The lack of reliable electricity is a key constraint to increased trade and broad-based economic growth in the region. Underinvestment in the region’s power sector has negative consequences for opening factories, processing food and, ultimately, for poverty reduction. USAID/West Africa’s Trade and Investment program aims to improve West African firms’ access to energy through increased investment in the sector.
Power Africa is a five-year, U.S. Government-wide initiative launched in June 2013 by President Obama to increase the supply of, and access to, reliable, affordable, and cleaner power in Sub-Saharan Africa. Power Africa seeks to add 10,000 megawatts of clean, efficient generation capacity and connect up to 20 million additional households across the continent to electricity. The initiative will initially focus on six countries, including three in West Africa: Ghana, Liberia, and Nigeria.
The Power Africa initiative provides incentives for energy sector reform by assisting high-impact infrastructure projects to receive financing so they can be built. In focus countries, USAID will work with partner governments to establish “delivery units” charged with completing high-impact investments; supply legal and technical assistance to complete priority transactions; provide training to build capacity in critial energy institutions; and provide African leaders with seasoned senior political advisers to galvanize energy sector reforms.
USAID/West Africa works with Economic Community of West African States’s (ECOWAS) and their energy institutions, including the ECOWAS Regional Centre for Renewable Energy and Energy Efficiency (ECREEE) and the West Africa Power Pool (WAPP). USAID coordinates technical assistance with donors, multilateral development banks and the private sector to leverage greater investment in clean energy generation, enable cross-border trade of energy, and develop regional public-private partnerships (PPPs) to generate energy from West Africa’s transnational infrastructure.
Leverage private investment in clean energy generation
There are viable clean energy and off/mini grid projects in West Africa that have the potential to expand access to energy. Clean energy investment opportunities have attracted interest from private developers, however, financing is critical because of the high up-front costs of clean energy, particularly for installing equipment. Lending is needed to trigger greater private development of the energy sector. However to lend, financial institutions need commercially viable projects.
To address these constraints, Power Africa is providing technical assistance to developers, utilities and regulators to advance private sector energy transactions, as well as expanding options for financing clean energy projects. USAID/West Africa is embedding a regional clean energy transaction adviser, based in Ghana, with ECREEE, who will work in West Africa with an emphasis on Ghana, Liberia and Nigeria. This adviser will coordinate financial mentoring to project developers and work to secure financing with other Power Africa partners such as the Africa Development Banks’s Sustainable Energy Fund for Africa.
USAID will also embed a regional clean energy adviser with Nigeria’s Bulk Electricity Company (NBET). This adviser will work with public utilities to evaluate expressions of interest from project developers, and work on behalf of NBET and other utilities to develop Power Purchase Agreements. These clean energy advisers will be complemented by Development Credit Authority guarantees and support for the feasibility studies required to receive financing for promising projects. Sustainability of the projects’ results will be advanced by reducing the perceived risks of private-sector developer business models and by familiarizing West Africa’s financial sector with the bankable potential of clean energy technologies.
Enable cross-border trade of energy in West Africa
The goal of WAPP is to complete interconnectivity among all West African countries and begin multi-country energy trading by 2020. To launch regional energy trading will require completing the connection of West African utilities to a regional grid and building the capacity of regulators and member utilities to manage a regional power pool. USAID supports WAPP to address these challenges with its member utilities. USAID’s assistance focuses on facilitating transmission infrastructure development as prioritized in WAPP’s Master Plan, developing and implementing market rules, and ultimately building the capacities of the WAPP Secretariat and member utilities to operate a regional power pool.
Develop regional Public Private Partnerships (PPPs)
USAID supports PPPs to develop large-scale electricity generation to supply regional markets. WAPP has a critical role to play by developing regional PPPs that take advantage of the West Africa gas pipeline to reach critical economies of scale for fuel supply, and by building the management and operational capacity of West Africa’s utilities as buyers. USAID/West Africa supports WAPP with advisory services to develop priority PPP plants that will generate electricity using fuel from the West Africa Gas Pipeline supplied by gas from Ghana or Nigeria.
Last updated: September 19, 2014