A U.S. company is playing a role in bringing much-needed electricity to Africa, through the use of solar and hydro power.
After completing a turn-key $5 million solar-panel manufacturing plant in Ethiopia in March, Florida-based SKYei now plans to construct two hydropower plants in Tanzania’s Mbeya region.
The combined 108.6 megawatts generated by the facilities will power district government offices, medical clinics and schools and be available for villagers to purchase at a fraction of existing costs, said Roland “Mack” McLean, who founded the former SKY Energy International in 2009 to develop renewable and traditional energy solutions in Africa, the Caribbean and Latin America.
“A lot of people don’t realize that outside major cities and South Africa, something like 90 percent of Africa doesn’t have electricity,” McLean said. “In remote parts of Tanzania it’s almost 100 percent. A statistic that really sticks in my mind is that Africa has 110 million telephone land lines and 23 million cellphones.”
Africa’s lack of electricity outside metropolitan areas means only one in three Africans in 2013 has access to electricity, said Phil Hay, communications manager for The World Bank’s Africa Region.
“Of those lucky one in three, many endure regular brownouts and pay two-to-three times more per kilowatt than electric consumers in the U.S. or Europe. Africa’s power needs are gigantic. You see kids doing their homework under streetlights at the side of the road.”
The organization estimates almost 70 percent of the continent’s population – or 600 million people – and 10 million small- and medium-sized businesses have no access to power. Africa’s electricity access is the worst in the world and the bank’s “Lighting Africa” initiative, launched in 2007, intends to help 250 million people in Sub-Saharan Africa gain access to low-cost, reliable and sustainable power by 2030.
Accomplishing that goal will require an additional $20 billion annual investment, according to a World Bank report released in April. Hydro power will play an important part as will private investments like McLean’s, said Hay.
With its mighty rivers and falls, Sub-Saharan Africa has a vast supply of potential hydroelectricity, of which just 10 percent has been tapped.
The World Bank has been involved in several major electricity-producing projects, including the Lom Pangar Hydro Power Project on Cameroon’s Sanaga River, and in 2011 brought electricity to 1.4 million people in African countries.
In August its board of directors approved $340 million toward the construction of the $468.6 million Regional Rusumo Falls Hydroelectric Project, which will benefit Burundi, Rwanda and Tanzania – areas with, respectively, 4, 13 and 15 percent access to electricity.
The run-of-the-river plant, which will harness the currents and cascades of the Kagera River to turn electricity-producing turbines, will contribute 80 megawatts of clean, green, renewal power to the three countries’ power grids.
Lighting Africa has also identified new oil and natural gas finds, geothermal potential in the Rift Valley and wind and solar power in regions throughout Africa.
Hay said the Rasumo Falls project is a prime example of The World Bank’s commitment to bringing power to the people by creating regional transformation, a cross-border, power pool of hydroelectricity and reliable water management that also addresses flooding and drought issues.
“Hydro Power is multidimensional,” said Hay. “With each hydroelectric plant, we’re not just investing in hydro power but an all-year water supply for irrigation, agriculture and fisheries management. The potential of all this untapped hydro power is incredible.”
In Tanzania, SKYei has partnered with CAMS Global, a group of companies known for its financial engineering capabilities, to develop hydro power projects, including the $300 million 100-megawatt hydroelectric pilot project on the Momba Falls and a smaller facility. The Momba Falls plant will have a solar-powered water treatment plant, solar backup and natural gas generators for small villages.
“Water is also near and dear to us,” McLean said. “Women and children travel miles to collect water. We’re planning to give them clean water. You need electricity for clean water, sanitation and schooling. How can kids today have any chance in the world if they don’t learn about computers?”
The two-phase pilot project will employ local villagers and cap electric rates at $4.50 per month during its initial upper-phase start-up during the first quarter of 2016.
“Once we begin producing, it would be interesting to conduct a study to see how use of electricity increases once the switch is turned on,” said Mclean.
CAMS-SKY Africa is also exploring mini hydroelectric plants in other areas of Eastern Africa, including Zambia, Rwanda, Uganda and Kenya. McLean said the company could build isolated grids throughout Tanzania that will eventually connect to the national grid, currently some 55 miles away from the prospective sites.
SKYei will also provide microfinancing for electric appliances and equipment, paving the way for “exponential growth” of small businesses such as sewing and mechanic shops, even “bars with cold beer,” said McLean.
Under McLean’s business plan, SKYei will assume the brunt of the risk, he said, “developing a project, getting it going, then bringing in the big boys and moving on. We become minority owners but keep a royalty interest in it.”
McLean was born into risk. His father was an oil wildcatter in Texas.
SKYei’s future financial stake means building the facilities to the highest standards, he said. It will source American- or European-designed turbines and equipment and employ local villagers during construction and then operations.
“We train locals and that differentiates us from other companies,” McLean said. “It’s been our experience that we can always find good local help. We pay more and wreck the local wage scale.”
Expect more U.S. companies to explore power projects in Africa. President Barack Obama’s just-announced Power Africa, a five-year initiative, pledges $7 billion in public funding and $9 billion in private sector financing to bring electricity to 20 million new residential customers in six African countries while helping others develop oil and gas reserves.
Incentives help. The Florida Export Financing Corp. provided funding for the $5 million semi-automatic solar panel manufacturing facility in Addis Ababa, Ethiopia, which involved 15 international suppliers.
Solar panels were provided by Spire Corp., a Massachusetts company that enlisted SKYei to participate, McLean said. SKYei constructed the plant, helped purchase machinery and provided training for key personnel.
Operating three daily shifts, the plant will produce about 100,000 panels a year with an annual capacity to generate 20 megawatts.
“The World Bank sees the private sector as absolutely vital partners in this effort to literally turn on the lights in Africa,” said Hay. “We need the private sector’s knowledge of infrastructure and construction. American companies need to update themselves on the vast array of business opportunities on the continent and take an educated risk. They need to tolerate slightly elevated risks that have higher returns. It’s a win-win market for the private investor, governments and the families trying to get by.
“Someone has to make a profit to bring power to Tanzania. Raising money to donate is not a reasonable approach,” McLean said. “Bono has even said taking Africa out of poverty will require capitalism and entrepreneurs. Some areas are very high risk but the reward is also high. We’re working with good people in Tanzania and view it as one of the most stable countries. We want to make a profit but also believe people need electricity or they’ll never come out of the grinding poverty.”
For McLean the major disadvantage of doing business in Africa is mostly physical – some 37 hours and multiple flights from his Sunrise, Fla., headquarters and additional travel time on land to reach construction sites.
“It’s a tough trip but the people are great to work with,” he said. “There are some good folks there. They know we’re bringing them power and bringing the costs down.”
Demand will continue to increase, according to Hay.
“Many of Africa’s countries are growing 4.5 to 5 percent – two to three times the OECD (Organization for Economic Co-operation and Development) average despite the 2007 global economic slowdown,” Hay said. “The biggest problem we have to fix is to provide more electricity for homes, small businesses, libraries, classrooms and big manufacturers. Electricity plays a major role in Africa’s development and economic progress.
“Ultimately, at the end of the day, the 600 million plus Africans who live by candlelight and kerosene lamps once the sun goes down will benefit.”
