This will be the largest shift in the US foreign Policy to an economically struggling Africa when this part of the world will begin generating an additional16,000MW of gas-fired power in nine countries by 2030.
In June at the World Gas Conference in Washington, DC the US announced a comprehensive Gas Roadmap for sub-Saharan Africa which is coordinated by the by the US Agency for International Development.
The road map is part of the Power Africa Initiative launched in 2016, which the US is implementing and whose goal is adding 30,000MW of new generation capacity and 60 million new connections by 2030.
US companies supported by Washington will invest $175 billion in gas power projects in Kenya, Tanzania, Côte d’Ivoire, Ghana, Nigeria, Senegal, Angola, Mozambique and South Africa.
The countries were selected because of their relatively large populations, high gross domestic product and either because they have local gas resources (in operation or under development) or are planning liquefied natural gas (LNG) import projects.
The US project has potential of generating at least $5 billion annually by exporting LNG into the region by 2030.
“A key ingredient in Africa’s energy mix is, and will continue to be, clean natural gas. Natural gas and LNG projects have the potential to generate essential electricity quickly and at reasonable prices,” wrote Rick Perry, US Secretary of Energy, in the “Power Africa Gas Roadmap to 2030,” strategy report.
He added that the gas roadmap underscores how the US can help advance gas sector investment in Africa as well as how the export of LNG and related innovations can spur gas-to-power development across the continent.
Gas resources have been discovered in 14 countries in sub-Saharan Africa, with Nigeria accounting for 81 per cent of the proven reserves.
It is estimated that several undeveloped fields in Tanzania and Mozambique account for 62% of total contingent resources while other African countries without reserves are developing infrastructure for importation of natural gas to support the demand for power generation.
Tanzania, which has discovered recoverable natural gas estimated at 57 trillion cubic feet, envisages a larger role for natural gas in the future energy mix, with gas-fired power plant capacity anticipated to grow from 1,501MW in 2015 to 4,915 MW in 2040, according to the country’s power master plan.
According to the roadmap, the US government interventions will focus on addressing the constraints related to gas projects in sub-Saharan Africa.
These include the availability of gas (both from a source as well as delivery method perspective), financial strength of off-takers of power and gas, lag in downstream infrastructure, such as power transmission and distribution capacity and the various markets’ ability to absorb power and gas.
“By focusing on decreasing fuel costs, development costs and the cost of capital, the best possible tariffs for the end user can be realised,” states the roadmap.
Apart from being clean energy, gas is highly competitive as a source of power with studies showing that prices for gas-to-power could run as low as $0.10 per kilowatt hour (kWh) for integrated LNG projects and $0.15 per kWh for small-scale and distributed power projects.
Both projected prices are lower than the $0.18 per kWh average cost of generation in sub-Saharan Africa.