African bank ‘tripling investments’ to support new renewable energy initiative

Bank president Akinwumi Adesina said the institution will be dedicating 40% of its resources to support the need for “massive financing for climate change mitigation and adaptation efforts” in Africa.

Adesina said at the launch of the ‘African Renewable Energy Initiative’ (AREI) in Paris on 1 December that the AfDB’s commitment meant it would triple its financing to climate change initiatives by $5 billion every year until 2020.

Adesina said: “The initiative is a game-changer as Africa loses 4% of its gross domestic product (GDP) due to lack of clean energy. Sunshine should do more than just nourish our crops. It must light our homes. Our massive water resources should do more than water our farms, it should power our industries. Potential is important, but homes and industries cannot be powered by potential. Africa must unlock its renewable energy potentials.”

The AREI initiative is expected to see the first 10 GW of the planned new generating capacity available by 2020, the AfDB said.

Kenya’s environment cabinet secretary Judi Wakhungu, who represented President Uhuru Kenyatta at the launch of AREI, said Kenya was “ready to engage in massive solar and wind energy production to attain 100% electricity reach for our people”.

According to the AfDB (3-page / 221 KB PDF), “Africa’s per capita energy consumption averages only 162 kilowatt hours compared to the global average of 7,000 KWh and Africa loses 3-4% of its GDP due to lack of energy”.

The director-general of the International Renewable Energy Agency, Adnan Amin, said in an interview earlier this year that there is “a huge appetite for investment in renewable energy projects in Africa”.

Amin said investment opportunities in the sector in Africa are “plentiful”. However, he said African governments needed to “reduce risks” by ensuring regulatory frameworks and investment incentive schemes were put in place.

Earlier this year, leaders of West African nations launched an initiative to reform energy sector policies and create “a pipeline of bankable investment projects” to boost access to sustainable energy throughout the region.

The West African initiative followed a US pledge to finance a range of Africa-based initiatives aimed at expanding development of the continent’s power infrastructure and supporting the region’s entrepreneurs.

The package included an extra $1bn commitment to the US-led Power Africa initiative up to 2018 by the US Overseas Private Investment Corporation (OPIC). The White House said OPIC had now reached “critical milestones on four priority projects”, including commitments for two large wind projects in Kenya, and thermal power projects in Senegal and Ghana, “which are collectively expected to generate more than 700 MW of power”.

Last September, the African Renewable Energy Fund reached its final close at its target of $200 million of committed capital to invest in small-to medium-scale electricity generating projects. Investors at the close of the fund, which is based in Nairobi and focused on sub-Saharan Africa, included the European Investment Bank and the Global Energy Efficiency and Renewable Energy Fund.