries according to how easy it is to start a new business. Although the rankings are highly influential in political circles, serous questions have been raised about their accuracy in predicting a country’s real-world economic success.

As Bloomberg reports:

“In 2016, economics student and blogger Evan Soltas measured whether large increases in a country’s position in the rankings were followed by growth. He found no measurable effect, even in the long term, and that taking the World Bank’s advice on structural issues seems to do very little if anything for economic growth.”

In other words, the World Bank has been relying more on guesswork than hard evidence about what actually drives economic growth. And the row the Ease of Doing Business Index is only the latest controversy to hit the Bank.

Its biggest shareholder, the US, has become increasingly vexed that the World Bank continues to lend money to China – a country so rich it has its own development bank – while continuing to deny finance to poorer countries that want to use fossil fuels to develop.

This has led some to argue that the World Bank is in fact become an anti-development bank, more interested in pushing environmental ideology than in helping to address the root causes of poverty. Experts have even suggested that the Bank should wind down its current lending mission and become a development think tank instead.

If the World Bank wants to regain its credibility it should listen to developing countries and lift its restrictions on one thing that we know for sure delivers economic growth: affordable, reliable baseload electricity.

Why is the coal-dependent EU telling Kenya it can’t use coal to industrialise?

Why is the coal-dependent EU telling Kenya it can’t use coal to industrialise?

By | Kenya | No Comments

The European Union’s Ambassador to Kenya has demanded that the East African country drop plans to build its first coal-fired power plant.

“Coal has fallen out of favour in the modern market, why would Kenya want to go down that route?” said Ambassador Stefano Dejak last week.

Why indeed? Here’s a rough guide to the east African nation’s thinking.

Kenya views the power plant as central to its poverty reduction plans

35 percent of young people in Kenya are unemployed, while 40 percent of the population live on less than $2 a day. But it doesn’t have to be like this. Kenya has ambitious plans to reach industrialising, middle-income country status by 2030. That in turn will require large amounts of low-cost, stable, predictable energy – which cannot be supplied by weather-dependent renewables.

It’s not either/or

But for the Kenyan government, coal versus renewables is a false dichotomy. The scale of energy need is so great that Kenya needs both. “Given that Kenya requires over 30 gigawatts to be an industrialised nation, we require all kinds of sources of power”, Energy Minister Charles Keter said last year.

The planned new coal plant on the island of Lamu would add 1 gigawatt of baseload energy to Kenya’s national grid, bolstering the country’s limited hydropower capacity while it develops its rich geothermal resources.

EU countries are still heavily dependent on coal

The EU Ambassador’s claim that coal has “fallen out of favour” with the market simply isn’t borne out by the facts. The International Energy Agency predicts that global demand for coal is set to rise over the next five years, with declines in Europe and China more than offset by demand in India and the rest of East Asia.

More importantly, why should Kenya forgo coal when an incredibly wealthy EU country like Germany isn’t willing to do the same? Despite being a renewables powerhouse, Germany currently derives 40% of its electricity from coal – because it still needs back-up power when the sun isn’t shining and the wind isn’t blowing. Indeed, Germany is now reported to be quietly watering down its climate targets.

All of this suggests that the EU should be taking a more nuanced, more pragmatic and less hypocritical approach to energy access in the poorest countries on earth.

Marshall Plan for Africa to stop migration

Marshall Plan for Africa to stop migration

By | Developing Countries | No Comments

Greece and Italy have demanded the creation of an EU-wide “Marshall Plan for Africa” to tackle the underlying causes of the migrant crisis, evoking the US aid programme that rebuilt Western Europe after the Second World War.

Speaking at the World Economic Forum in Davos, Greek Prime Minister Alexis Tsipras said:

“the problem is not the flows [of migrants], it is not the people who are trying to find a new life in Europe, but the problem is why the people cannot live in their countries.”

This call will be welcomed by Angela Merkel’s government, which has also stressed the need for an African answer to the Marshall Plan.

“We need a paradigm shift,’ says German international development minister Gerd Muller. “We have to realise that Africa is not the continent of cheap commodities but that the people of Africa need infrastructure and a future.”

So what would a Marshall Plan for Africa look like? Like its European predecessor, infrastructure would likely be the focus. Power infrastructure is the number one priority for sub-Saharan Africa, where two thirds of the population lack electricity and businesses struggle with constant blackouts.

The US has also taken an interest in tackling the scourge of energy poverty, proposing a “Clean Coal Alliance” that would see the transfer of carbon capture technology to developing nations dependent on coal.

This matters because reliable power can be transformational. 1000MW of electricity – equivalent to a medium-sized power station – can sustain the equivalent of 800,000 jobs according to the UK government, creating much-needed opportunity in a region where young people are risking everything to get to Europe.

As African Development Bank President Akinwumi Adesina has said

“The future of Africa’s youth does not lie in migration to Europe; it should not be at the bottom of the Mediterranean; it lies in a prosperous Africa. We must create greater economic opportunities for our youth right at home in Africa.”

A prosperous Africa needs reliable, affordable power. Now Europe and the US have to get on and deliver.

Urbanising Africa needs the grid

Urbanising Africa needs the grid

By | Developing Countries | No Comments

“I came to [Rwandan capital] Kigali about five years ago,” says 35-year-old Hassan Mudenge, a construction site assistant, “to look for a job and other opportunities. I can say I am now financially stable. I pay my rent regularly and send some money home to help my parents.

Across sub-Saharan Africa millions of young people are pursuing the same path, migrating from rural areas to the fast-growing urban centres in search of a better life. This is process is closely associated with job creation and poverty reduction, according to the World Bank.

It’s also why grid electricity matters. Western environmental groups often argue that since the majority of people without electricity live in rural areas, it’s usually cheaper and quicker to provide them with off-grid solar panels rather than connect them to the grid.

Yet this ignores the fact that so many Africans are now moving to the cities, where grid power is much easier to roll out thanks to population density. The World Bank projects that the continent’s urban population will rise from 36 percent to 50 percent by 2030. All of these people, schools, businesses and hospitals, need reliable, 24/7 power, which with current technology can only be provided by the grid.

And for the factories and companies that Africa needs to eradicate poverty, the alternative to the grid isn’t solar, but costly, inefficient and heavily polluting diesel generators.

But get this right and the prize is huge. Rwanda is banking on reaching high-income country status by 2050, with its urban economy powering that rise.

In other words, poverty could be over within a generation.

Energy access fits perfectly with Britain's new results-focused approach to international development

Energy access fits perfectly with Britain’s new results-focused approach to international development

By | Affordable electricity | No Comments

International Development Secretary Penny Mordaunt has an op-ed in today’s Telegraph, setting out her new strategy for British aid. It’s an important insight into the UK government’s thinking on this issue, one with clear implications for the energy access agenda.

Mordaunt’s first point is that the Department for International Development (DfID) will now work alongside the Department for International Trade to build a “bold new Brexit-ready proposition to boost trade and investment with developing countries.”

This shift matters because energy technology is one area where Britain has key expertise, in everything from carbon capture to renewables to low-emissions coal. By including energy technology in future British aid packages we can help improve energy access, spur economic growth and boost jobs at home and abroad.

Second, Mordaunt says that Britain will no longer finance good works that developing countries are capable of funding themselves. Again, this points to energy. Large-scale energy infrastructure projects such as power plants or power lines can prove transformational in the developing world – a single medium-sized power plant is estimated to support 800,000 jobs  for example. Yet many overseas governments find these projects hard to finance.

Third, Mordaunt says that aid spending should contribute directly towards tackling “the issues that matter most to the British people.”

Issues that the public care about, like disease, mass-migration and conflict do not respect national borders, yet development experts agree that building a reliable power infrastructure is the single best aid intervention we can make to head off those problems before they reach our shores.

The energy access agenda is a natural fit for the UK’s new results-focused approach to international aid. We need to send Penny Mordaunt a clear message: if you want to spend taxpayers’ money well, spend it on energy poverty.

US Environment Protection Agency: stewardship of natural resources can "feed and fuel the world"

US Environment Protection Agency: stewardship of natural resources can “feed and fuel the world”

By | Developing Countries | No Comments

Developing countries must be able to use their natural resources for development, says the head of the US Environmental Protection Agency (EPA).

The EPA is the US federal department charged with protecting the environment and public health.

Scott Pruitt, the administrator of the EPA, argues that poor countries should be free to use their natural resources in order to drive economic growth. He criticised the previous government’s ideological approach to international development, which often imposed restrictions on using extracting minerals and fuels essential to electrification.

For Pruitt, the US must advocate a responsible use of these natural resources, acting as stewards of the environment, whilst also ensuring that these natural resources can “feed the world and fuel the world.”

He compares this to the current puritanical prohibition mindset of NGOs and development organisations, that look to restrict extraction of these resources, which consequently starve countries of the opportunity to develop. In his mind, these people who are comfortable “putting up a fence and saying ‘do not use’,” are only exacerbating the problem.

Pruitt’s remarks follow US Energy Secretary Rick Perry’s calls for a “Clean Coal Alliance” to help promote High Efficient Low Emission (HELE) technology during a recent energy conference in South Africa.

Economist: Africans consuming less electricity now than in the 80s

Economist: Africans consuming less electricity now than in the 80s

By | Developing Countries, Ethiopia, Ghana, Kenya, Nigeria, South Africa | No Comments

According to the World Bank, the proportion of Africans with access to electricity increased from 19% in 1991 to 37% in 2014. But as a recent article in the Economist points out, this is nowhere near as impressive as it seems.

More people than ever may be connected to the grid, but they are not consuming more electricity. In 2014 each African consumed, on average, just 483 kilowatt hours (kWh). That is less than in the 1980s.

By contrast, Americans use 13,000 kWh each on average. Indeed, in the West, a typical family fridge consumes several times more power than a whole family of Nigerians.

As the Economist says:

“Some greens may hail such frugality. They should not: the alternative to electricity is often filthy, dangerous charcoal stoves and kerosene lamps. Besides, if utilities are unable to sell enough electricity to cover their costs then they cannot invest in maintaining or modernising their grids.”

Worldwide, power consumption is strongly correlated to GDP. The more electricity you use, the richer your country is likely to be. Yet this is not the case in Africa, where many countries use less power than their national incomes would suggest.

According to the Economist, this is because Africa has so little of the world’s manufacturing and heavy industries, who are the biggest consumers of electricity. In turn that keeps demand for power low in the rest of the economy. Without industrialisation and the good jobs it brings, ordinary Africans just can’t afford more electricity.

It’s why an approach to energy access which stresses small-scale solar powered solutions – while the ignoring the needs of industrial consumers – is unlikely to do much to alleviate poverty. To power Africa, all forms of energy will have to be used.

Boris Johnson: aid should be spent more “sensibly” to boost British interests

Boris Johnson: aid should be spent more “sensibly” to boost British interests

By | Developing Countries | No Comments

British aid spending will be more “sensibly distributed”, with a view to supporting British foreign policy goals. That’s the message from Foreign Secretary Boris Johnson, who has kicked off 2018 promising a radical shake-up of the £13bn aid budget.

Ministers have previously voiced concern at waste and inefficiency in the UK’s aid programme, much of which is distributed on Britain’s behalf by multilateral bodies such as the UN and the World Bank. “Britain must show further leadership to reform the global humanitarian system,” International Development Secretary Penny Mordaunt vowed recently, with senior government sources vowing to crack down on “pointless projects and sky-high salaries.”

If the goal is to shore up core British interests such as tackling extremism and addressing the “push” factors driving uncontrolled migration, then more spending on energy access makes enormous sense. Experts agree that a decent power infrastructure is a prerequisite for poverty reduction, with some of the world’s least stable regions crying out for affordable, reliable energy.

A new value-for-money driven approach would ideally mean a greater emphasis on funding for large-scale baseload power projects such as hydro, gas and clean coal, which can support many hundreds of thousands of jobs in developing countries and ultimately reduce reliance on aid spending.

And as we know, too often in the past the Department for International Development has tried to meet energy access targets with small-scale solar projects that can power a lightbulb for a few hours a day but can’t run the factories, businesses and hospitals that a country needs to develop.

It remains to be seen whether 2018 is the year when Johnson and Mordaunt will deliver.