By Ariel Gandolfo
Earlier this month, CNBC reported that Google is in negotiations to invest in Africa’s largest wind power project, which is set to break ground this Thursday. Located in Kenya, the $700 million Lake Turkana wind farm represents the largest single private investment in Kenya’s history. The expected 310 megawatt output could increase national energy capacity by 20 percent, filling a crucial gap in a country where more than 75 percent of the population lacks electricity, even after the government spends over one hundred million dollars per year on fuel imports.
The investment clearly makes sense for the forward-thinking tech giant, because more Kenyans with electricity means more people able to use Google products; the company’s strategy dovetails philanthropy with its core business interests by enlarging its long-term customer base. While Google has concentrated its renewable energy technology investments in California and the American Southwest, it also invested $12 million in the solar Jasper Power Project in South Africa in 2013, and the Turkana wind farm could be its second large-scale investment in African energy infrastructure.
Clean energy investments are a cornerstone of American foreign policy on the African continent, and the Obama administration has leveraged billions of dollars from the private sector and philanthropic foundations to scale up investments in clean energy innovation. President Obama’s flagship Power Africa initiative, housed in USAID, is the most notable for international development. By collaborating with African governments and private companies, Power Africa aims to add 30,000 megawatts of clean electricity generation and provide electricity to 60 million new homes and businesses.
The World Bank, African Development Bank, and even the Swedish Government have contributed billions of dollars to Power Africa to fund research and finance and scale up projects. Other key components of the initiative include removing barriers to investment and doing business, and improving the capacity of African governments to deliver electricity and administer the power sector. So far, over 90 private sector partners have committed $20 billion, and projects already funded are expected to generate 4,100 megawatts. Projects currently in the planning stages could add another 15,000 megawatts.
Power Africa’s goal is to spur electricity generation in Africa, of course, but the investments are also meant to enable U.S. companies to develop and scale technologies so that the cost of solar, wind, geothermal, and other sources will be comparable to standard, fossil fuel-based energy in the near future. The FY2016 U.S. federal budget includes $7.6 billion to fund R&D, pilot projects, and commercialization efforts to turn renewable energy technologies into viable options to power homes and businesses— a 15 percent increase from last year. Tax credits and other programs also provide incentives and loan guarantees meant to promote billions of dollars in private sector investments and the utilization of renewable energy technologies by individuals, businesses, and government agencies.
From the menu of renewable energy options, solar energy has received the most attention and made the most progress thus far. The objective of the Department of Energy’s SunShot Initiative is to reduce the cost of solar electricity to $.06/kWh by 2020— a cost point that would make solar competitive with conventional energy sources. Already, Americans can accumulate significant savings by installing solar panels to provide home electricity. In some states with more progressive tax codes, particularly Hawaii, New York, Connecticut, Colorado, and Massachusetts, households can save up to $30,000 on electricity bills over 25 years, which is a higher return on investment than buying a U.S. treasury bond or investing in a S&P 500 stock index.
The Lake Turkana Wind Power Project in Kenya is one small but important step in the same direction for wind energy, which will never become an affordable option until governments and investors help to fund research and implement large-scale projects that will eventually drive down the cost for average consumers. So far, Lake Turkana Wind Power is supported by a consortium of European investment funds.
If Google agrees to join the project, and the U.S. government helps to mobilize other private sector investors, not only would hundreds of thousands of Kenyans have better access to electricity, but more U.S. companies could follow Google’s lead in African energy investments. Combining philanthropy and business acumen in the renewable energy sector has the potential to provide cheaper, cleaner electricity for Africa and for everyone – and in Google’s case, more people using Android.
Ariel Gandolfo is a researcher with the Project on U.S. Leadership in Development.
Photo:”Lake turkana satellite“. Licensed under Public Domain via Wikimedia Commons.
2 thoughts on “Google Investment Could Drive Down Cost of Wind Energy for Africans and Americans”
Pingback: Summer Writing at CSIS | ARIEL GANDOLFO
Pingback: Summer Writing at CSIS | From the Periphery