One of the major obstacles to poverty reduction, economic growth and job creation in developing countries is an electricity supply that is insufficient, unreliable or unaffordable. More than 1.3 billion people around the world lack access to electricity. This stifles investment, increases costs of goods and services, and often forces families to seek electricity sources that are expensive and environmentally unfriendly. An unreliable source of electricity can hamper the delivery of critical services like health care and reduce job opportunities, particularly for the poor and socially disadvantaged.
Country-led development is a core principle of MCC investments. Many of MCC’s partner countries identify and prioritize electricity investments as a building block for the economic development of their countries and the well-being of their citizens. MCC invests in the electricity sector to create self-sustaining electricity systems to meet current and future household and business electricity needs and attract private investment to stimulate economic growth.
Attracting private investment
With the electricity sector investment needs of Africa and South Asia estimated at approximately $40 and $70 billion per year, respectively, these regions need to look beyond traditional donors, development banks and domestic markets to plug the investment gap. Private sector capital and expertise are vital to expanding and improving the sector. Transparent governance, contract enforcement, creditworthy institutions and respect for the rule of law are some of the necessary preconditions to attract this kind of investment. MCC helps partner countries to address gaps in their electricity sector policies, laws and regulations and strengthens sector institutions to help create a business-friendly environment.
Power Sector Reform in Malawi
MCC worked with the government of Malawi to amend its outdated electricity laws, restructure the governance, and strengthen the finances and operations of its power utility. MCC also worked to introduce a competitive framework for procuring generation capacity. As a result, the country is now negotiating with multiple independent power producers who are eager to bring capital and expertise to build and operate photovoltaic solar power plants in Malawi.
Access to reliable and affordable electricity is critical to creating and sustaining economic growth. To ensure such access, countries must have the right physical infrastructure in place. To facilitate this, MCC invests in strategically identified electricity infrastructure, spanning the entire power sector value chain. Currently, for example, MCC is constructing a 400 kilovolt transmission line and related substations in Malawi, rehabilitating and expanding the 88 megawatt Mt. Coffee hydropower facility in Liberia and procuring firms to finalize design of the low-voltage distribution lines in Benin.
Promoting energy efficiency and low carbon development
MCC is committed to investing in climate-smart measures. In a number of countries, MCC provides grants towards the development of renewable sources of electricity to serve both on- and off-grid communities. MCC also promotes energy efficiency measures, which are not only important to reduce the cost of electricity for beneficiaries but are also vital to reducing the amount of electricity needed.
Energy efficient investment in Ghana
The $25 million energy efficiency project will build on Ghana’s past successes. The program will implement energy-efficient standards and labelling, build capacity for improved energy auditing, launch a public-awareness campaign to promote energy efficiency, deliver retrofits of public facilities, and convert street lighting to efficient LED technology.
Expanding domestic generation capacity in Benin
MCC will increase Benin’s domestic generation capacity through investments in utility scale solar generation projects. These projects are expected to dramatically increase the amount of installed capacity in Benin—equivalent to one-third of the country’s current peak demand—while helping the country reduce its reliability on energy imports.
Supporting institutional capacity and human capital
Investing in the capacity of energy institutions helps create a workforce with the necessary skills to deliver the services required to help an economy grow. By building the capacity of key stakeholders and providing technical assistance to public and private energy organizations, partner countries gain foundational knowledge in areas like project planning, coordination and resource management.
Building capacity and sustainable institutions in Liberia
In addition to the rehabilitation and expansion of Mt. Coffee hydropower project, MCC’s compact with Liberia invests in building capacity of the electricity sector institutions. The compact investments do this through the development of a training center for electricity sector technicians and the creation of an independent energy regulatory agency, as a lack of a sound maintenance strategy and proper regulatory oversight make electricity generation capacity a critical constraint to growth in Liberia.