African Heads of State will gather in Dar es Salaam for the Africa Energy Summit next week where the focus will be on “Mission 300,” the electrification initiative led by the World Bank and the African Development Bank. M300’s goal is to bring electricity to 300 million more Africans by 2030.
African leaders will use the summit to adopt an Africa Energy Compact – a concrete plan and specific reforms to drive investment in the continent’s energy sector. And financing partners from the private, public and philanthropic sectors are expected to pledge additional resources to meet M300’s objectives.
This is a mission that requires effective co-operation between an alliance of sector stakeholders and I’ll be at the summit with Gridworks colleagues to showcase our portfolio and our expertise to investors, governments, private sector partners, donors and civil society.
Mission 300’s strategy encompasses innovative off-grid solutions to reach remote communities as well as efforts to support grid expansion and boost electricity supply for commercial and industrial users. The program will prioritise sustainable financing models that can be rolled out across the continent.
While the headline focus of M300 has been on connecting people to electricity, the summit will also deliver detailed country-specific agreements for at least 13 nations, including Nigeria, DRC and Mozambique. These compacts will cover reforms in key areas such as regional energy integration, low-cost power generation, incentivising private sector participation, and ensuring financially viable utilities. We think that these reforms, and the last two in particular, are crucial to delivering not just energy access in Africa, but economic growth and a just energy transition to net zero.
The continent faces a multi-billion-dollar shortfall in investment for electricity network improvements. Despite decades of growing investment in generation, this under-investment in grids has led to poor quality electricity supply, low levels of energy access and an inability to absorb renewable power. For all the promise of distributed renewables – and that promise is profound – large scale utilities represent the best solution for connecting most customers and most businesses to affordable, reliable energy. They also allow the largest level of renewable power integration.
In a continent where unreliable electricity is cited as the biggest barrier to business growth, it’s the provision of reliable and affordable power to industry that will drive the structural change needed to lift African countries out of poverty.
Transmission infrastructure is the backbone of a power system and building out the grid in developing countries is critical to the goals that M300 has set itself. We’re going to use the Africa Energy Summit to, among other things, bang the drum for private sector investment in Africa’s electricity grids and highlight the powerful impact it can deliver.
Private capital has played a key role funding grid investment around the world including in Latin America and India, but this is still a nascent market in Africa. Gridworks is at the forefront of this new market and is developing a portfolio of projects which will be among the first of their kind in Africa. The Chimuara-Nacala project in Mozambique is a good example of this, where Gridworks is working with the country’s national utility to deliver a 460km, 400 kV transmission line that will strengthen the power system in the country and provide vital transmission capacity and connectivity between Central and Northern regions. Several M300-aligned development partners are expected to join the project later this year.
We were able to announce the project last summer because the government of Mozambique had shown leadership and a willingness to use new funding models to develop its nationally important infrastructure. We encounter a similar openness amongst a growing number of African leaders and policy makers, including in Uganda, South Africa, Kenya and Zambia. Most investment for grids had previously been raised by donors or African governments but there simply isn’t enough to meet the continent’s growing needs. Last year, a report from the AFDB and IEA said that, at a minimum, a four-fold increase in grid investment was needed to meet Africa’s economic and climate needs.
The Chimaura-Nacala project will strengthen power supply in the Central and Northern regions of Mozambique.
At M300 we’ll be encouraging African governments and international financial institutions alike to make changes to help kick start private funding for grids. We think the following “to-do list” can be transformative:
For African governments:
- Establish consistent and transparent policies that provide long-term stability and predictability for investors.
- Introduce tariff structures that allow cost recovery while being affordable for low-income customers.
- Simplify permitting and licensing processes to reduce bureaucratic delays and lower the administrative burden on private investors.
- Improve the capacity of local institutions to manage, regulate, and support the electricity sector effectively.
And for international financial institutions:
- Regulators and government ministries have historically had a lot of support to develop the generation sector and boost capacity to transact with the private sector. Transmission utilities now need to be brought up to speed and properly resourced. There is a role for MDBs and donors in supporting this.
- Provide risk mitigation guarantees and insurance to protect against political and economic instability.
With a clear need for the private sector to step in, Gridworks is using its project development mandate and skills to transform the sector, develop new business models and bring in private capital. Our portfolio company, Anzana Electric Group – another M300 supported business – is developing, investing, and operating pioneering rural utilities and distributed energy projects in six countries in east and southern Africa. In 2023, Anzana launched Weza Power in Burundi. Weza is Africa’s first private sector, national scale distribution utility in more than a decade and its long-term ambition is to provide electricity to 70% of the population, where currently only 12% have access.
Burundi, where Weza Power operates, has one of the lowest rural electrification rates in the world.
As M300 champions the need for new business models, we’re working with partners from the initiative to develop our Moyi Power project in the Democratic Republic of Congo. Moyi is an ambitious program to build greenfield, solar-powered utilities that will provide electricity to a million people in three isolated cities in the north of the country. In a country where less than 1 in 6 people have access to electricity, we have created a model that has the regulation and scale to deliver long-term financial sustainability. Moyi has attracted a blend of different types of capital and once it is operational it will have a model that does not require continual subsidy. Moyi’s large scale “metro-grid” model can spread to many more cities across DRC and is replicable continent-wide.
The challenge facing M300 is an ambitious one. I look forward to working hand-in-hand with our partners and using our unique mandate and skills to create businesses that help meet the challenge.
Erik Knive, Gridworks CEO