Shaping the Future of Energy Development

In the past decade, China’s energy demand has nearly doubled. With this has come a rapid development of the countries hydropower industry - not only investing in hydropower in China itself, but in hydropower around the world. Involvement goes so far as Latin America, including work on a dam in Ecuador that is expected to supply the country with 45% of its total power. This may seem like a strange partnership, but Chinese banks are willing to finance projects in countries with poor credit ratings - ones that historically have had difficulty accessing sufficient capital for major infrastructure projects such as these.

Chinese involvement in hydropower is only expected to increase in the coming years, with plans for construction of reservoirs in a multitude of South and Central American countries including Argentina, Belize, Costa Rica, Colombia, Guyana, Honduras, and Peru.

Read more on this here.

South African Power Plants Fail to Meet Output Targets

The largest power plant breakdown in South Africa in three years has caused multiple unplanned outages in the past week, thus causing a decrease in production at many of the countries major companies. Roger Baxter, Chief of Mines in South Africa stated that many companies have confirmed that they are feeling constrained by the rationing of the power supply, especially as they become more frequent. Bloomberg Business reports: “Eskom Holdings SOC Ltd., the utility that provides 95 percent of the nation’s power, rationed supply for a fourth straight day on Friday. Its aging plants are breaking down more often and the startup of new capacity has been delayed by construction issues and labor unrest.” As much as 37 percent of Eskom’s installed generating capacity was offline last on Thursday.

Bloomberg goes on to report that “Eskom is struggling to keep the lights on after the country failed to invest adequately in generation in the 20 years after the first democratic elections in 1994, even as the government expanded supply to an extra 7 million people.” Although Eskom has already removed 2,000 megawatts from the power grid, it is estimated that they will have to cut 4,000 megawatts of capacity in the coming weeks, amounting to blackouts of 9 hours in length in 4.5 hour blocks in both businesses and homes.

South Africa is the world’s 7th largest producer of coal, and Eskom uses coal to generate about 80% of its electricity. Mineral Resources Minister Ngoako Ramatlhodi declared that state-owned African Exploration Mining and Finance Corp., “will be augmenting its portfolio to contribute towards greater security of supply.” Many companies and residents are demanding research be done in order to find more efficient ways to use coal. Read more on this here.

World Bank to Give Kyrgyzstan $24 Million to Provide Electricity to Remote Areas

The World Bank Executive Board of Directors approved $24 million to go towards the Energy Sector Development Policy Operation for the Republic of Kyrgyzstan today. The goal of this project is to improve the long term reliability of the Central Asian republic’s energy supply, which has deep rooted structural issues. The country relies mostly on hydroelectric power but is very unreliable due to a multitude of issues.

AKIpress reports: “The Kyrgyz Republic has the lowest electricity tariffs in the Europe and Central Asia region, which contributes to the inefficient use of energy, severe under-spending on maintenance and new investments, and resulting poor supply reliability and quality. The patchwork regulatory framework and insufficient transparency and accountability result in operational inefficiencies and undermine public trust in the sector.” When these issues are coupled with the fluctuation in hydrology cycles, energy shortages become abundant. The issue has become more apparent in the winter 2014-2015 season as there has been a significant reduction in water flow to the much relied upon Toktogul reservoir.

The approach being taken is to focus on a few main policy areas including increasing electricity tariffs, strengthening energy sector governance and transparency, and better management of power shortages in remote and lower income areas. The hope is that by addressing these different policy areas that are interlinked at the core, energy supply reliability will greatly improve in the coming years.

Read more about this operation here.

How can private-sector investment increase capital while impacting climate change in Sub-Saharan Africa?

The US-Africa Clean Energy Finance (ACEF) initiative reportedly reached 100% commitment of their initial $20 million project funds in December. The project was designed to support early stage private-sector investment in renewable energy in Sub-Saharan Africa. ACEF was launched at the UN Conference on Sustainable Development 2012 under then Secretary of State Hillary Clinton. At the US-Africa Leaders Summit in August of 2014, current Secretary of State John Kerry announced his support for the project and pledged that the US will invest another $10 million. 

So far the project has seen much success and praise with funds having been invested in nearly 30 different renewable energy projects in 10 African countries. The US Trade and Development Agency reports: “The initial $20 million of funding has the potential to lead to more than 400 megawatts of new renewable power in Africa and could mobilize more than $1.5 billion in project capital, a ratio of $75 for every $1 from the ACEF program.” The initiative has a goal of making energy more reliable in Sub-Saharan Africa in both urban and rural environments while also inviting private investment. Projects include a 150 megawatt wind farm in Senegal and a 12 megawatt “run-of-the-river” hydroelectric power facility in Rwanda. 

Todd Stern, US special envoy for climate change at the US State Department states: “ACEF is an excellent example of how we can use limited public resources to leverage the private financing necessary to fuel low-carbon growth in developing countries – a key step in meeting the challenge to address climate change.

Learn more about this initiative here.

What are the impacts of monoculture economies?

Oil has fallen to it’s lowest price since May 2009. Many countries, especially in Africa and the Middle East, rely almost solely on oil revenue - For Algeria, oil revenue makes up 97 percent of hard currency earnings, and the government has done little to diversify the economy. This heavy reliance on oil and gas is dangerous. While Algeria has done well to subsidize basics such as electricity, food, education, and housing, all of these things are provided and supported with money brought in from oil and gas. “Algerians will not find anything to eat if the price of oil continues to fall,” stated independent lawmaker Habib Zegad. Read more on Algeria’s monoculture economy here.

Energy: East Africa Pipeline

Oil fields found across East Africa in recent years hold vast economic potential. Building a joint pipeline to bring the oil to market could generate millions in revenue for member nations. 

What are the long-term impacts of building a pipeline in the region? How can the neighboring nations agree on a joint plan? Which of the proposed plans is most financially efficient? Which proposal would bring the most public benefit as well as political stability?

The Daily Nation reports that Kenya’s plans for a pipeline between Nairobi and Mombosa are moving forward. Reuters notes that the feasibility of further plans is still under debate. The Economist wrote about the overarching political and economic obstacles to the project in “Pipeline Poker.”