Powering Africa: Interview with Peter Ballinger, Director of Business Development, Overseas Private Investment Corporation

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Peter Ballinger (third from left) at the site of a solar project being developed in Rwanda.
Peter Ballinger (third from left) at the site of a solar project being developed in Rwanda.

Interview with Peter Ballinger, Director of Business Development, Overseas Private Investment Corporation

Power Africa harnesses the power of private sector investment to help the more than 600 million people in sub-Saharan Africa, who lack access to energy. It’s a staggering number, but also one that does not fully capture the extent of energy poverty on the continent, or the challenge of delivering power to many of the more rural areas on the continent.

In the same way that powering Africa will require tapping into a variety of resources including both traditional and renewable fuels, it will also require some innovative approaches to bring power to off-grid, or beyond the grid, populations.

The Overseas Private Investment Corporation (OPIC), is the U.S. Government’s Development Finance Institution, and through finance and insurance mobilizes private capital to help solve critical development challenges around the world. In 2014 alone, OPIC committed $410 million in financing and insurance to private sector partners to develop African power projects. With OPIC involvement, these private developers are better able to attain traditional private finance support for their game-changing African energy projects. This model of leveraging private investors to lead the way in energy development is at the heart of the Power Africa effort.

OPIC’s approved support to Power Africa includes providing insurance and $50 million in financing to help construct and operate the massive Azura-Edo power plant in Nigeria, as well as providing insurance and $250 million in financing to the Lake Turkana wind farm in northern Kenya, which will become the continent’s largest wind project when completed.

OPIC has also partnered with the State Department and the U.S. Trade and Development Agency as part of the U.S. Africa Clean Energy Finance Initiative (U.S.-ACEF). This innovative program provides small amounts of early-stage funding to renewable power projects in Africa, intended to cover technical and feasibility studies, legal and administrative fees, and other expenses that may otherwise stall the progress of vital clean energy projects.

U.S.-ACEF-supported projects span the breadth of what will be needed to address the African energy challenge, including large and small-scale projects, both connected to central power grids and serving rural, off-grid communities. With U.S.-ACEF support, in wind farm in Senegal will to provide 150 megawatts of clean, renewable power and thousands of home solar kits will be installed and maintained in homes across northern Tanzania.

Here, Peter Ballinger, Director of Business Development at OPIC, discusses the challenges to supplying reliable electricity to communities in African nations who aren’t on the grid. Ballinger leads the U.S. Africa Energy Development and Finance Center in Johannesburg, South Africa. In his work supporting business development across the continent, he has seen both the urgent need for more electricity as well as some of the promising solutions to deliver it.

Energy poverty is particularly severe in rural areas. Why are traditional ways of delivering power insufficient to reach these communities?

Most Africans are not connected to the grid and might never be connected. They may have the ability to pay for power but there is just no electricity available. Some burn kerosene lanterns or charcoal in their homes as a means to cook or so that their children can do homework after dark but this is not sustainable. Kerosene and charcoal burned indoors pollutes the air indoors and poses major health hazards. This lack of easily accessible electricity also impacts every aspect of life and work from charging a small cell phone to operating a small business.

One of the ways OPIC and other agencies of the U.S. Government are working to introduce more off-grid power is through ACEF which provides support for early stage project development, often to businesses focusing on off-grid power.

ACEF is helping to do in the energy sector what we’ve seen for years in the mobile telecom revolution; it is providing support to a variety of projects designed to generate power from biomass, and from solar and mini-hydro plants. There are all sorts of businesses focused on ways to deliver power that is not delivered via traditional grids, including solar lighting and micro-grids.

What are some of the more interesting and promising off-grid solutions you’ve seen?

Off-Grid Electric is a business that bypasses the grid by installing solar home kits in northern Tanzania. Another off-grid technology that has already shown proven success in India is Husk Power Systems. Husk developed a biomass technology to generate power from discarded rice husks and used OPIC financing several years ago to establish a series of mini-power plants based in remote villages. These plants are simple enough that local villagers can be trained to operate them. Husk is now working to introduce the same technology in Africa.

In addition to reaching remote populations, are there other benefits of off-grid power?

I would say the major benefit with off-grid power lies in the size of these projects; they are smaller. For starters, with a project that is measured in the 5-15 megawatt range, the list of potential investors is exponentially larger than those who would enter a $900 million, 400-megawatt project. The investment and risks are smaller and the speed of construction and return are swifter. You can avoid the lengthy negotiations required with determining an off-taker or a power distribution company. Off-grid power providers are often community-based and the payment systems can be made via cell-phones. Consumers can also pay for their power as-needed and in advance.

Many off-grid power projects are also franchise and lease projects that can bring in small investors who will own and operate the project for the community. It really helps introduce sustainability, and spreads power access to those off the grid. These solutions also help take kerosene and diesel out of the equation for home power use.

Describe the business opportunity

The business opportunity is tremendous for the companies that are developing these leapfrog technologies and the investors that are helping to introduce them. By helping to provide the energy and people needed to sustain economic growth for businesses in Africa, Power Africa is building on the work that OPIC has been doing for a long time. I think Power Africa is bolstering OPIC’s efforts by bringing additional resources to this longstanding challenge. But more importantly, Power Africa’s concerted efforts across the U.S. Government are helping to direct the private sector’s focus on the burgeoning opportunity in Africa.

Last updated: June 07, 2016

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