By Katrina Pielli, U.S. Department of Energy; Himesh Dhungel, Doug Mason, Dan Tobin, Millennium Challenge Corporation; and David Gottfried, U.S. Department of Treasury.

Between 2010 and 2040, it is estimated that Africa’s energy demand will grow by 85 percent¹. While new power generation and associated infrastructure are critical to bridging the gap between energy supply and demand, the role of energy efficiency as a least-cost energy resource is critical to reducing overall demand, decreasing the need for expensive peak capacity, and allowing electricity supply to be expanded to meet increasing demand in a timely, low-cost, and sustainable way.

One example of energy efficiency making a difference in overall demand is Ghana’s appliance labeling program (labeling appliances to show consumers the energy consumption and efficiency of the product) and associated regulations. These efforts have resulted in estimated peak energy savings of over 120 megawatts (MW). As a result, this program has displaced the need for $105 million (USD) in generation investment and reducing carbon dioxide emissions by over 110,000 tons annually². This type of work will continue with support from the Millennium Challenge Corporation’s second compact with Ghana that includes the development and enforcement of additional standards and labels to keep the most energy inefficient products out of the market³, as well as improving the peak load management through efficient lighting.

At the local level in many African nations, peak demand is often met with power from privately owned diesel generators, which supply very expensive electricity and pollute the air. By 2011, over three gigawatts (GW) of total cumulative energy savings were achieved through the establishment of energy efficiency incentive programs in South Africa by Eskom⁴, over a 10 year period, representing the combined electricity output of five 600 MW generators⁵.

Appliances and lighting are primary consumers of electricity in residential and commercial buildings. And as more Africans become connected to the grid, the efficiency of appliances and lighting becomes even more critical to cost-effectively meet demand, mitigate supply constraints, and improve utility sector performance. For example, a 40-watt solar panel can power a 25-watt incandescent light for almost five hours a day. However, if the latest high-efficiency appliances are used, the same system could power two brighter LED lights for the same five hours, while also powering a color television, a fan, a mobile phone charger, and a radio for more than three hours per day⁶.

A focus on energy efficiency in Africa in parallel with new energy supply (central station power generation, mini-grids, and distributed renewable generation) can help reduce energy intensity⁷, realize energy savings⁸, lower the carbon footprint⁹, create jobs¹⁰ and markets for energy efficiency related products and services, and allow electricity generation expansion to meet increasing demand in a timely, low-cost, and sustainable way.

Despite the many benefits of increasing energy efficiency investment in Africa, there are key challenges, some of which are more difficult to overcome than others. For example, rural-urban economic disparities and opportunities have led to rapid urbanization, resulting in significant peak demand growth. While urbanization is difficult to manage, demand growth and inefficient use of energy can be managed by technical and economic approaches to demand side management and energy efficiency.

Additional challenges to greater energy efficiency in Africa include:

• The limited awareness of the benefits provided by energy efficiency and limited understanding of energy efficiency as an energy resource. These challenges continue to perpetuate the supply-side focus for meeting Africa’s energy needs.
• Poor regulatory environments and governance challenges that undermine the economic incentives to conserve electricity or invest in energy efficiency and inhibit a vibrant private-sector energy efficiency market. Instituting cost-reflective tariffs with lifeline tariffs for the poor will help ensure that power utilities have a sustainable business model and that vulnerable populations retain access to electricity.
• Lack of local, trained workforce to undertake new energy efficiency projects. Investing in local workforce training and accreditation is critical.
• Many commercial and industrial businesses face a lack of access to financing for energy efficiency projects. Low-cost loans and other financing mechanisms can provide increased opportunities for energy savings projects to be implemented.

As we work to achieve the Power Africa goals of adding 30,000 MW of new power generation and expanding access to power to 60 million new households and businesses connections, we must also keep in mind our long-term aim to double access to cleaner, reliable, and efficient electricity in sub-Saharan Africa. Therefore, it’s critical to share information with these new energy consumers about the benefits of efficiency -- living in better insulated houses, working in efficient buildings or factories, and buying efficient appliances and lighting that allows every kilowatt generated to deliver more services.

The importance of increasing the visibility of energy efficiency among African leaders and highlighting African energy efficiency successes were all themes at the June 2014 U.S.-Africa Energy Ministerial¹¹. From this came a clear picture that Power Africa must also be a venue to showcase successes and lessons learned from African countries and help expand the investment and savings from energy efficiency and demand side management.

Power Africa looks forward to engaging donor organizations and other key stakeholders in the exploration of how to raise the profile of energy efficiency in Power Africa countries. If you would like to get involved, please contact Katrina Pielli at the U.S. Department of Energy (katrina.pielli@ee.doe.gov).

¹http://www.eia.gov/forecasts/ieo/world.cfm. Energy consumption in Africa is projected to increase by over 16 quads between 2010-2040. International Energy Outlook 2013, Release Date: July 25, 2013. Also see http://www.iea.org/publications/freepublications/publication/WEO2013_Exe...

²http://www.worldfuturecouncil.org/fileadmin/user_upload/PDF/PkfA.neuKofi...

³http://www.mcc.gov/pages/countries/program/ghana-compact

⁴Eskom generates approximately 95% of the electricity used in South Africa. http://www.eskom.co.za/

⁵http://eetd.lbl.gov/sites/all/files/south_africa_country_study_lbnl_repo...,

⁶Fact Sheet: Global Lighting and Energy Access Partnership (Global LEAP)

⁷Energy intensity is measured by the quantity of energy required per unit output or activity, so that using less energy to produce a product reduces the intensity. http://www1.eere.energy.gov/analysis/eii_efficiency_intensity.html

⁸http://www.mckinsey.com/Client_Service/Electric_Power_and_Natural_Gas/La...

⁹ World Energy Outlook 2013. As the source of two-thirds of global greenhouse-gas emissions, the energy sector will be pivotal in determining whether or not climate change goals are achieved.

¹⁰ Energy efficiency provides local employment opportunities – efficiency could generation between 1.2 - 1.6 million jobs in the MED-ENEC countries (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria and Tunisia) alone by 2030. http://www.egelec.com/pdf/MED_ENEC_employment_29082013_web_RGB.pdf.

¹¹http://energy.gov/eere/articles/deploying-american-made-clean-energy-tec.... http://www.aceee.org/files/pdf/white-paper/energy-efficiency-job-creatio... http://www.energy.gov/ia/initiatives/us-africa-energy-ministerial