Renewable energy
Kenya is on course to fully decarbonise its electricity sector, with 92.3 per cent of electricity distributed by Kenya Power now generated by renewables, also referred to as “green energy” sources.
The demand for electricity in Kenya continues is growing at an average rate of 4.5 per cent annually driven by economic activities as the country recovers from the effects of the global COVID-19 pandemic.
At the same time, Kenya has scaled up use of renewable sources further boosting the country’s standing in the fight against climate change.
According to the 2021 Economic Survey from the Kenya National Bureau of Statistics (KNBS), the total installed electricity generation capacity was 2,836.7 MW in 2020 of which geothermal’s share was 863.1 MW, solar 52.5 MW in 2020. Generation from thermal sources decreased slightly to 749.1 MW in 2020.
Of the 2,836.7 MW installed, 2,705.3 MW is the “effective capacity” – the maximum electric output a power station can achieve under operating constraints.
In 2020, thermal power plants were responsible for just under 7 per cent of the electricity generated even as Kenya imported less power. Unfortunately, electricity transmission and distributive losses at 2,790.7 GWh in 2020, were still too high, amounting to 24.3 per cent of total supply.
Power Generation
The Kenya Electricity Generating Company (KenGen) PLC on its website https://www.kengen.co.ke/ confirms that 86 per cent of the energy it generates today is green energy, and that its installed generation capacity market share is over 60 per cent.
The breakdown of the 1,818MW of installed generation capacity by KenGen is Hydro (826MW), Geothermal (713MW), Thermal (253MW), and Wind (26MW).
The company is also preparing to add another 83MW to the national grid in the first quarter of 2022 once the Olkaria I, Unit 6 geothermal power plant is commissioned this year.
In November 2021, the demand for electricity in Kenya hit a new record peaking at 2,036MW on the back of a resurgence lifting of COVID-19 lockdowns across the country.
At the same time, the country recorded a new energy gross demand peak of 36,381MWh mostly drawn from renewable energy sources as the economy responds positively to the lifting of some of the COVID-19 related restrictions.
Responding to the demand, KenGen scaled up generation from its geothermal, hydro and wind power stations to meet the growing demand.
The Energy and Petroleum Regulatory Authority (EPRA) reported that KenGen’s hydro power stations exceeded the period’s projections by 581MWh or 5.56 per cent, with a total installed hydro capacity of 826 MW.
KenGen’s Gitaru, Kindaruma, Kamburu, and Kiambere Power Stations were among the hydro power stations surpassed the projected power generation output. The stations are part of the Seven Forks cascade and a crucial piece of KenGen’s power generation infrastructure, accounting for around 29 per cent of Kenya’s total installed capacity.
The power generation giant’s expertise is also in high demand across Africa with governments keen to track KenGen’s footprints in Olkaria, Naivasha where the company has successfully drilled about 320 geothermal wells. In November, the firm announced that it had begun drilling one of three geothermal wells in Djibouti under a Kshs 700,000,000 contract signed in February 2021.
The drilling of the first well is expected to take about two months to complete as KenGen seeks to export the expertise and experience earned.
The experts from KenGen comprise of mechanical Engineers, drilling Engineers, project managers, drillers, cementing technicians and specialised welders in the geothermal development value chain.
KenGen is also set to commence drilling of three geothermal wells for the Djibouti Office of Geothermal Energy Development (ODDEG) in 2022.
The Djiboutian venture is part of KenGen’s ambitious diversification strategy, in which the company is seeking to acquire new revenue streams by offering commercial drilling services, geothermal consulting and other related services across Africa.
This is the third mega geothermal drilling contract that KenGen is implementing in Africa. In October 2019, the company secured a Kshs 5.8 billion contract to drill 12 geothermal wells in Ethiopia. The contract with Ethiopia’s independent power producer Tulu Moye Geothermal Operations (TMGO) PLC includes installing a water supply system and equipment.
In February 2019, KenGen won a contract to drill geothermal wells for the Ethiopian Electric Company (EEP) in Aluto-Langano, Ethiopia. The contract is for the implementation of drilling rigs and accessories as well as rig operation and maintenance for drilling geothermal wells. It is financed by the World Bank through a loan to the Ethiopian Government.
In November 2021, KenGen announced that it had completed drilling the deepest geothermal well in the Aluto-Langano project reaching a depth of 3,000 meters, surpassing a target of 2,750 meters.
KenGen posted a 7 per cent increase pre-tax profit in its full year Financial Results ending 30th June 2021, from Kshs 13.79 billion to Kshs 14.76 billion and recommended a dividend payout of Kshs0.30 per share (Ksh.1.98 billion) to be paid to all its shareholders.
Environmental Warrior
On the environmental front, KenGen has completed plans to set up an Energy park at its geothermal power generation hub at Olkaria-Naivasha in order to take advantage of the competitively priced geothermal steam and electricity as key economic drivers of production.
The park will provide industrial, commercial and recreational facilities and will be developed in two phases, with completion of the first phase set for this year.
The park is strategically located along regional transport routes with access by road and rail. The park will provide quality and reliable utilities and energy supply (Electricity, high pressure stream and brine at 130 degree Celsius) which will be managed through an appointed developer who will develop infrastructure for a plug and play environment,
Ongoing Power Generation projects by KenGen are:
i. Seven Forks 40MW Solar Photovoltaic (PV) Project
ii. Raising Of Masinga Hydropower Dam
iii. Ngong Wind Farm
iv. Olkaria 1 Units 1, 2 & 3 Rehabilitation Project
v. Olkaria V, (172MW) Projects
vi. Olkaria I Additional Unit 6 (83.3MW)
In an official Press release in January 2022, (KenGen), announced that it had completed Phase One of the 25 acres Ngong Forest Restoration Project.
Commenced in October 2018, the project involved planting 7,000 indigenous trees around a degraded site in Ngong hills forest power station, where KenGen generates 25.5 MW of electricity from wind energy.
The initiative is in line with the company’s Environmental Conservation Program and Corporate Environmental Sustainability Policy, which seeks to undertake an additional 10 Hectares ecosystem restoration project in Phase II within the KenGen lease area at Ngong during the 2021/2022 financial year.
According to Ngong forest restoration Phase I’s completion report, KenGen attained a 100 per cent trees survival rate, marking the project as completed and successful.
The report read: “The project’s final milestone verification for milestone 3 final quarter was carried out on 21st June 2021 followed by a final Project Implementation Team (PIT) meeting at Ngong project site where 7,134 seedlings were verified as surviving against a target of 7,000 seedlings thus a 100 per cent success achieved rehabilitating an area covering 10.7 acres (est).”
The company has fully aligned itself to climate action agenda and rolled out various environmental conservation projects across the country which will go a long way in in helping to slow down the effects on climate change.
It complements other climate action efforts by KenGen including its deployment of green energy power projects like the construction of the 83MW Olkaria I unit 6 which is almost complete.
KenGen plans to undertake an additional 10 hectares ecosystem restoration project within the lease area this year that will include planting, protecting, replacing and maintaining 10,000 assorted indigenous tree seedlings.
The state-owned power generation firm has signed a Memorandum of Understanding (MoU) with partners including the Kenya Wildlife Services to carry out conservation and management activities in Ngong Forest and other mitigation measures identified in the Environmental and Social Impact Assessment study for the proposed construction of 10MW Ngong Phase IIIA wind project at Ngong Hill.
The project supports the commitment towards NETFUND 2 billion campaign where the company has pledged to plant and grow 400,000 seedlings per year.
Over the years, KenGen has supported initiatives to mitigate the effects of climate change while maintaining ecological balance. The initiatives such as the Green Initiative Challenge (GIC) launched in 2013 have been under the KenGen Foundation’s environmental pillar and community sensitisation.
Rural Electrification Projects
In December 2021, the Government launched the Electrification of Public Facilities Project (EPFP) to connect over 1,200 public institutions in 36 counties across the country to the national power grid at a cost of Kshs 6.4 billion.
The Rural Electrification and Renewable Energy Corporation (REREC) is implementing the project in five sectors: Nyanza and Western; North Rift; South Rift; Central and Upper Eastern; and Lower Eastern and Coast regions. It is to be completed by June 2022.
Connecting the public facilities to the national power grid will improve their ability to provide social services such as education and health.
The public facilities to benefit include markets, health centres, educational institutions, tea buying centres, coffee factories and administration centres.
To expedite the project, the Government of Kenya, secured credit financing from Arab Bank for Economic Development for Africa (BADEA); OPEC Fund for International Development (OFID); Saudi Fund for Development (SFD) and the Abu Dhabi Fund for Development (ADFD) in conjunction with the Government of Kenya.
In schools, electrification will result in the uptake of ICT and use of modern learning methods, thereby improving the competitiveness of rural schools in attracting qualified teachers as well as improving their performance.
Availability of electricity in rural trading centers empowers the rural populace, enabling growth of income generating activities such as the Jua Kali sector and providing employment opportunities. It also enables mechanised farming for improved food security.
Sector Reforms
After President Uhuru Kenyatta received Report of the Presidential Taskforce on Review of Power Purchase Agreements (PPA) from the Chairman Mr John Ngumi, the Ministry of Energy began implementing its recommendations.
Energy is a critical enabler of economic development. The report documented reasons for the high cost of electricity, which has had a negative roll-on effect on the cost of doing business and the prices of consumer goods in the country.
In October 2021, Interior and Coordination of National Government Cabinet Secretary Dr Fred Matiang’i inaugurated the Steering Committee on Implementation of the Recommendations of the Presidential Taskforce on Power Purchase Agreements (PPA).
The Steering Committee was appointed on October 8, 2021 through Kenya Gazette Notice Vol.CXXIII No. 209 by President Uhuru Kenyatta.
Energy Cabinet Secretary Amb Dr Monica Juma revealed that several teams were to be established to spearhead implementation in various power sub-sectors, adding that there was no room for failure.
Among the tasks is renegotiation of power purchase agreements (PPAs), which were found to be badly skewed in favour of the providers at the huge expense of the taxpayer. The other key task is restructuring of state-owned power distribution monopoly, Kenya Power.
The team is also examining policy issues in the energy sector, reviewing laws and analysing previous taskforce reports.
Terms of Reference for the Steering Committee are:
i. Oversee, coordinate and monitor implementation of the Recommendations of the Presidential Taskforce;
ii. Provide advisory and technical support during the implementation of the recommendations of the Presidential Taskforce;
iii. Prepare progress Reports for presentation to his Excellency the President through the Cabinet Sub-Committee on KPLC; and
iv. Perform any other task ancillary to its terms of reference as may be directed by the Cabinet Sub-Committee on KPLC.
The Steering Committee had an almost immediate impact when it managed to lower the cost of electricity sold by Kenya Power to consumers just before the New Year.
Kenya Power has already experienced a turnaround registering a KShs 8.2 billion profit, from a loss of KShs 7.04 billion a 216 per cent growth, driven by the increased revenue of Sh144 billion alongside the restructuring of its operations.
Renegotiation of PPAs seeks to inject efficiency and effectiveness in the sector players to keep power prices on a sustainable curve, given Kenya’s attractive renewable energy mix that should result in cheaper electricity.
Kenya Power lowered its operating costs by 17 per cent by improving efficiency in operations.
The commissioning of nine new sub-stations and refurbishing of another five enhanced network capacity upwards to 500 Megavolt amperes (MVA), and Kenya Power is also automating its network. The automation of the distribution management system has improved the response time to power outages via the control center.