Vahid AlavianWater and Hydropower AdvisorAfrica RegionThe World Bank

Energy, Development and Climate Change in Africa

Outline

• The energy landscape

• The challenges we see

• The climate variability and change factor

• Managing the climate risks

• The World Bank energy strategy

• Summary

Energy and growth

Human Development Index (HDI)

Energy Consumed per Capita

Best-Fit Trendline

En

erg

y/C

ap

ita

Energy inequalities contribute to regional inequalities

4

276.2

160.8146.2

127.2

72.453.3

42.8

15.9

North America

Eurasia Europe Middle East WORLD Central and South

America

Asia and Oceania

Africa

Per Capita Primary Energy Consumption (mBTU)

Source: Energy Information Administration 2006

Consumption in Africa is 4.5 times lower than world average and 18 times lower than that of North America

Power shortages are a brake on economic growth and competitiveness

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

North

Africa

West Africa East Africa Southern

Africa

Central

Africa

AFRICA

Pe

rce

nta

ge

po

ints

of

pe

r c

ap

ita

ec

on

om

ic g

row

th

Telecom Power Roads

Low availability at high prices

184

85

21 1

26

55

38

29

204

114

58

1

900

430

2108

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000C

am

ero

on

Nig

eria

Eth

iopia

Ke

nya

Ta

nza

nia

Ug

and

a

Bu

rkin

a F

aso

Gh

an

a

Se

ne

ga

l

Alg

eria

Eg

yp

t

Mo

rocco

Wo

rld A

ve

rag

e

Ele

c c

on

su

mp

tio

n (

kW

h/y

r)/C

ap

ita

500 kWh/capita/year minimum consumption

for reasonable quality of life

Energy use per person in Africa

0

5

10

15

20

25

30

35C

had

Cape V

erd

e

Madagascar

Uganda

Burk

ina F

aso

Senegal

Kenya

Rw

anda

Cam

ero

on

Nig

er

Benin

Côte

d'Ivoire

Nam

ibia

Ghana

Lesoth

o

South

Afr

ica

Mozam

biq

ue

Tanzania

Eth

iopia

Congo

Mala

wi

Nig

eria

Zam

bia

US

cen

ts

Power tariffs in other

developing countries:

lower bound

Power tariffs in other

developing countries:

upper bound

High prices, low consumption

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

SA

S

EA

P

EC

A

LA

C

SS

A

OE

CD

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Afr

ica

Asia

LA

C

Ch

ina

MN

A

EC

A

OE

CD

Average tariff

(US$ per kWh)

Power consumption

(kWh pc pa)

Source:

Poor reliability

–Lost sales revenues • 5-6% formal

sector

• 20% informal sector

–Most large firms run generators: $0.40/kwh0%

5%

10%

15%

20%

25%

30%

<1% 1-3% 3-5% 5-10% >10%

Load shedding as percentage demand

Pe

rce

nta

ge

of co

un

trie

s

Load shedding

Source:

Huge power investment backlog

• To remedy this energy situation Africa needs to build

7,000 MW of generation capacity per year

More than five million new power connections per year

An extensive transmission network

• The annual financing requirements are staggering

spending needs: US$41 bn/yr

financing gap: US$23 bn/yr

Coal is Africa’s largest single source of power, but will lose ground to hydro

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Actual Trade Expansion Scenario

Trade Stagnation Scenario

Hydro Oil and Gas Coal OtherSource:

How is the energy and development landscape affected by climate

variability and change?

• Poorest, the most vulnerable and least prepared are hit hardest – most of Africa

• Development gains so far is at risk

• Water and energy security at risk

• heavy reliance on burning wood and charcoal to meet basic energy needs means the continent continues to suffer intense deforestation.

Sources of Green House Gas Emissions

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AFR OECD Developing Countries

Electricity & Heat Manufacturing & Construction TransportationOther Fuel Combustion Fugitive Emissions Industrial ProcessesWaste Agriculture Land-Use Change & Forestry

• Africa: Land-use change is the largest source of GHG emissions

• Africa accounts for only 4% of CO2 emission

• Power accounts for only 10% of Africa’s emissions, and (excluding RSA) <1% of global emissions

• Lack of Energy access and environmental degradation are linked

Energy generation, processing, and use contribute over 60% of the world’s greenhouse gas emissions

What has already changed?

13

Less rainfall in the Sahel

More rainfall in East Africa

Africa has warmed on average 0.5 degree C over last century

Six warmest years on record have all occurred since 1988

Climate change impact is mostly through water

Natural legacy

• extreme variability

• 35-40% around the mean

Historical legacy

Kenya: Annual Rainfall Variation about the Average

60%

80%

100%

120%

140%

160%

Impact on

hydropower

generation and

cooling water

• 60+ international rivers

Projected change in annual basin yield (%)

Change in Basin Yield (%) Climate Change Exposure Risk

Impact

on

water

supply

Impact on

water

Investments

A path forward

Improve Scale-up of regional generation and transmission capacity

Develop a new generation of transformative projects, including natural gas, wind and geothermal

Strengthen Regional Power Sector planning

Develop regional power pools including legal & regulatory frameworks

Support hydro projects with a focus on integrated water resources management

Regional power trade could save almost

US$3 billion annually as well as

70 million tons of CO2

Why think regional about power?

• Africa’s economic geography is a serious challenge

20+ countries with populations of <5 million

20+ countries with economies of <US$5 billion

60 international river basins

15 landlocked countries

• That means power development must be at a regional scale

Most countries too small to generate power efficiently

Handful of countries with major hydro resources

Upstream decisions compromise downstream availability

Regional power trade: a necessity

• Economies of scale in production and regional power trade would save Africa US$2bn/yr

• Exports: dominated by hydropower (DRC, Ethiopia and Guinea)

Earnings could amount to 2-6% of GDP

Huge investments needed to become exporters

• Imports: cover >50% of needs in 16 countries

Savings >US$ 0.03 per kWh or over 1% of GDP

IRR on inter-connections >100% pays back in <1 year

Source:

Power Export Potential

Power flows with trade expansion (TWh in 2015, mostly hydro)

East Africa

West Africa

Southern Africa

Central Africa

Source:

Existing Regional Network

Missing links

Hydropower has high strategic value and offers a “cleaner” development path

Hydropower:

• accounts for 88% of renewable energy

• is a mature technology

• has ancillary benefits, such as system stability, peaking capability

• can store energy

Multi-purpose Hydro:

• contributes to a minimum platform of infrastructure for water security

• can help mitigate extreme events (droughts and floods)

MITIGATION

ADAPTATION

World Bank and Hydropower

• Energy lending grew from US$260 million in 2003 to US$750 in 2007 and 2008.

• Energy lending in 2009 alone was US$1.2 billion.

• Hydropower lending 2009 contained 77 active projects for total investment of about US$ 3.5 billion (not including carbon funded).

• The portfolio is diverse: 28% storage, 48% run-of-river, 24% rehabilitation.

Sudan

Algeria

Libya

Mali

Chad

Niger

Iran

Egypt

Congo, DRC

Russia

Angola

Saudi Arabia

Turkey

Ethiopia

Iraq

Nigeria

Ukraine

South Africa

France

Spain

Namibia

Tanzania

Mauritania

Zambia

Kenya

Italy

Somalia

Mozambique

Yemen

Botswana

Morocco

Congo

Madagascar

Kazakhstan

Syria

Cameroon

Germany

Zimbabwe

Gabon

Romania

Ghana

Poland

Guinea

Uganda

Central African Republic

Senegal

Burkina Faso

Azerbaijan

Bulgaria

AustriaHungary

Cote d'Ivory

Tunisia

Benin

Greece

Serbia

Western Sahara

Eritrea

Malawi

Jordan

Liberia

Portugal

Georgia

Togo

Croatia

SlovakiaCzech Republic

Italy

Italy

United KingdomBelgium

Moldova

Sierra Leone

Belarus

Switzerland

Albania

Israel

Oman

Armenia

Lesotho

Slovenia

Burundi

Bosnia & Herzegovina

Macedonia

Rwanda

Kuwait

DjiboutiGuinea-Bissau

Qatar

Ireland

Swaziland

Cyprus

Montenegro

Lebanon

Equatorial Guinea

Greece

The Gambia

West Bank

Luxembourg

Equatorial Guinea

ComorosComoros

Andorra

Malta

Sao Tome & Principe

Bahrain

Gaza Strip

Jersey

St. Helena

Monaco

Gibraltar

Glorioso Is.

Juan De Nova I.

Vatican City

Fomi

Felou

Jebba

Karuma

Kainji

BumbunaZungeru

Taoussa

Bujagali

Corumana

Metolong

Gibe III

Inga IIIInga III

Adjarala Lom Pangar

Mount Coffee

Ruhudji Hydro

Inga I and II

Lower Kafue Gorge

JMP (Mendaya as illustration)

Legend

AFR Hydropower Project Pipeline

Type

Proactive Engagement

Under Consideration

WPA Commitment

The World Bank is focusing on clean energy and increased access in its lending portfolio

Examples:

• Sierra Leone: Bumbuna Hydro-electric Project

• Africa Rift Valley: Geothermal Facility

• Kenya: Energy Sector Recovery Project

• South Africa: Renewable Energy Market Transformation

• Uganda: Bujagali Hydropower Project

• Cameroon: Lom Pangar Hydropower Project

• Democratic Republic of Congo: Inga 1 and 2 Rehabilitation

Summary

• Power shortages are a brake on economic growth and competitiveness. Climate change can exacerbate this.

• Infrastructure investment needs are massive and Africa faces a huge power sector financing gap. Climate issues can add to this cost.

• Power trade would help to reduce costs and facilitate a shift to cleaner energy. Reduction in carbon emission can be achieved through regional power trade.

• Scaling up hydro development for both urban and rural electrification can significantly reduce biomass fuel use and deforestation. Pricing challenge remains.

• Hydropower can play the mitigation and adaption roles in addressing climate change impacts.

Thank you!