Christian Aid’s new policy paper summarises findings of recent research that suggests the African Development Bank (AfDB) could do more to deliver sustainable renewable energy to the people who most need it including 600 million people in Africa who lack access.
The African Development Bank is a regional development finance institution which has injected huge sums into energy sector development in Africa, approving energy projects worth USD 4.5 billion between 1967 and 2008.
In 2015 the Bank embarked on a ‘Hi-5’ strategy to power a New Deal on Energy for Africa. The bank also partnered with the African Union through the Africa Renewable Energy Initiative (AREI) to increase renewable energy capacity to 300GW by 2030.
Since the New Deal on Energy for Africa (between 2015 and 2023) 77.37% of projects funded have been renewables, 15.13% has gone to incentives and technical assistance initiatives for renewable energy projects (although 7.5% of funding still went to fossil fuel projects, and the Bank is still funding an offshore gas project in Mozambique, for example).
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While such initiatives may bring important benefits, Christian Aid believes that governance of the green energy transition must be focused on the rights and needs of people living in poverty and particularly should prioritise off-grid communities who face the greatest challenges associated with their lack of access to clean modern energy. The question therefore is to what extent is the AfDB succeeding in this respect?
Empowering off-grid communities: Addressing energy poverty
Among energy poor communities, energy for domestic use and particularly for cooking is an urgent priority, but our research found that clean cooking received the least funding. In all four regions of Africa, the Bank prioritized infrastructure projects and grid enhancement aimed at increasing energy access for populations that can already access grid electricity.
While such investments are important for Africa’s green energy transition, African civil society organisations have been calling for a greater focus on decentralised (off grid) renewable energy projects because these can often bring electricity to energy poor communities more rapidly and cheaply than grid extensions.
Concerns have also been raised about the lack of transparency and hidden costs to consumer associated with financing arrangements such as public-private partnerships and associated power purchasing agreements with private sector providers. There is a need for greater public scrutiny of such arrangements and civil society participation in energy governance more broadly, to ensure the concerns of people living in poverty are put front and centre of the energy transition.
Case study: Kenya’s Menengai Geothermal Project
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It was partly funded by AfDB & delivered through a PPP
Kenya’s Menengai Geothermal Power Project was partly funded by the African Development Bank (committed in AfDB’s Country Strategy Paper for Kenya 2014-2018), with the Kenyan government opting to work with three Independent Power Producers.
PPA contract transparency is an issue
The Menengai project has challenges like an opaque Power Purchase Agreement (PPA), de-risking project measures in the PPAs that are costly to the state, and safeguarding issues like SEAH that have led to one of the IPPs being taken to the Environmental Tribunal by local communities.
Community participation is inadequate
The Geothermal Development Company leads in community engagement and steering IPP/community feedback mechanisms which it has yet to put in place.
Safeguarding is recognized as a key issue
One of the IPPs was taken to court by a Community Based Organization which called for a new Environmental Impact licence. The host community also indicated there are increased numbers of HIV infection and teenage pregnancy.
Our recommendations
Given the importance of AfDB funding to Africa’s transition to sustainable renewable energy, our policy recommendations include:
- A need for greater transparency regarding energy initiatives and particularly data on AfDB investments in renewables and fossil fuels.
- Need for public finance done right: Safeguarding must be adhered for renewable energy projects to have public finance done right without repeating the harms done by the fossil fuel industry.
- The AfDB Regional Integration strategy & REC energy policies need to align: Important milestones presented by both the regional strategy and REC energy policies aim to promote greater infrastructure for trade. There is need for further alignment towards a renewable energy pathway.
- Need to prioritize off grid renewables for the ‘last mile’: Bank investments are still heavy on big energy projects for grid electricity access. Need to consider countries like Sudan in EA, Malawi in Southern Africa & others. The fastest and cheapest way would be through off grid renewables.
- AfDB should Stop funding the offshore gas in Mozambique: this is a large-scale project that is at odds with the energy transition trajectory & the Paris Agreement.
- Subject de-risking measures to public participation: Kenya’s Presidential Taskforce report indicated that there were commercial operating risks that IPPs wanted the state to bear. This is unacceptable. Since de-risking measures by IPPs impact the public, they should be subjected to public participation.
