RFP 72067423R00002 EECA - FINAL.pdf

RFP Number: 72067423R00002 RFP Title: Empower East and Central Africa (EECA) RFP Issuance Date: December 6, 2022 Questions Due Date and Time: December 19, 2022, 5:00pm EST Closing Date and Time for Receipt of Proposals: January 24, 2023, 5:00pm EST

To All Prospective Offerors:

The United States Government, represented by the U.S. Agency for International Development (USAID) anticipates awarding one Cost-Plus-Fixed-Fee (CPFF) completion contract with an estimated period of performance of five (5) years for the implementation of the Empower East and Central Africa (EECA) activity. Subject to availability of funds, the estimated cost range for this contract is between $85,000,000

- $95,000,0000.

The procurement will be conducted through full and open competition, under which any type of organization (large or small commercial [for profit] firms, educational institutions, and nonprofit organizations) is eligible to compete. The procedures set forth in Federal Acquisition Regulation (FAR) Part 15 apply.

Section L of the RFP sets forth all instructions for the preparation and submission of required proposal content, including critical dates/times for the submission of questions, and the proposal submission closing date and time. Section M states the criteria by which proposals will be evaluated.

Any questions related to this RFP must be submitted by email to proposals@usaid.gov with copy to Lezanda Bruwer at lbruwer@usaid.gov by the time and date specified above. No questions will be accepted after the date and time stated above.

This RFP can be viewed and downloaded from https://sam.gov/content/home. USAID bears no responsibility for data errors resulting from transmission or conversion processes. Further, be aware that amendments to solicitations are occasionally issued and will be posted on the same website from which you downloaded the solicitation. USAID advises to regularly check the above website for amendments.

The principal geographic code for this contract is 935. The North American Industry Classification System (NAICS) code for this activity is 541690. Under 13 CFR 121.201, the U.S. Small Business size standard is $17M of annual receipts.

Issuance of this solicitation does not in any way obligate the U.S. Government to award a contract nor does it commit the U.S. Government to pay for costs incurred in the preparation and submission of a proposal. Award of a contract under this RFP is subject to availability of funds and other internal USAID approvals. Furthermore, the Government reserves the right to reject any and all offers, if such action is considered to be in the best interest of the U.S. Government. USAID reserves the right to award this contract without discussions.

Thank you for your interest in USAID programs.

Sincerely, Nancy Kleinhans Regional Contracting Officer mailto:proposals@usaid.gov mailto:lbruwer@usaid.gov https://sam.gov/content/home

RFP No. 72067423R00002

SECTION B: SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 PURPOSE

The purpose of this contract is to increase the availability of and access to affordable, reliable, sustainable and clean energy in Eastern and Central Africa.

B.2 CONTRACT TYPE/CONTRACT SERVICES

This is a Cost-Plus-Fixed-Fee (CPFF) completion contract with an estimated period of performance of five (5) years. For the consideration set forth below, the contractor must provide the deliverables or outputs described in this contract and comply with all contract requirements.

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

(1) The estimated cost for the performance of the work required hereunder, exclusive of fee is [$ To be completed prior to award]. The fixed fee is [$ To be completed prior to award]. The total estimated cost plus fixed fee is [$ To be completed prior to award].

(2) The amount currently obligated and available for reimbursement of allowable costs incurred by contractor (and payment of fee, if any) for performance hereunder is [$ To be completed prior to award].

The contractor must not exceed the aforesaid obligated amount, nor will the U.S. Government (USG) be responsible for costs incurred should the contractor do so.

(3) Funds obligated hereunder are anticipated to be sufficient through [To be completed prior to award].

Funding for this contract will be on an incremental basis, subject to availability of funds.

B.4 CONTRACT BUDGET

The budget for this contract is as follows: [To be completed prior to award]

CLIN Line Item Total

001a Direct Costs $TBD

001b Indirect Costs $TBD

001c Fixed Fee $TBD

TOTAL ESTIMATED COST-PLUS FIXED FEE $TBD

B.5 INDIRECT COSTS

Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs will be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases:

[To be completed prior to award]

B.6 COST REIMBURSABLE

The U.S. dollar allowable costs will be limited to reasonable, allocable and necessary costs determined in accordance with FAR 52.216-7 Allowable Cost and Payment (AUG 2018) and FAR 52.232-22 Limitation of Funds (APR 1984), and AIDAR 752.7003 “Documentation for Payment.”

B.7 PAYMENT OF FIXED FEE

Payment of fee, referenced above in B.3 and B.4, will be in accordance with FAR 52.216-8. The Contracting Officer, in consultation with the Contracting Officer’s Representative (COR) and at the request of the contractor, may modify the below fee schedule, based upon changes in underlying assumptions, the development context or other extenuating circumstances.

Upon successful completion of a deliverable, the contractor must provide evidence of its achievement to the COR for verification. Upon receipt of concurrence by the COR, the contractor may submit an invoice for the amount of the fee associated with the deliverable.

In the event of discontinuance of the work in accordance with the clause of the contract entitled FAR 52.249-6 Termination (Cost Reimbursement), the fee must be re-determined by mutual agreement equitably to reflect the reduction in the work actually performed. The amount by which such fee is less than, or exceeds, payments previously made on account of the fee must be paid to, or repaid by the contractor, as applicable.

Contract Year 1:

No. Description of Deliverable Method of Verification Amount of Fee

[Offeror to propose inputs to this table]

Contract Year 2:

Contract Year 3:

Contract Year 4:

Contract Year 5:

B.8 MULTI-YEAR CONTRACT

The ceiling is considered non-severable and is therefore a multi-year contract as defined in FAR 17.103.

This contract is subject to the requirements of FAR 17.106.

This is a Cost- Plus- Fixed- Fee (CPFF) type contract where the contractor is authorized to be reimbursed for all costs which are allowable in accordance with FAR 52.216-7, “Allowable Costs and Payment.”

Therefore, the contractor will not incur any costs which would have been amortized over the life of the contract should it be canceled in accordance with FAR 52.217-2. Therefore, the cancellation ceiling established pursuant to FAR 17.106-1(c)(1) for each program year is detailed below.

In the event that the Government cancels requirements for services in subsequent program years under this contract, the following conditions will apply: [Amount and dates to be filled in prior to award]

Cancellation Dates [To be completed prior to award, Offeror to propose]:

Contract Year 2: DATE TBD, [Award year + 1 year] Cancellation Ceiling: To be completed prior to award Contract Year 3: DATE TBD, [Award year + 2 years] Cancellation Ceiling: To be completed prior to award Contract Year 4: DATE TBD, [Award year + 3 years] Cancellation Ceiling: To be completed prior to award Contract Year 5: DATE TBD, [Award year + 4 years] Cancellation Ceiling: To be completed prior to award

The amounts above are based on the nonrecurring costs to be incurred by the contractor, which would be applicable to, and which normally would be amortized over the life of the contract, and the items or services to be furnished under the multi-year requirement.

[END OF SECTION B]

SECTION C: DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK (SOW)

C.1 INTRODUCTION

The Empowering East and Central Africa (EECA) contract will increase the availability of and access to affordable, reliable, sustainable, and clean energy in East and Central Africa in order to reach measurable development outcomes. Measurable development outcomes include economic growth, increased resilience, improving livelihoods, and increasing inclusive access to electricity-enabled services in such areas as agriculture, water provision, education, transportation and telecommunications.

Power Africa has encouraged the efforts of sub-Saharan African countries to develop power solutions that support poverty reduction, promote development outcomes, and drive economic growth through several regional energy programs, including the East Africa Energy Program and the Power Africa Off-Grid Program, which are scheduled to conclude in 2023. EECA will build upon these efforts.

EECA will support the accelerated connection of more East and Central African homes, businesses, and institutions to reliable electricity and increase its productive use; reduce greenhouse gas emissions from the energy sector by supporting cleaner electricity generation and just energy transitions; and increase energy sector investment, working in partnership with East and Central African governments to improve the enabling environment for the energy sector.

C.2 BACKGROUND

Approximately 600 out of the 800 million people in the world without access to electricity are Africans, often living in poverty in drought-prone, fragile, conflict-affected countries, where predatory exploitation of natural resources and energy production have fed corruption and led to environmental degradation and inequity.

Africa’s current population of 1.37 billion is expected to almost double and increasingly urbanize by 20501, which will have major implications for the development of the energy sector. This population growth has resulted in a youth bulge with a median age of 20 in Africa as compared to a median age of 31 in Latin America, 32 in Asia, 39 in North America, and 43 in Europe.2 A young, rapidly expanding population will compound the current deficit in energy supply and heighten the need for less carbon intensive energy options to meet current and future demand in an environmentally sustainable manner.

The East Africa region has one of the most advanced energy sectors in sub-Saharan Africa, with over 20 years of experience with independent power producers (IPPs). The generation mix has also expanded with significant development of geothermal, wind, and solar power from the previous overdependence on hydro and thermal power. There has also been significant development in the expansion of the transmission and distribution infrastructure to support the expanding customer base and to facilitate regional power trade. Despite these developments, the energy sector still faces challenges that may impact its ability to support countries' economic development agenda. Major issues include weak and aging transmission and distribution infrastructure, high electricity loss levels, frequent and long outages -especially in the rural areas, highly indebted utilities with significant liquidity challenges and delays in reviewing electricity retail tariffs. Other pertinent issues include inconsistencies and delays in approval of new IPPs, inadequate access to project financing, unclear delineation between on-grid and off-grid development plans, long delays in project implementation due to right-of-way challenges. The region is

1 The Economist, March 26, 2020 https://www.economist.com/special-report/2020/03/26/africas-population-will-double-by-2050 2https://www.pewresearch.org/fact-tank/2020/04/22/populations-skew-older-in-some-of-the-countries-hit-hard-by-covid-19/ https://www.economist.com/special-report/2020/03/26/africas-population-will-double-by-2050 https://www.economist.com/special-report/2020/03/26/africas-population-will-double-by-2050 https://www.pewresearch.org/fact-tank/2020/04/22/populations-skew-older-in-some-of-the-countries-hit-hard-by-covid-19/ https://www.pewresearch.org/fact-tank/2020/04/22/populations-skew-older-in-some-of-the-countries-hit-hard-by-covid-19/ also facing a near-term electricity demand/supply mismatch as demand growth has lagged behind the development of power generation infrastructure, opening up opportunities for large scale demand creation and power trade between countries and regions.

The Central Africa region includes large country populations, and one of the lowest electrification rates globally. For example, decentralized mini-grids and standalone off-grid solutions could reach an estimated 61 million people in the Democratic Republic of Congo (DRC), according to Power Africa’s Off-Grid Solar Market Assessment for that country.3 The energy sector is hampered by a poor business operating environment, governance challenges such as corruption, poor electric utility performance, high taxes, and nascent regulatory agencies. Yet a renewable energy market is emerging in Central Africa. For example, President Tshisekedi announced an ambitious 30% electrification target, appointed directors to the two new energy agencies, and granted $5 million to the Mwinda Fund to stimulate increased electricity access in the DRC.4

The solution lies in partnering with African counterparts to achieve universal and affordable access to sustainable energy, while meeting key development objectives, including improved economic development, access to basic services, and food security. Given its abundance of natural resources, including solar, wind, and geothermal resources, East and Central Africa are well-positioned to meet the growing demand for energy in an environmentally sustainable manner.

Energy sector development offers new opportunities for the United States and East and Central African nations in the areas of investment, technology advancement, research and development, job creation, and market expansion. New gender equity and empowerment, local capacity, digitization, climate finance and just energy transition priorities hold the promise of driving improved and sustained development impacts.

C.3 SCOPE OR MISSION

In alignment with the UN’s Sustainable Development Goal #7 (By 2030, ensure universal access to affordable, reliable, sustainable and modern energy services), the U.S. Congress passed the Electrify Africa Act of 2015 (P.L. 114-121) to encourage the efforts of sub-Saharan African countries to develop power solutions that support poverty reduction, promote development outcomes, and drive economic growth. Power Africa directly supports this Congressional mandate.

Power Africa is a U.S. Government-led partnership, coordinated by USAID, that brings together the collective resources of 12 U.S. Government agencies, 20 development partners, key African institutions and counterparts, and over 170 private sector partners to advance sub-Saharan Africa’s development through universal access to clean energy by 2030. To help meet this goal, Power Africa is working with partners and stakeholders to reach 30,000 megawatts of additional electricity and 60 million new household and business connections by 2030. To date, Power Africa has supported 13,000 megawatts of new power projects and 29 million household and business connections. Going forward, Power Africa intends to accelerate progress to achieving our goals based on lessons learned.

Power Africa acts as an honest broker in the region, working with African governments and sector leaders to build the regulatory and governance structures necessary to combat predatory lending and corrupt business practices, and drive public and private investment into the energy sector.

3 Power Africa Off-Grid Solar Market Assessment for DRC 4 https://www.elanrdc.com/latest-news/2021/2/1/president-flix-tshisekedi-presented-a-5-million-usd-cheque-to-nbspthe-national-renewable-energy-fund-mwindanbsp https://www.congress.gov/bill/114th-congress/senate-bill/2152 https://www.congress.gov/bill/114th-congress/senate-bill/2152 https://www.congress.gov/bill/114th-congress/senate-bill/2152 https://www.congress.gov/bill/114th-congress/senate-bill/2152 https://www.usaid.gov/sites/default/files/documents/1860/PAOP-DRC-MarketAssessment-Final_508.pdf https://www.elanrdc.com/latest-news/2021/2/1/president-flix-tshisekedi-presented-a-5-million-usd-cheque-to-nbspthe-national-renewable-energy-fund-mwindanbsp https://www.elanrdc.com/latest-news/2021/2/1/president-flix-tshisekedi-presented-a-5-million-usd-cheque-to-nbspthe-national-renewable-energy-fund-mwindanbsp

Future Power Africa interventions will continue to be at the forefront of SSA’s transition to a more sustainable low-carbon energy system. Activities will deepen engagement with governments, energy ministries, utilities, regulators, financial institutions, other development partners, and international and local energy businesses to support a more just and lasting enabling environment delivering tangible results in the energy sector.

C.4 PROBLEM STATEMENT

There are several key constraints to increasing the availability of and access to affordable, reliable, sustainable, and modern electricity in East and Central Africa:

C.4.1 Access, Affordability, and Reliability

Nearly half of the population of sub-Saharan Africa (SSA) lacks access to affordable and reliable electricity. Countries with limited access to electricity are usually lowly ranked in the human development index. Although access to electricity alone does not guarantee development, it impacts the extent of social and economic poverty in affected areas. The lack of access to electricity is evidenced in many SSA countries with low per capita electricity consumption and low industrial activity.

The effects of energy poverty are acutely felt by the most vulnerable, including people displaced by climate change and conflict, and women and girls. Given recent waves of violence and climate shocks in countries including Ethiopia, the Democratic Republic of Congo, and Somalia, responding to the needs of the displaced will become increasingly important. Partnerships between the public and private sectors, such as the Smart Communities Coalition, can help to meet the needs of refugees and displaced people.

Additionally, the effects of energy poverty are acutely felt by women and girls.5 Data demonstrate that when schools and homes are electrified, girls are more likely to stay in school.6

While increasing electricity access remains critical, ensuring the reliability and affordability of services is an even greater challenge. East and Central African countries have unreliable grids, with enterprises reporting an average of nine outages per month and a loss in business revenue.7 Operational inefficiencies and losses within utilities and existing infrastructure result in the cost of service being higher than the affordability threshold of the end users. Many electricity customers are located in rural or peri-urban areas where lower incomes and poor infrastructure are interlinked. These customers may often end up paying a higher percentage of their incomes for energy than those in urban areas with access to the grid, despite having lower purchasing power.

Demand is directly linked to affordability. Off-grid energy is a way for governments and service providers to encourage and support renewables without the need for large-scale activities in underserved areas that have not yet been served by the traditional grid. Due to their comparatively low purchasing power, many off-grid customers may only be able to afford low tiers of energy services at present, for example basic lighting and cooking. In the standalone solar sector, companies must tailor their products to customers with low purchasing power, and as a result, may only offer small products such as lanterns or small solar home systems.

5 Van Leeuwn, Richenda, United Nations Foundation, Power for Girls and Women: 5 Facts on How Electricity Powers Progress, (April 4, 2016), at: https://unfoundation.org/blog/post/power-for-girls-and-women-5-facts-on-how-electricity-powers-progress/ 6 UNDESA, Electricity and education: The benefits, barriers, and recommendations for achieving the electrification of primary and secondary schools, (December 2014) Final Online Version, pg. 13, At:

https://sustainabledevelopment.un.org/content/documents/1608Electricity%20and%20Education.pdf 7 Ibid.

https://unfoundation.org/blog/post/power-for-girls-and-women-5-facts-on-how-electricity-powers-progress/ https://unfoundation.org/blog/post/power-for-girls-and-women-5-facts-on-how-electricity-powers-progress/ https://sustainabledevelopment.un.org/content/documents/1608Electricity%20and%20Education.pdf

Energy companies are finding new, innovative and cost-effective ways to deliver distributed energy solutions to rural populations in East and Central Africa without having to wait for the grid to arrive.

beyond-the-grid solutions run the gamut from mini-grids (including under-grid mini-grids, metro-grids, grid-connected mini-grids), integrated utilities, and standalone solar home systems. Beyond-the-grid is the same as off-grid and distributed renewable energy. Distributed renewable energy (DRE) offers a promising solution. DRE is defined as a broad range of energy access solutions that can be applied in off-grid areas where traditional approaches to grid extension are not feasible due to financial, geographic, or technical constraints; and in weak grid areas where power is unreliable. DRE solutions present a promising alternative, but like many clean energy investments, require a comparatively high upfront cost, which may initially appear more expensive than an existing fossil fuel solution (kerosene, diesel or gasoline) but are much cheaper in the long run when life cycle costs are compared.

To expand the customer base, reach new markets, and achieve profitability, DRE companies require demand-driven business development support. Local renewable energy associations, which represent the interests of DRE companies, require capacity building support as they take on the role of enhancing sustainability of the DRE sector in their countries.

In the mini-grid sector, companies may offer a higher tier of service at the outset, but the mini-grids are often underutilized, negatively impacting key commercial metrics. This causes political and legal uncertainty for investors, making it harder for companies to achieve commercial sustainability. In addition to efforts aimed at increasing affordability, the broader off-grid energy sector must make greater efforts to stimulate demand. In considering issues of demand the sector must consider the energy needs of women, important but often undervalued customers. Evidence suggests that women can be strong ambassadors for rural electrification, referring new customers to off-grid solar enterprises, a significant benefit to growing these companies.8

The same is true of on-grid electrification. The lack of transmission and distribution infrastructure results in some countries having excess generation capacity with a large portion of their population unelectrified.

Inefficiencies at the distribution level mean the utility or utilities will not recover their costs for all the electricity supplied. Operational inefficiencies, aging infrastructure, theft, and non-cost-reflective tariffs all contribute to this challenge. When combined, these problems limit distribution utilities’ ability to make needed investments, including expanding their services, expanding to new areas, and upgrading existing infrastructure, resulting in low rates of grid-connected electricity access.

C.4.2 Economic Development and the Energy Transition

According to the World Bank, climate change increases the costs of development in the poorest countries by between 25 and 30 percent. Africa is the continent most vulnerable to the adverse effects of climate change despite contributing the least to global warming.9 Responding to the negative impacts of climate change while achieving other development goals will require an increase in clean energy production and consumption on the continent. Energy use per person in Africa is so low that even modest increases in income will produce large increases in energy demand.10 Coal, gas, and oil presently dominate the energy sources for large-scale electricity generation in Africa. Combined, they contribute 77 percent of Africa’s energy supply, with hydro, solar, wind, geothermal, and biomass accounting for the balance. Avoiding large-scale dependence on fossil fuels to power economic growth across the continent is critical not only for reducing global greenhouse gas emissions, but for the long-term resilience and economic prosperity of

8 https://www.greentechmedia.com/articles/read/why-gender-is-key-to-african-off-grid-energy-sales 9 https://www.brookings.edu/research/africa-can-play-a-leading-role-in-the-fight-against-climate-change/ 10 https://www.wilsoncenter.org/article/battle-earths-climate-will-be-fought-africa https://www.greentechmedia.com/articles/read/why-gender-is-key-to-african-off-grid-energy-sales https://www.brookings.edu/research/africa-can-play-a-leading-role-in-the-fight-against-climate-change/ https://www.wilsoncenter.org/article/battle-earths-climate-will-be-fought-africa

African countries as renewable energy increasingly represents the cheapest supply option and mitigates price volatility associated with fossil fuel generation.11

Grids are currently subject to frequent outages or low-quality power supply, which leads to more fossil fuel use as households and businesses often resort to using pollutive backup diesel generators. Operating backup generators is expensive, with $28 billion to $50 billion spent by generator users on fuel each year Africa-wide.12 Accelerating the transition from a fossil-based fuel source to those that are environmentally friendly, and least-cost will provide long-term environmental and financial sustainability to the power sector in East and Central Africa. The transition to clean energy sources from coal-fired plants and diesel generators will reduce greenhouse gas emissions and its associated environmental, financial, and health impacts. Yet integrating solar and wind energy into the grid presents new challenges to grid operators. Such a transition must be pursued in a way that provides appropriate policies and technical support to achieve these impacts while at the same time accounting for the industry, equity, workforce, and energy availability concerns that will accompany such a transition.

In support of an energy transition, clean energy technologies (e.g., photovoltaic cells) are growing more affordable by the year, despite a still limited production industry within Africa itself. However, concerns about the economic and political impacts of transitioning away from fossil fuels in countries that have those resources may create governmental and sector-wide reluctance to fully embrace and support the energy transition. This is exacerbated by the high price of energy storage needed to balance renewables, a major up-front capital expense. Additionally, many large-scale energy infrastructure projects are complicated, potentially involving multiple parties, and sometimes fail to meet financial close or construction due to legal or technical challenges, preventing much needed power from coming online.

Given these countervailing pressures, nuanced understanding of the existing political economy will be needed in each country where Power Africa works, to best engage and support all stakeholders to build momentum for the clean energy transition.

Some governments have faced huge costs following investments in new power generation projects with low utilization and have attempted to renegotiate power purchase agreements in recent years, which has caused distrust from the private sector. Power trade may help to balance supply and demand, but demand stimulation is another approach to help ensure that the power that utilities and governments have committed to buying is harnessed for economic growth and industrial development.

C.4.3 Insufficient Enabling Environments, Investment, and Innovation in the Energy Sector

Energy sector development and investment across East and Central Africa is inhibited by a host of enabling environment challenges, including an inability to define desired end states, identify common barriers and prioritize those interventions with the highest potential to unlock prohibitive market obstacles. This includes poor sector strategic planning, which can lead to loadshedding or power over-supply, or off-grid concessions conflicting with grid extension plans. In addition to effective strategic plans, a solid regime of energy sector laws and policies is required to create transparent and equitable conditions for energy sector participants.

Restrictive laws and policies, like taxes on imports of renewable energy equipment or lack of quality assurance standards, often hinder energy sector development. Government institutions and independent regulators need to be strengthened to enforce enabling laws and policies, such as empowering utilities to collect cost-reflective tariffs. Government institutions may stifle private sector participation by

11 ibid 12 The Dirty Footprint of the Broken Grid (IFC) https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/financial+institutions/resources/dirty-footprint-of-broken-grid negotiating bilateral deals behind closed doors rather than running transparent and open competitive procurements for energy infrastructure projects.

Regional institutions such as power pools need support to create power markets that incentivize new investment and provide real opportunities for power trade that enhances reliability, reduces greenhouse gas emissions, and improves affordability of power. Several countries in East Africa are heading towards oversupply due to domestic ambitions for energy security and sales not aligning with those of their neighbors, indicating a lack of effective planning and failure to embrace opportunities for regional coordination.

Energy sector institutions, including universities and civil society, need improved technical capacity and increased gender equity. A growing body of evidence demonstrates a strong correlation between gender diversity and a company’s financial performance. An index comparing the performance of power utilities demonstrated that the top 20 most gender diverse utilities significantly outperformed the lower 20 in return on equity.13 And yet the energy sector remains highly male dominated, with women representing approximately 20% of the global energy workforce.14 Investment in and innovations across the sector have the potential to bring more women and youth into the workforce.

The East and Central African energy sector has ample opportunities to reach financial sustainability and local ownership. There are hundreds of private energy sector companies currently operating in East and Central Africa, from large multinational independent power producers to local last-mile distributors.

Many large-scale energy infrastructure projects are complicated, potentially involving multiple parties, and sometimes fail to meet financial close or construction due to legal or technical challenges, preventing much needed power from coming online. Only a small fraction of energy sector companies operating in East and Central Africa possess the financial management sophistication and in-house talent needed to raise large amounts of long-term financing and fundraise for their projects. Trade associations can support members to advocate for their collective interests, yet many of these organizations are under-resourced to fulfill their mandates of sector-wide data collection and analysis, policy advocacy, and public communications.

Public and private financing shortfalls and power sector legacy debts are some of the biggest impediments to universal access to electricity across East and Central Africa. According to Sustainable Energy for All (SEforALL), $45 billion for universal energy access is needed annually through 2030, with current annual financing of only around one-third ($16 billion) of that amount for generation, transmission, distribution, and solutions beyond-the-grid. Utilities need support to unlock bilateral and multilateral donor finance for large-scale infrastructure investments. Governments need support to structure and implement domestic subsidies and incentive funds for electrification. But public finance alone will be insufficient to meet such a deficit. Massive amounts of private finance are needed to fill the gap. Private sector energy companies need debt and equity to launch, grow, and provide more innovative energy products and services to more Africans. Further, financing for energy sector companies may not be as available to women-owned enterprises. Of the venture capital allocated to African companies in 2021, less than 1 percent went to early stage companies founded or run by women.15 New investment vehicles and risk mitigation facilities are needed across the board to address financing challenges such as currency risk and political risk. There are currently limited opportunities for private sector participation and finance in certain segments of the energy sector altogether. There have been advances in the generation segment, and some in the distribution segment in certain countries, but there is still very little private participation and finance in

13 Ernst and Young, Talent at the Table: Index of Women in Power and Utilities, 2014 and 2016 14 https://www.iea.org/topics/energy-and-gender 15 2021 in 21 Numbers (Africa: The Big Deal) https://www.iea.org/topics/energy-and-gender https://thebigdeal.substack.com/p/2021-in-21-numbers#:%7E:text=So%2C%20Here%20we%20go%E2%80%A6%20Start,in%20at%20least%20one%20deal.

transmission16, which is a huge constraint to efficient power delivery, especially new utility-scale renewable energy that is often located in remote areas. Increased investment will help unlock energy innovation across the sector.

Energy sector development and investment has not benefited all Africans equally. There is a need for energy projects to be implemented in a just way that meaningfully involves local stakeholders and shares the benefits of projects with them. African women in particular need special consideration. Despite the very real benefits of electrification on their livelihoods, women may not have equal access to new energy sources. Off-grid technologies are often not marketed effectively to women, financing products are often not accessible to women consumers, and productive use of energy (PUE) technologies often do not meet the needs of women customers. Access to new sources of energy might also be constrained due to biases that limit women’s decision-making powers.

The energy sector can have potential negative impacts on the environment, and the environment can also impact the energy sector. Construction of energy infrastructure such as power lines, substations, mini-grids, wind turbines, and other power plants can have adverse impacts on air, water, and wildlife. Polluted air and water can have negative impacts for local communities. Wildlife interactions with energy infrastructure are not only a risk for Africa’s critically important wildlife but can also result in power disruptions and large financial losses to utilities and energy companies. Climate change also poses a risk to East and Central Africa’s energy infrastructure and operations. Increasing storms, droughts, floods, and wildfires are damaging existing energy infrastructure, causing power outages, lost investment, and setbacks to achieving energy reliability and access goals.

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16 https://cldp.doc.gov/sites/default/files/2021-10/Understanding_Transmission_Financing.pdf https://cldp.doc.gov/sites/default/files/2021-10/Understanding_Transmission_Financing.pdf

C.5 RESULTS FRAMEWORK

C.6 THEORY OF CHANGE

● If, East and Central African nations develop transparent and investor-friendly energy policy environments that promote equitable energy solutions with low carbon footprints; and

● If, access to affordable, productive, and reliable clean power is broadened and expanded, in particular for marginalized groups; and

● If, African governments, other donors and the private sector invest greater resources in U.S. clean technology expertise and innovation, to strengthen burgeoning local energy ecosystems;

● Then, East and Central African nations can advance development outcomes by ending energy poverty and accelerating economic growth in a carbon-free future.

C.7 OBJECTIVES AND RESULTS

Objective 1 - Ending Energy Poverty

The first objective is aiming to end energy poverty by increasing access to affordable, reliable energy which can support increased economic activity and improved living standards.

Expanding Access Governments throughout the East and Central Africa region, as well as Power Africa itself, have ambitious targets for dramatically expanding energy access to transform lives, which will require a range

Purpose: To increase the availability of and access to affordable, reliable, sustainable and modern electricity in East and Central Africa.

Development Objective 2:

Accelerating a Carbon

Free Future

Development Objective 1:

Ending Energy Poverty

Development Objective 3:

Bolstering Energy Sector

Investment and Innovation

IR 2.1 Clean energy generation increased to reduce current and future carbon emissions

Intermediate Results (IR) 1.1 Improved energy access for households

IR 3.1 Improved private sector delivery of energy goods and services

IR 1.2 Increased energy for human services

IR 3.2 Strengthened enabling environment for the energy sector

IR 2.2 National and regional planning for just clean energy transitions supported IR 1.3 Employment opportunities increased by improved business access to energy

R 3.3 Increased investment in and utilization of advanced energy technologies

IR 1.4 Improved energy access for marginalized populations

IR 3.4 A socially inclusive and environmentally responsible energy sector encouraged

Cross cutting IR Strengthened and expanded grids delivering more power to end users of on- and off-grid solutions. These solutions can include grid densification, grid expansion, grid extension, and distributed renewable energy (DRE) solutions such as mini-grids and solar home systems.

As access to electricity becomes available, it provides the opportunity to promote increased productive and direct use applications and their linkages to other development objectives, such as increased agricultural productivity, growth of small and medium-sized enterprises, and enhanced educational outcomes. It can also simply improve quality of life. Achieving this ambitious objective requires holistic thinking on- and beyond-the-grid, and supporting solutions that make the most sense across varied geographies.

It is critical to support East and Central African government efforts to develop and implement their energy access goals. In addition to the direct expansion of services and service-related infrastructure, improved energy sector regulation, strategic planning, quality assurance standards, holistic rural electrification plans with on- and off-grid delineations, implementation of sound policies and strategies, and improvement in the enabling environment for energy access is necessary to achieve sustained, reliable improvements in delivery.

For on-grid energy access, public and private transmission and distribution companies need to be strengthened to increase and upgrade grid connections and improve the quality of their services (affordability, reliability, sustainability), without jeopardizing utility and sector financial performance.

Continued engagement with utilities is needed to identify new ways of increasing energy consumption.

Areas of prioritization for increased service provider/utility professionalization may include customer relations and services, billing and collections, operations and maintenance, financial and investment planning, capacity building and training, network infrastructure modernization, measures of grid reliability (i.e. SAIDI and SAIFI), as well as a broad range of operational and administrative improvements.

In order to promote economic development and improved standards of living, electricity access must be linked to income-generating activities and livelihoods. This can range from small to large industrial and commercial clients whose businesses would benefit from improved electricity supply, to agricultural activities where productive uses of energy can have great potential for developmental impact. Given that women disproportionately bear the brunt of energy poverty, new connections have the potential to improve the livelihoods of women and girls in powerful ways, although this requires a concerted effort to address potential barriers to access for women beneficiaries of social services.

The DRE sector in East and Central Africa, inclusive of off-grid and point-of-use renewable technologies, has begun a shift towards larger system offerings and business models that support more productive use applications, including dedicated technologies for solar powered refrigeration products, water pumps for irrigation, and e-mobility.17 This Objective should expand business opportunities in this sector to continue to meet diverse consumer needs while addressing issues of affordability. Additionally, as customer bases are expanded, the thoughtful consideration of gender dynamics and the needs of women customers, whether small or large clients, must not be overlooked.

To increase the adoption and scaling of productive uses of energy, innovative solutions are required to address the barriers to uptake. These barriers include the limited availability of PUE products to potential customers; limited PUE product demand due to lack of awareness among farmers and other end users;

high upfront costs due to larger system sizes; and limited ability to pay, given that target customers often have low and/or variable incomes. Consumer financing and other types of installment payments can increase affordability, but many off-grid energy companies currently consider it too risky for their

17 Electromobility (e-mobility) is the use of electric cars, as well as e-bikes or pedelecs, electric motorbikes, e-buses and e-trucks.

business to finance products over long loan time periods and require more innovative and flexible financing instruments.

New connections within public facilities and refugee camps can also improve the quality of social services such as education and clean water provision. Water utilities operate energy-intensive pumps and treatment plants around the clock and need large amounts of electricity to distribute clean water to consumers. Access to electricity can additionally help East and Central African communities increase their resilience by powering irrigation and cooling systems, providing access to redundant electricity sources during climate shocks, and powering telecommunications towers for greater connectivity.

Minimum Results:

● 5 million new on-grid connections

● 3.5 million new off-grid connections

● 40,700 productive use off-grid devices sold

Objective 2 - Accelerating a Carbon Free Future

The second objective is to accelerate East and Central African countries’ transitions to carbon-free futures through expansion of clean energy.

Transitioning to Cleaner Energy Production Reducing the carbon emissions from the power sector in East and Central Africa will require a multi-pronged approach that accommodates the need for increased energy supply and consumption while avoiding increases in greenhouse gas emissions. To displace demand for diesel gensets, kerosene, fuel wood and charcoal, and fossil fuel power plants, it is critical to increase the share of renewable energy in generation mixes, reduce grid losses, and optimize grid power supplies within and across borders.

In order to increase the supply and use of clean energy sources, it is critical for East and Central African governments to develop and implement ambitious, viable, climate-resilient pathways–financial, policy, and technical strategies–to net-zero power systems that also meet their long-term access and economic growth goals.18 This includes adoption of improved foundational energy sector laws and regulations in alignment with countries’ Nationally Determined Contributions; integrated resource and resilience planning to increase clean energy generation and ensure energy security in light of anticipated climate changes (i.e., hydropower supply given precipitation changes); execution and implementation of such policies and plans; reductions of emissions from existing energy assets (e.g., gas flaring); reduced technical losses on the grid to make sure more power generated reaches end consumers; just energy transition planning and implementation; and a strengthened enabling environment for clean energy generation, distributed energy resources, and cross-border power trade.

Building On- and Off-Grid Solutions To accelerate clean energy via the grid, utilities need to run competitive procurements for clean energy and related services, increase clean energy integration into their grids (including through distributed energy resources), enhance system flexibility through enhanced ancillary services to improve reliability and help integrate variable clean energy and mitigate challenges with variable renewable energy on the network, and expanded and strengthened grids to connect wind and solar power resources to load centers.

Additionally, utilities should optimize dispatch and improve the operational efficiency of the transmission and distribution infrastructure to reduce technical losses and improve power quality. Independent power

18 Net zero power systems refers to systems meeting all of their energy needs with energy produced from zero-emission sources.

producers and off-takers need to bring new clean energy projects to financial close and complete construction and interconnection processes in a timely manner.

Utilities, power pools, and other intergovernmental bodies need to be strengthened to optimize supply and demand for their existing power mixes both within their countries and across borders. This includes political negotiations and signing of power purchase agreements, development of critical transmission projects and interconnectors such as those laid out in the Power Africa Transmission Roadmap, and technical preparation for increased power trade to reduce the need for new generation investments in each individual country.

As central grids expand into rural areas and off-grid solutions are deployed at progressively greater scales, these two models of energy delivery will intersect. Compelling opportunities exist in East and Central Africa to incorporate privately operated mini-grids into the service territories of distribution utilities or to electrify medium-sized cities with mini-grids isolated from the central grid. The Integrated Distribution Framework, championed by the Global Commission to End Energy Poverty, envisages the delivery of universal access within a defined territory using a mix of technologies, both on- and off-grid, and public-private partnerships.19 Additionally, promising opportunities exist to provide pivotal support to ground-breaking privately financed, captive clean power projects for commercial and industrial (C&I) applications with broader community applications across a range of industries. Uncooperative business enabling environments, entrenched incumbent business models, and technical issues will be among the key constraints to scaling in these exciting new categories of energy access.

Minimum Results:

● 3.7 million metric tons of on-grid CO2e greenhouse gas (GHG) emissions reduced, sequestered, or avoided

● 3.29 million metric tons of off-grid CO2e greenhouse gas (GHG) emissions reduced, sequestered, or avoided

● 700 MWs of generation capacity reached financial close

Cross-Cutting Minimum Results for Objective 2:

● 1,500 kilometers of new transmission lines supported through Power Africa assistance reach financial close

● Aggregate technical, commercial and collection losses reduced and/or avoided among Power

Africa supported utilities

● The value of new electricity capacity committed for regional trade in MWh

Objective 3 - Bolstering Energy Sector Investment and Innovation

The third objective is to remove constraints to investment in East and Central African energy sectors, and to increase sector innovation.

Increasing Investments in the Grid and Beyond Increased investment and innovation in the energy sector is underpinned by a supportive enabling environment that offers transparent, consistent, and aligned policies and regulations; an educated, empowered, and diverse energy sector workforce; strong energy sector institutions; and implementation of leading social and environmental practices in energy sector development. Power sector challenges have given rise to opportunities for increased investment and innovation, particularly by the private sector, at

19 Integrated Distribution Framework: Guiding principles for universal electricity access (Global Commission to End Energy Poverty and MIT) https://static1.squarespace.com/static/5d371cb401986300013881d3/t/5fc69ef13c6ccf69f34825fa/1606852340478/2020-integrated-distribution-framework-guiding-principles.pdf all levels of the energy value chain. These opportunities include new technologies, business models, and financial structures to improve electricity generation, transmission, distribution, and access.

There is a need for increased investment in the grid across the continent, especially in transmission and distribution.