Kenya is now ranked among the world’s top ten countries that have made significant investments in renewable energy, much of it in the development of geothermal resources. Kenya is ranked sixth in a global list of key emerging markets which together attracted KES 12.9 trillion (US$ 126 billion) worth of investments in clean energy last year. This was according to a report released by Bloomberg New Energy Finance in late November 2015.
Kenya is now ranked among the world’s top ten countries that have made significant investments in renewable energy, much of it in the development of geothermal resources. Kenya is ranked sixth in a global list of key emerging markets which together attracted KES 12.9 trillion (US$ 126 billion) worth of investments in clean energy last year. This was according to a report released by Bloomberg New Energy Finance in late November 2015.
Clean Energy Investment in Africa
Clean energy is becoming big business in sub-Saharan Africa, with over US$ 25 billion deployed in renewables (excluding large hydro) by the second half of 2015. As of 2014, clean energy capacity almost doubled on the previous year in the region. But only some countries are making significant inroads and contributions to developing renewable resources. South Africa accounts for over US$ 16 billion of the region’s total clean energy investment. Kenya comes second, investing over US$ 4 billion. According to the Bloomberg energy report, Uganda has also attracted significant investment in clean energy is now ranked ninth in the world, behind Kenya (number 6) and South Africa at position four.
Kenya’s Geothermal Power: A Success Story
Geothermal power is particularly abundant in Kenya, primarily in the Great Rift Valley. It is also very cost-effective to develop. It is estimated that Kenya has the potential to produce about 10,000 MW of geothermal power from the Rift Valley basin, according to studies by the Ministry of Energy. Geothermal now accounts for 29 per cent of Kenya’s energy mix, up from only 13 per cent in 2011. With the opening of the 280 MW geothermal power plant at the Olkaria geothermal power source in early 2015, Kenya is now ranked the eighth largest producer of geothermal energy in the world. The power plant at Olkaria is the largest in the world.
The Kenya Electricity Generating Company (KenGen) plans to add another 560 MW of geothermal power to the national grid by 2019. By 2030, Kenya plans to have 5,530 MW of geothermal power. This will equal 26 per cent of Kenya’s total geothermal capacity and will make geothermal power Kenya’s largest source of clean energy electricity. The additional geothermal power already being generated from Olkaria and other projects in Kenya continues to lower the cost of fuel in electricity bills. Additional geothermal energy will continue to make it cheaper to do business in Kenya, attract further investment and help Kenyans save money on electricity.
Data from Kenya’s Energy Regulatory Commission (ERC) indicates that geothermal power consumption rose to a record high of 402.1 million units in October 2015, accounting for nearly half of the country’s total consumption.
More Investment and Functional Cooperation Required
This is the good news. Great news, in fact. But systemic weaknesses need to be addressed to ensure Kenya’s current trajectory when it comes to tapping clean energy, in general and geothermal power, in particular. For example, a 2013 Africa Energy Outlook report noted that three action areas that could assist Kenya and the rest of sub-Saharan Africa in the regard. It could also have the effect of boosting the sub-Saharan economy by a further 30 percent by 2040.
The actions called for by the report include first, an additional US$ 450 billion in power sector investment. This is precisely what Kenya has been so adept at doing, both through significant government investment and attracting major foreign direct investment (FDI) for such projects. For example, during the 2015 Global Entrepreneurship Summit in Nairobi – attended by US President Barrack Obama – the Overseas Private Investment Corporation (OPIC) of the United States signed a KES 23 billion funding agreement with Kipeto Power Ltd. to develop the 100 MW wind farm on the outskirts of Nairobi (see more at: https://www.kenyaengineer.co.ke/index.php/tech/columns-menu/political-engineering/5426-details-behind-kenya-power-s-deal-to-purchase-wind-power-from-a-proposed-wind-farm).
Second, the report called for deeper cross-border cooperation on large-scale energy generation and transmission projects. This is needed to further integrate the region, which should be an end in and of itself in order to ensure the region’s stability (political, economic and social) as well as the sharing of resources in an equitable, sustainable and cost-effective manner.
With Kenya and Uganda currently in the list of top ten countries that have made significant investments in renewable energy, it makes sense for the two countries to cooperate on a functional level. The concept of “functional cooperation,” found in the study of political science and how politics can affect the economy, demonstrates that functional cooperation is easier to undertake and less cumbersome than regional integration. Countries simply need to agree on the best way to share their common resources to better serve their particular region or continent. This sharing is expected to result in reduced transaction costs and enhanced intraregional trade.
While not a new concept, functional cooperation can lead to region-wide and even continent-wide benefits. It more often than not involves regional public goods that extend across national borders. Political economist Anne Kamau has listed areas where functional cooperation can be undertaken, such as the provision of public health, environment/agriculture/land, security, scientific research and development, transportation and telecommunications, tourism, disaster management and fisheries/water management.
Kenya and Ethiopia have arguably dabbled in the implementation of functional cooperation to positive effect. While regional integration is perhaps a long-term goal for both of these countries, Ethiopia remains firmly outside the East African Community (EAC). As such, functional cooperation, particularly in the sharing of renewables and energy resources, offers enhanced energy security and solutions to Kenya and Ethiopia. To this end, the Power System Interconnector Project between Ethiopia and Kenya aims to further integrate the electricity markets of the East African Power Pool (EAPP). It plans to do so by interconnecting the power systems of the two countries through the construction of high-voltage, direct current (HVDC) power lines and the transmission of hydroelectric power.
Geothermal Success and Scandal
A third action area by the report calls for more transparent policies and governance of energy projects. This may prove to be Kenya’s proverbial Achilles heel. The rosy picture surrounding the successful tapping of Kenya’s vast reserves of geothermal energy is stained by the ongoing investigation of Kenya’s state-owned Geothermal Development Company (GDC). At the heart of the matter is corruption.
GDC is responsible for the development of geothermal resources in Kenya. While a string of successes in regards to the bringing of geothermal power online to Kenyans may excuse some behavior at GDC, it cannot excuse the fact that the company is being investigated by the Ethics and Anti-Corruption Commission (EACC) over the procurement of drilling rigs, staff mismanagement and financial improprieties. These improprieties include claims of corruption in awarding of tenders worth more than KES 10 billion.
It is hoped that President Kenyatta’s recently renewed attack on corruption in Kenya will arrest the problems at GDC so that Kenya can continue its stellar track record when it comes to tapping its geothermal energy resources. By tackling corruption, establishing multiple avenues of functional cooperation across the region, and promulgating renewable energy-specific policies rather than general policies, Kenya will continue to be one of the world’s frontrunners when it comes to properly and cost-effectively exploiting its renewable energy resources.
References
(2015, January 26). Kenya: CID Probes Graft Claims at Geothermal Company. The Star. Retrieved from http://allafrica.com/stories/201501260373.html.
Barber, D.A. (2014, October 20). Bad Policies Hinder Africa’s Renewable Energy Growth. AFK Insider. Retrieved from http://afkinsider.com/75448/africas-renewable-energy-growth-hindered-policies/.
Kamau, A., & Initiative, B. A. G. (2012). Enhancing Intra-African Trade through Functional Cooperation. Accelerating Growth through Improved Intra-African Trade, 18.
Karambu, Immaculate (2015, November 23). Kenya ranked among top ten countries in renewable energy investments. Daily Nation. Retrieved from http://www.nation.co.ke/business/Kenya-ranked-sixth-globally-in-renewable-energy-investments/-/996/2968580/-/1ob4qe/-/index.html.
Ngirachu, John. (2015, February 23). EACC probes Sh10bn Geothermal Development Company deals. Business Daily. Retrieved from http://www.businessdailyafrica.com/EACC-probes-Sh10bn-GDC-deals/-/539546/2632766/-/97a8q4/-/index.html.
Regions: Africa. ClimateScope 2015. Retrieved from http://global-climatescope.org/en/region/africa/.
