On Energy forfrica‘To Light up and power Africa by 2025’

2What is the New Deal on Energyfor Africa?
he New Deal on Energy for Africa is apartnership-driven effort with the aspirational
goal of achieving universal access to energy
in Africa by 2025. To drive and achieve this goal, theAfrican Development Bank is working withgovernments, the private sector, and bilateral andmultilateral energy sector initiatives to develop a
Transformative Partnership on Energy for Africa – aplatform for public-private partnerships for innovative
financing in Africa’s energy sector.

TWhat does the New
Deal aim to achieve ?
To reach the goal, Africa mustachieve four targets:•••
The New Deal on Energy for Africa helps to unify allof the other efforts that are currently driving towards
achieving the goals of universal access in Africa. It
focuses on five key principles: raising aspirations tosolve Africa's energy challenges; establishing a
Transformative Partnership on Energy for Africa;
mobilizing domestic and international capital for
innovative financing in Africa’s energy sector;
supporting African governments in strengthening
energy policy, regulation and sector governance; andincreasing the African Development Bank's
investments in energy and climate financing.

•increase on-grid generation to
add 160 GW of new capacity by 2025
increase on-grid transmission and gridconnections that will create 130 million newconnections by 2025, 160 per cent more thantoday
increase off-grid generation to add 75 million
connections by 2025, 20 times what we havetoday
increase access to clean cooking energy foraround 130 million households.

Why the New Deal?
Over 645 million Africans have no access to electricity.
Power consumption per capita in Sub-Saharan Africa
is the lowest of all continents, currently estimated at
181 kWh per annum, compared to 6,500 kWh in
Europe and 13,000 kWh in the United States.

Most of the people with no access to electricity live in Africa
istribution of population without access to electricity by region
Distribution of population without access to electricity by region% of total population, 2013
100% = 7.0 billion
Other

18%

Middle East
LatAm

9%

1.2 billion
1% 2% 0%10%3%ASEAN1 & China

31%

SouthAsia2

24%

Africa16%

Worldpopulation

34%

53%Population
without
access to gridelectricity

1 Association of Southeast Asian Nations.
2 Bangladesh, DPR Korea, India, Mongolia, Nepal, Pakistan, Sri Lanka, Other Asia.
sociation of Southeast Asian Nations.
SOURCE: World Energy Outlook, 2015; Electricity Access Database, © OECD/IEA 2015<25%25% to 49%
50% to 75%
>75%

3

E n e rg y  s e c t o rbottlenecks andpower shortages
are estimated tocost Africa some 2 4 per cent of GDP
annually, undermining

economic growth, employment creation andinvestment. Companies in Tanzania and Ghana arelosing 15 per cent of the value of sales as a result ofpower outages. South Africa’s economic growth has
been hobbled in recent years by severe electricity
generation capacity constraints and frequent‘loadshedding’.

Power consumption per capita in Africa remains very low,
especially in sub-Saharan Africa

1 Sub-Saharan Africa average, excluding South Africa

SOURCE: World Development Indicators 2015; World Bank Group; Non-OECD Energy Statistics; © OECD/IEA 2015

An estimated 600,000 Africans (mostly women andchildren) die annually due to indoor air pollution
associated with the use of fuel wood for cooking.
Children under-perform for lack of electricity, since over
90% of Africa’s primary schools lack electricity. Lives
are at risk in African hospitals, as life-saving equipment
and services lie unused because of lack of electricity.
Africa’s poorest people are paying among the world’s
highest prices for energy. A woman living in a village innorthern Nigeria spends around 60 to 80 times per unit
more for her energy than a resident of New York City orLondon (Africa Progress Panel).
While a number of programmes and projects exist (andmore are emerging), the lack of sufficient innovative andappropriate financing, of bankable projects, ofappropriate policy and regulatory environments, ofpricing incentives and of coordination severely limits thescale and speed at which energy is provided to thecontinent.
At the same time, Africa is rich in energy resources. The
continent has well over 10 TW of solar potential, 350 GW
of hydroelectric potential, 110 GW of wind potential andan additional 15 GW of geothermal potential. This does
not even include coal and gas, which can still provide
some of its cheapest electricity. Africa cannot power its
homes and businesses unless it unlocks this hugerenewable energy potential, and combines it withconventional energy to light up and power thecontinent.Energy is the engine that powers economies.

4

1 Raising aspirations to solve Africa's energy
challenges
The New Deal calls on partners to raise
aspirations and mobilize political will andfinancial support to solve Africa’s energy
challenges.
This is a pre-requisite forachieving the UN’s Sustainable Development
Goals (SDGs) agreed in New York in
September 2015, and for implementing theglobal climate change deal reached at the UNsummit (‘COP 21’) in Paris in December 2015.

What will underpin the New Deal?
The New Deal is built on five inter-related and mutuallyreinforcing principles.

2 Establishing a Transformative Partnership on
Energy for Africa
The New Deal will be implemented through apartnership designed to provide a platform forcoordinated action amongst partners (privateand public) and for innovative financing. The
Partnership will unlock Africa’s energy
potential, and eventually foster a transition tolow carbon energy futures. It will help reduce
duplication and pool resources to achieve
economies of scale in Africa’s energy
investments.

Universal access to electricity by 2025 means connecting ~200 Mn households, andnearly doubling grid generation capacity and tripling the use of clean cooking solutions&OHDQFRRNLQJ

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2 Out of 234m households in 2015 and 300m households in 2025

SOURCE: WEO 2014, Brighter Africa report, World Bank

53 Mobilizing domestic and international capital for
innovative ﬁnancing in Africa’s Energy sector
To achieve universal access by 2025, innovative
mechanisms are required to mobilize an additional
USD 40-70 billion annually in domestic andinternational capital. This is a significant increaseon the USD 22.5 billion invested in the sector in2014. Achieving this scale of energy financing
requires that collective action be taken by all
stakeholders – public and private – to create
enabling conditions for financial flows, to develop
bankable projects, to reform utilities, and toenhance African countries’ absorptive capacities.
4 Supporting African countries in strengthening
energy policy, regulation and sector governance
The New Deal will build on and further scale up
the Bank’s investments in the “soft” infrastructureof national governments and institutions, toenhance energy policies, regulations, incentivesystems, sector reforms, corporate governance,and transparency and accountability in the energy
sector.
5 Increasing the African Development Bank's
investments in energy and climate ﬁnancing

Over the past five years, the African
Development Bank has invested some USD 6billion in the energy sector. Under the New Deal,
the Bank will ramp up its investments to provide
finance and guarantees, co-financing andsyndication. Between 2016 and 2020, the Bank
will invest about USD 12 billion and leverage
about USD 50 billion in public and private
financing for investments in the energy sector.
In addition, it will triple its climate finance toabout USD 5 billion per annum, and leverage
about USD 20 billion in private and public
sector investments in climate mitigation andadaptation by 2020.

How will the New Deal work?
Building on the five principles, the development of
the New Deal has focused on identifying andovercoming the obstacles to universal access.
To make major strides towards delivering theseprogrammes, the New Deal addresses sevenstrategic themes, each of which is supported by aseries of flagship programmes that the Bank willlaunch.

4 Key Aspirations: Universal Access by 2025 implies the equivalent of ~800 power plants,~90“Kenya Power”, ~300x Africa’s biggest PayGo company and ~180 “ClimateCare” projects

SOURCE: M-KOPA Solar, Press

61234567

Setting up the right enabling policy environment
Advising and supporting governments on setting
up efficient sector regulation and governance,
focusing on cost reflective tariffs, building
crediblecounter-parties,
andensuring
appropriate risk allocation.
Enabling utility companies for success
Offering technical assistance to utilities for
restructuring (privatisation and concessions) andoperations improvement (loss reduction andrevenue recovery).
Dramatically increasing the number of bankableenergy projects
Aggregating project development capital, andchannelling it through highly capable private
sector organisations which are involved in worldclass project development, including private
sector financing and legal institutions.
Increasing the funding pool to deliver new
projects
Scaling up the pool of finance that will be used tocreate greater leverage on the financial markets,by buying down certain categories of risk for theprivate sector.
Funding ‘bottom of the pyramid’ energy accessprogrammes
Increasing the availability of financing to promote
the development of both on- and off-grid project
organisations.
Accelerating major regional projects and driving
integrationIdentifying major regional projects, particularly
those with regional interconnections included intheir mandate, and systematically driving them tocompletion.
Rolling out waves of country-wide energy‘turnarounds’
A central theme tying all elements together is thesystematic implementation of full-country
turnaroundprogrammes.The Bank will coordinate
major development institutions to launch end-toend energy system turnarounds, in close
collaboration with the Head of State, Minister ofEnergy and Minister of Finance in each country.
These programmes will include energy system
planning, restructuring of the national regulatoryenvironments, matching donors to targetedinterventions, and bringing in the private sector
to drive development ofcapacityand connections.

7

What makes the New Deal
different?
The New Deal will coordinate action across all
existing programmes focused on the Africanenergy sector
There are a number of different African energy
programmes currently underway. The New Deal isa Coordinated Action Programme (CAP). It is
designed to workwith and build on the existing andemerging initiatives, to achieve impact at scale andat speed.
The New Deal will act as a central coordination
point for all of the initiatives that are currently
under-way, but which are not always fully alignedwith each other.

Some of the existing energy partnerships
Bgsjdb!Sfofxbcmf!Fofshz!Jojujbujwf!)BSFJ*
Launched at COP21 in 2015 with a commitment of at least USD 10 billion for Renewable Energy investmentsin Africa by the G7 countries between 2015 and 2020. It will deliver at least 10 GW of new and additional
renewable energy generation capacity by 2020, and aims to mobilise the African potential to generate at least
300 GW by 2030.

Qpxfs!BgsjdbA transaction and partnership-driven model launched by US President Barack Obama in 2013, Power Africa’s
goals are to add 60 million new electricity connections and generate 30 GW of new generating capacity by2030.

Tvtubjobcmf!Fofshz!gps!Bmm!)TF5Bmm*
Launched by UN Secretary-General Ban Ki-moon in 2011, the SE4All programme aims to achieve three main
goals by 2030: ensuring universal access to modern energy services; doubling the global rate of improvement
in energy efficiency; and doubling the share of renewable energy in the global energy mix.

Fmfdusjgjdbujpo!Gjobodjoh!Jojujbujwf!)FmfdusjGJ*!
The Electrification Financing Initiative (ElectriFI) is an EU initiative, launched during COP21, to support
electrification investments that will lead to new and improved connections, with strong features for scalability.
ElectriFI aims to support different business models, utilities and mini-grids.

Bgsjdbo!Fofshz!Mfbefst!Hspvq!)BFMH*
Launched in January 2015, it brings together political andeconomic leaders at the highest level to drive the reforms
and investment needed to end energy poverty andsustainably fuel the continent’s economic future.

8The New Deal is resource-neutral andtechnology-neutral
The New Deal is energy resource neutral andtechnology neutral. It will work with countries todeveloptheircomparativeenergy resource advantages
without bias, in renewables and non-renewables
alike. The transformation of existing energy systems
is critical,butit requirespragmaticchoicesthat harness

the comparative resource advantages of countries tomeet economic development needs, while at thesame time reducing the rate of growth in greenhousegas emissions. The New Deal aims to achieve a
relative decoupling of energy access from carbon
dioxide emissions through massive investments inrenewable energy, cleaner technologies in the nonrenewables sectors, and energy efficiency measures.

The African Development Bank
As the premier development finance institution on the continent, the AfDB’s mission is to help reducepoverty, improve the living conditions of Africans, and mobilize resources for the continent’s economic
and social development. The Bank Group has 80 member countries, comprising 54 regional membercountries and 26 non-regional member countries.
The Bank has an active energy portfolio of over USD 11 billion, with lending to energy sector projects(public and private) exceeding an annual USD 1 billion in recent years. Over three-quarters of theenergy portfolio supports public sector projects. The portfolio is composed largely of generation
projects, as well as distribution projects, and support for regional energy interconnections.
The Bank hosts the Sustainable Energy for All (SE4All) Africa Hub in partnership with the African
Union Commission, the NEPAD Agency, and UNDP. It also hosts the Secretariat to the African EnergyLeaders Group (AELG). The Bank is one of the architects of the Programme for Infrastructure
Development in Africa (PIDA), and a key financier for the PIDA Priority Action Plan. The Bank is
actively engaged in the new Africa Renewable Energy Initiative, and is expected to play a key
implementation role. The Bank cooperates with key stakeholders in the Energy sector, such as theWorld Bank Group, European Commission, bilateral donors including the US (especially through thePower Africa Initiative), the UK, France, Germany, IRENA, and others. The Bank is also working withUSAID and SIDA on the provision of co-guarantees.

AFRICAN DEVELOPMENT BANK GROUP
Rue Joseph Anoma 01 BP 1387 Abidjan 01 (Côte d’Ivoire)Tel: +225 20 26 44 44 – Fax: +225 20 21 31 00

Web: www.afdb.org
newdealonenergyforafrica@afdb.org
March 2016