While Kenya hopes to develop its national power grid by adding 19 200 MW of renewable energy – against a demand of 15 000 MW – by 2030, there are several factors hindering the investment needed to reach this goal.
Kenya was ranked second among African nations, behind South Africa, as a key investment region for renewables, with investments in this commercial hub of East Africa totalling $4-billion by the end of 2015.
Coming together on Tuesday for a webinar on renewable energy in Kenya – Exploring Kenya’s Renewable Energy Opportunities – several developers in the country’s geothermal, solar and wind energy fields, agreed that one of the biggest challenges facing the development of a renewable-energy industry was community buy-in.
Kinangop Wind Park CEO James Wakaba noted that the company had run into headwinds with community members about the $150-million, 61 MW Kinangop wind project in central Kenya.
Backed by Norwegian private equity firm Norfund, South African asset manager Old Mutual and Sydney-based fund Macquarie, the proposed wind park was on the verge of collapse in November, after locals declined to offer their land for the project.
“[Although] it was properly licensed, the community resettlement programme was hampered by politicians, while the government’s adoption of the new Constitution, as well as new leaders, also had an impact on the timeline,” said Wakaba, adding that the commercial operation date should already have been achieved.
“The project is currently in a precarious situation, but we still have the government letter of support and we are counting on that for further development,” he added, also pointing out that the letter of support was now being tested.
The wind farm has been in development since 2004, with financial closure only achieved in November 2014.
US conglomerate GE, which had already delivered 38 turbines with a capacity of 1.6 MW for the project, was last year awarded a ten-year $58-million contract to provide maintenance for the Kinangop wind farm.
Meanwhile, Ram Energy CEO Hezy Ram agreed with the general sentiment that project development in Kenya took longer than necessary.
The independent oil and gas company was currently developing the $300-million, 140 MW Akiira Geothermal Limited power station project, which would be rolled out in two 70 MW phases. Drilling started in March 2015 and the company is expecting to be fully operational by the end of 2017.
Nevertheless, Ram noted during the webinar that there was never a clear timeline for project development, adding that Ram Energy had already been granted a concession in July 2009.
The company expected to close its bridge loan in June, which would be followed by the notice to proceed to the contractor.
On the positive side, Ram pointed out that there was a “lot of money” available for developing countries, particularly for investing in renewables.
Also speaking during the webinar, renewable-energy specialist and Strathmore University professor Izael da Silva pointed out that there were fewer challenges when it came to solar power development, as the timeframe was shorter, for instance. He pointed out, however, that it took some persuasion to have locals see the benefit of solar power.
Da Silva, who was currently overseeing Strathmore University’s 600 kW solar project, said that most locals believed that solar power “was only good enough to charge a lantern or calculator”, but that it wasn’t a serious power source and could not power a lift or car, for instance.
However, through the development of the solar power project at the university, which started with the installation of a 10 kWP system at the university’s student centre building in 2010, Da Silva could provide “good data” on photovoltaic performance.
This was the first-ever power purchase agreement (PPA) for solar generated electricity in Kenya. The 20-year PPA, signed in 2015, would see parastatal Kenya Power pay KSh12.36 per unit of electricity.
He further highlighted that, prior to the installation of the solar panels, the university consumed 1.37-million units of electrical energy a year, at a cost of $273 000.
However, it was now saving up to 60% of consumption and up to $180 000 a year on its utility bill.
Meanwhile, Da Silva noted that the Kenya government had adopted a new Energy Bill in 2015, which introduced certain regulations that would further promote investment in this sector. These regulations included the implementation of a net metering concept and the stipulation that 60% of future water heating would need to be carried out through solar energy, for example.
“If I were in America or Europe, I would come straight to Kenya to invest,” he concluded.