Gridworks, a new company by UK’s development institution CDC, has announced it will invest over US$300 million to improve transmission, distribution and off-grid electricity infrastructure in Africa.
The money will be invested in long-term projects over the coming years to bring about sustainable, affordable and reliable power for Africa’s 600 million people where electricity networks have suffered from decades of historic under-investment in many countries.
The $300m is nothing much compared to what Africa needs but its a welcome move. A recent McKinsey report estimates that US$345 billion of investment in transmission and distribution is required by 2040 to absorb current and planned power generation. Once generated, electricity still needs to reliably and safely reach its intended users, who in turn need to be able to pay for it in a practical and efficient way. CDC’s investment in Gridworks will contribute to Global Goal 7 of the Sustainable Development Goals: Affordable and Clean Energy.
According to CDC’s Chief Executive, Nick O’Donohoe, “For African countries to reach their economic potential they need reliable and affordable power. Getting that power to households and businesses requires well-financed, efficient electricity networks. CDC has a long history and expertise in investing in African power, so I’m proud that we’re capitalising Gridworks to support their ambition to invest over US$300m of long-term capital develop and invest in transmission and distribution infrastructure in the years ahead.
Gridworks’ remit will see it develop and then invest in critical electricity network infrastructure, whether on or off-grid. This could include utility concessions, public private partnerships (PPPs), management contracts, rural electrification programmes, isolated grid systems, off-grid-to-on-grid investments, or utility services companies.
Traditionally, the public sector and multilateral institutions have been responsible for financing the electricity network in Africa, but the scale of the challenge means there is a need for complementary investment from the private sector. Gridworks will work with governments, multilateral organisations and other investors to bring flexible, patient capital and private sector expertise to the sector. It will develop and then invest in commercially sustainable infrastructure, bringing affordable, reliable power to the people and businesses who need it.
The UK Government’s Minister for Africa, Harriet Baldwin, MP added: “Gridworks is a fantastic initiative using British expertise and finance to connect millions of people across Africa to electricity. The provision of reliable and affordable power is a real barrier to economic development and by providing capital and expertise, CDC is supporting the growth of businesses and jobs in some of the poorest countries in the world.”
CDC has appointed Simon Hodson as the CEO of Gridworks.
Simon Hodson said:“The need for investment in electricity networks in Africa cannot be underestimated. Creating sustainable and investable opportunities in transmission and distribution means building the right environment and the right regulatory framework to attract private investment. I want to see Gridworks play a central role in transforming Africa’s power infrastructure by working with key stakeholders across the continent to bring much needed capital and expertise. This will improve the quality of networks, create the demand necessary for further generation and improve the lives of individuals and businesses alike.”
CDC has played an important role in bringing power infrastructure to Africa. In recent years, CDC has invested in and helped develop Globeleq, Africa’s largest power platform with eight power plants in five countries, Virunga, an isolated hydro-power grid in the north-east of the Democratic Republic of Congo. Umeme, Uganda’s national electricity utility which CDC helped establish in 2005 and Eneo, Cameroon’s national utility, which it is supporting as it expands the country’s power supply and power efficiency