The energy sector in Kenya is among the most active in Africa and continues to grow with installed electricity capacity increasing from 1600 MW in 2009 to 2298 MW in 2015. The Kenyan government plans to increase this generation capacity to 23,000 MW by 2030. A critical component of this sector is renewable energy. Dr Moses Ikiara (pictured), Managing Director, KenInvest writes.
Currently, Kenya’s installed generation capacity is produced through geothermal sources at 46.4%, hydro at 38.1%, thermal at 14.8% and wind at 0.4%. By 2030 the government expects the mix to be 26% geothermal, 19% nuclear, 13% coal, 11% LNG, 9% wind, 9% thermal, and 5% hydro; which creates new less expensive energy sources that are more diversified and less reliant on good rainfall for production. The increased investment and growth over the last decade in the renewable energy will increase economic development in the country by providing more access and lower energy costs for Kenyans.
Increased investments led by firms including tech giant, Google into renewable energy sources, and innovations in technology are driving energy accessibility; which will in turn reduce the costs of running businesses in the country. Moreover, the government’s commitment to ensuring energy access for the large majority of Kenyans is a strong driving force.
Currently, only 32% of Kenyans are connected to the grid. The government has rolled out a key electrification initiative, the Rural Electrification Programme which gives the rural population access to electricity, facilitating education, health, farming, employment and quality of life. This initiative aims to connect 70% of the population to the grid by 2017.
In addition, efforts are being made to reduce the cost of energy by between 25% -30% so as to stimulate the manufacturing and the industrial sectors. The government has also created a conducive environment through favorable regulatory frameworks such as: the National Energy and Petroleum Policy which seeks to ensure competitively priced energy while protecting the environment. According to this policy the government explores and adopts financing options from local and international sources for cost-effective utilisation of all energy resources.
According to the Ministry of Energy’s Wind Atlas, Kenya has a proven wind potential of 346 W/m2. In 2014, the country installed wind capacity of 25 MW connected to the grid. This capacity is expected to rise with completion of Lake Turkana Wind Farm in northern Kenya in 2017. The 40,000-acre wind farm, which is Africa’s largest, is expected to inject 310 MW into the national grid, with investment from Google, which shifts its $200 billion clean energy focus to Kenya and the Turkana Wind Project.
Through purchasing a 12.5% stake, the company’s latest investment sets out to spur innovation in the region through powering more than two million households and adding significant source of wind energy to Kenya’s energy mix as a means to provide an alternative to oil and diesel powered generators and hydropower. Google’s investment in Kenya offers one of the best wind resources in the world and is a sign of global firms stepping into the green energy field.
Geothermal has emerged as an important energy source in the country. According to the Kenya Electricity Generating Company (KenGen), geothermal power now accounts for 46.4% of Kenya’s energy mix, making Kenya the 8th largest producer of geothermal power in the world. It is estimated that the country has potential to generate 10,000 MW from geothermal, enough to power 20 million households and businesses. The country aspires to produce at least 1900 MW of geothermal energy by 2017, and 5500 MW by 2030, presenting immense investment opportunities.
As the country shifts to low carbon, the pace of solar energy development is increasing. Its unique geographical position ensures that Kenya has a very high solar potential, which is ripe for increased investment. A number of foreign firms are already taking advantage of this – UK firm UBBINK in conjunction with Chloride Exide setting up a solar panel assembly plant in Nakuru County to meet this demand.
In Kericho County, British firm SolarCentury in conjunction with two local firms have developed East Africa’s largest solar plant with an output of 1 MW. At the July 2015 Global Entrepreneurship Summit held in Nairobi, the Ministry of Energy signed a Ksh 200 billion (US $ 2.2 billion) deal with North American company Skypower to develop 1000 MW of solar energy in the country.
The government has also taken steps to spur solar energy development including lifting of VAT charges on all solar equipment imported into the country. Currently, solar energy has been installed in over 2000 institutions, with a total output of 2 MW. With demand for solar energy in the country set to increase further, demand for solar panels is projected to grow by 15% signifying a huge potential market.
Technological innovation is aiding solar power development in the country. An example of this is the 2015 Zayed Future Energy Prize winner M-Kopa, which has helped to increase access to affordable solar energy across East Africa. M-Kopa is a pay as you go system allowing users access to a solar power system that includes a panel, three lamps, radio and mobile phone charging kit at a minimal fee. Most Kenyans are able to pay for the whole system in one year. M-Kopa has helped over 200,000 households across East Africa access energy.
Another important renewable energy source is hydropower. Kenya’s installed hydropower capacity is 821 MW, mainly from large hydro. The country’s total potential hydropower capacity is 6000 MW, with the potential for small hydro estimated at 3,000 MW. Compared to other markets such as Egypt and Mozambique where the hydropower capacity is 3,664 MV and 197 MV respectively, Kenya has more capacity in the hydropower sector. Out of the 3,000 MW, less than 30 MW has been exploited, of which only 15 MW supply the national grid. This under exploitation has been attributed to high installation costs, inadequate hydrological data, and lack of capacity to manufacture small hydropower components.
Biomass energy or cogeneration contributes to more than 90% of rural households’ energy needs. The main sources of biomass for Kenya include charcoal, wood-fuel and agricultural waste, forestry and agro-industry residues including bagasse. With such a large population depending on biomass energy, efforts are being made to mitigate environmental and health implications arising from use of charcoal and wood fuel. A number of companies e.g. US based companies Burn and Envirofit, have already invested in the production of clean burning stoves in Kenya.
Since 2006, the energy sector has grown tremendously, as it seeks to meet rising demand. The government has put in place a raft of measures aimed at encouraging investment of growth, which have been hugely successful. Various investors have expressed an interest in developing renewable energy sources in the country including 20 small hydros with a total capacity of 84 MW, 6 biomass energy projects with a total capacity of 270 MW, and 23 wind projects with a total capacity of 1327 MW.
With demand for energy in the country projected to continue growing, peaking 15000 MW by 2030, the future of Kenya’s energy sector is bright. The recent unprecedented 25-30% reduction in the cost of power, following injection of 280MW of additional geothermal generated power, has created profound interest and optimism.
Are the UK Governments Plans for the Energy Sector Smart?
The revolution in the energy sector marches on, wind turbines and solar panels are harnessing more renewable energy than ever before – so where is it all leading?
The UK government have recently announced plans to modernise the way we produce, store and use electricity. And, if realised, the plans could be just the thing to bring the energy sector in line with 21st century technology and ideologies.
Central to the plans is an initiative that will see smart meters installed in homes and businesses the length and breadth of the country – and their aim? To create an environment where electricity can be managed more efficiently.
The news has prompted some speculation about how energy suppliers will react and many are predicting a price war. This could benefit consumers of electricity and investors, many of whom may be looking to make a profit by trading energy company shares online using platforms such as Oanda – but the potential for good news doesn’t end there.
Introducing New Technology
The plan, titled Smart Systems and Flexibility is being rolled out in the hope that it will have a positive impact in three core areas.
- To offer consumers greater control by making smart meters available for all homes and businesses by 2020. Energy users will be able to monitor, control and record the amount of energy they use.
- Incentivise energy suppliers to change the manner in which they buy electricity, to offer more smart tariffs and more off-peak periods for energy consumption.
- Introduce new standards for electrical appliances – it is hoped that the new wave of appliances will recognise when electricity is at its cheapest and at its most expensive and respond accordingly.
How the Plans Will Affect Solar Energy
Around 7 million houses in the UK have solar panels and the government say that their plan will benefit them as they will be able to store electricity on batteries. The stored energy can then be used by the household and excess energy can be exported to the national grid – in this instance lower tariffs or even payment for the excess energy will bring down annual costs significantly.
The rate of return on energy exported to the national grid is currently between 6% and 10%, but there are many variables to take into account, such as, the cost of battery storage and light levels. Still, those with state-of-the-art solar electricity systems could end up with an annual profit after selling their excess energy.
The Internet of Things
Much of what the plans set out to achieve are linked to the now ubiquitous “internet of things” – where, for example, appliances and heating systems are connected to the internet in order to make them function more smartly.
Companies like Hive have already made great inroads into this type of technology, but the road that the government plans are heading down, will, potentially, go much further -blockchain technology looms and has already proved to be a game changer in the world of currency.
It has already been suggested that the peer to peer selling of energy and exporting it to the national grid may eventually be done using blockchain technology.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Don and Alex Tapscott, Blockchain Revolution (2016)
The upshot of the government’s plans for the revolution of the energy sector, is that technology will play an indelible role in making it more efficient, more flexible and ultimately more sustainable.
4 Case Studies on the Benefits of Solar Energy
Demand for solar energy is growing at a surprising rate. New figures from SolarPower Europe show that solar energy production has risen 50% since the summer of 2016.
However, many people are still skeptical of the benefits of solar energy.Does it actually make a significant reduction in our carbon footprint? Is it actually cost-effective for the company over the long-run?
A number of case studies have been conducted, which indicate solar energy can be enormously beneficial. Here are some of the most compelling studies on the subject.
1. Boulder Nissan
When you think of companies that leverage solar power, car dealerships probably aren’t the first ones that come to mind. However, Boulder Nissan is highly committed to promoting green energy. They worked with Independent Power Systems to setup a number of solar cells. Here were the results:
- Boulder Nissan has reduced coal generated electricity by 65%.
- They are on track to run on 100% renewable energy within the next 13 years.
- Boulder Nissan reduced CO2 emissions by 416,000 lbs. within the first year after installing their solar panels.
This is one of the most impressive solar energy case studies a small business has published in recent years. It shows that even small companies in rural communities can make a major difference by adapting solar energy.
2. Valley Electric Association
In 2015, the Valley Electric Association (VEA) created an 80-acre solar garden. Before retiring from the legislature, U.S. Senate Minority Leader Harry Reid praised the new project as a way to make the state more energy dependent and reduce our carbon footprint.
“This facility will provide its customers with the opportunity to purchase 100 percent of their electricity from clean energy produced in Nevada,” Reid told reporters with the Pahrump Valley Times. “That’s a step forward for the Silver State, but it also proves that utilities can work with customers to provide clean renewable energy that they demand.”
The solar energy that VEA produced was drastically higher than anyone would have predicted. SolarWorld estimates that the solar garden created 32,680,000 kwh every year, which was enough to power nearly 4,000 homes.
This was a major undertaking for a purple state, which may inspire their peers throughout the Midwest to develop solar gardens of their own. It will reduce dependency on the electric grid, which is a problem for many remote states in the central part of the country.
3. Las Vegas Casinos
A number of Las Vegas casinos have started investing in solar panels over the last couple of years. The Guardian reports that many of these casinos have cut costs considerably. Some of them are even selling the energy back to the grid.
“It’s no accident that we put the array on top of a conference center. This is good business for us,” Cindy Ortega, chief sustainability officer at MGM Resorts told Guardian reporters. “We are looking at leaving the power system, and one of the reasons for that is we can procure more renewable energy on the open market.”
There have been many benefits for casinos using solar energy. They are some of the most energy-intensive institutions in the world, so this has helped them become much more cost-effective. It also helps minimize disruptions to their customers learning online keno strategies in the event of any problems with the electric grid.
4. Boston College
Boston College has been committed to many green initiatives over the years. A group of researchers experimented with solar cells on different parts of the campus to see where they could produce the most electricity. They discovered that the best locationwas at St. Clement’sHall. The solar cells there dramatically. It would also reduce CO2 emissions by 521,702 lbs. a year and be enough to save 10,869 trees.
Boston College is exploring new ways to expand their usage of solar cells. They may be able to invest in more effective solar panels that can generate far more solar energy.
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