Two weeks ago, Africa Development Bank (AfDB) President Donald Kaberuka rekindled the long running debate on Africa’s quest to satisfy its deep thirst for energy.
Mr Kaberuka who spoke in London defended the bank’s decision to “go against the grain” and continue financing coal power projects in Africa.
Kenya is among African countries with massive coal power projects on the cards aimed at boosting the national output amid growing demand from industrial and domestic consumers.
Opponents of coal argue that it is dirty, an environmental hazard and not a sustainable energy source.
The question is whether Kenya and other African nations with ambitions of industrialising can be too choosy as to ignore coal – the well-known driver of economic advancement around the world.
With a generation capacity of 2,147 megawatts (MW) against a peak demand of about 1,500 MW, Kenya is under pressure to keep pace with the annual growth in demand of five per cent.
Increasing demand for power in Africa is partly premised on the fact that only 39 per cent of the population has access to electricity, compared to 70-90 per cent in other parts of the developing world.
AfDB data shows that Africa’s power connectivity is at 39MW per million inhabitants, the lowest in any developing region. The data also shows that more than 30 African countries experience recurrent outages and load shedding, with opportunity costs amounting to as much as two per cent of the total annual economic output.
Africa’s per capita energy consumption is expected to rise to 1,757 kilowatt hour (kWh) in 2040 from less that 1000kWh presently while total demand from industry should rise to 1,806 terrawatt-hours (TWh) by 2040.
This dire situation has, however not stopped the raging debate as to whether Africa should rely on sources such as coal to boost their power supplies and drive economic growth.
Environmental groups including Greenpeace, Oxfam and WWF have opposed the construction and financing of coal plants, citing environmental and health risks.
The World Bank and European Investment Bank have both yielded to such pressure and put limits on how far they can go financing coal projects. The governments of the UK, Denmark, Finland, Norway and Sweden have followed suit.
In Kenya, activists under the Save Lamu Group have opposed the construction of a 960 MW coal plant in Hindi, Lamu citing threats to the environment and human life.
AfDB which finances a wide range of energy projects in Africa however maintains that the continent cannot ignore coal just yet.
Dr Kaberuka, reckons that the region doesn’t “have the luxury” of ruling out polluting fuels in favour of more costly renewables such as wind and solar.
“It is hypocritical for western governments who have funded their industrialisation using fossil fuels, and are now providing their citizens with enough power, to say to African countries, ‘you cannot develop dams, you cannot develop coal, just rely on these very expensive renewables. African countries will not listen.”
AfDB is already supporting several clean energy projects in Africa, including wind and geothermal power.
In Kenya, for example AfDB is supporting the 300Mw Lake Turkana wind power project. The bank is also supporting the 105 MW Menengai geothermal power plant and has provided a $12.7 million partial risk guarantee for the Independent Power Producers in the project, which has the potential to supply about 500,000 households and 300,000 businesses with power.
The Menengai geothermal steam field development project involves the use of the Geothermal Development Company (GDC) steam to generate power in the three power plants at the field.
Despite the rising output from renewable forms of energy such as wind, solar and geothermal, coal remains an option for many countries in Africa such as Kenya and South Africa.
Like other successful economies including the US and Europe, South Africa remains Africa’s benchmark in terms of how energy sources such as coal can help drive change. Though often down played, coal has played a big role in South Africa’s economic development.
Estimates show, coal supplies over 70 per cent of the country’s energy needs, over 90 per cent of its electricity requirements, and over 95 per cent of its metallurgical carbon (coke) requirements.
Coal was South Africa’s primary source of resource revenue in 2011, 2012, and 2013 and the first commodity to generate a total sales in excess of R100 billion ($8.4 billion) in one year, a according to statistics published by Cornerstone, the official journal of the World Coal Association.
In Kenya, estimates show that coal has the potential to become one of the most reliable and easily accessible base for electricity generation.
But despite this huge potential, the mineral currently accounts for just one per cent of the primary energy consumed, mainly by cement manufacturers.
This is however about to change with the recent award to Amu Power Company a tender to construct a coal power plant in Lamu.
The Lamu coal plant is among the many that the government is executing under an ambitious scheme to generate 5,000 MW of power in 40 months starting September 1, 2013 under the public private partnership (PPP) arrangement.
The plant will initially use imported coal and later source raw materials from Kitui’s Mui basin. Power generated from the coal plant will be sold to Kenya Power under the long-term Power Purchase Agreement (PPA) framework.
The plan is to use the coal plant to transform the tourist heavens on the Lamu archipelago and to power a second sea port whose construction starts this month.
Africa has argued that the immense energy needs leave it open for adoption of various sources, including the controversial coal, to bridge the gap in supplies.
“To every single African country, from South Africa to the north, the biggest impediment to economic growth is energy, and we don’t have the luxury of being selective. There is a little bit of hypocrisy in the West at this moment,” Dr Kaberuka said.
Mr Bjørn Lomborg, author of The Skeptical Environmentalist and Cool It and president of the Copenhagen Consensus Centre concurs that restricting the energy options for Africa would stifle economic growth prospects and raise poverty levels.
“It seems immoral to me to want to reduce CO2 emissions by denying the very poorest energy access while we in the West continue to get more than two-thirds of our much higher energy consumption from fossil fuels,” he said in an opinion article.
Like in other controversial sectors such as oil, African governments and investors taking on coal energy projects must win the confidence of communities by clearly enacting rules that will guide basic issues such revenue-sharing, job allocations and health management to avoid future conflicts.
Proper macroeconomic management and governance structures can ensure that the proceeds generated from such projects trickle down to development and poverty-reduction in local communities.