M a r k e t N e w s

Electrifying Keyna: How One African Country is Approaching Renewable Energy Development

Posted on : Thursday, 8th January 2015

Kenya has taken some major steps to boost its renewable energy production recently, according to reports. However, confusion about projects and the government’s ambiguous energy policy is overshadowing excitement.

Kenya’s renewable energy ambitions have attracted growing attention in recent months. There has been a strong uptick in interest in the country’s wind energy potential in particular. Last year, Kenya’s Ministry of Energy and Petroleum said in an investment prospectus for 2013-2016 that it plans to boost wind power generation by 630 MW as part of its target to increase electricity levels by 5,000 MW by 2016. In March, the Kenyan government also signed a financing document for the largest private investment in Kenya.

The Lake Turkana Wind Project (LTWP) in northeastern Kenya, spanning 40,000 acres, will provide the country’s national grid with 300 MW of wind power capacity, or a fifth of the country’s installed electricity capacity. Construction is due to begin imminently and the facility is expected to be online by 2016. Three hundred and sixty five wind turbines will generate the energy at the farm.

"All is progressing very well now and hopefully the long awaited final notice to proceed on the transmission line will be in place this week," said Carlo Van Wegeningen, Chairman, Lake Turkana Wind Power. "This is the last CP we are waiting for to allow to proceed and commence construction," he added.

According to Van Wegeningen, the project will have huge benefits. "It will increase the power generation capacity to the country by 17 percent. At EU € 0.0752 per kWh LTWP will be the cheapest new and clean source of power in the country after geothermal," he said. "Today’s average cost of power in Kenya stands at approximately EU € 0.12/kWh. LTWP will save the Kenyan economy some $150 million a year in fuel replacement costs. It will contribute $1 billion in income tax payments over the life of the project," Van Wegeningen added.

As well as the Lake Turkana farm, a number of other wind power projects are in the pipeline in Kenya. They include the Kipeto Wind Project in the Rift Valley Province, which will have a capacity over 100 MW; a 90-MW Electrawinds project in Lamu; and the 61-MW Kinangop wind farm project in central Kenya under UK-based wind turbine supplier Aeolus Power.

Kenya’s wind energy potential is high, say experts. Wind speeds of as much as eight to 14 meters per second are being recorded in several areas of the country, making wind-powered electricity production attractive on a commercial level as well as an environmental one. The government is keen to boost its intelligence about the best sites for wind farms and has set up 61 wind masts and data loggers all over the country over the last three years to this end. It plans to erect 34 more this year. After gathering sufficient information, the state plans to offer the best sites for wind power generation up to investors.

Solar Power On the Grid Not as Strong

In contrast to Kenya’s booming wind power sector, Kenya’s solar policy has been beset with confusion. In January, The Guardian reported that the country planned to source half of its energy from solar by 2016 through a plan to invest $1.2 billion jointly with private firms to install nine major solar power plants across the country. The government has announced no such plans.

On the other side of the spectrum, in November last year there were media reports that the country’s government had suspended new licenses for solar plants and wind farms until 2017 and would focus on cheaper non-renewable energy sources instead in a bid to slash electricity costs. Insiders deny that this is the case. "There is no sign that there is any official moratorium, no high ranking official has said so. Kenya seems very much still open for business in this regard," said Janosch Ondraczek, a researcher on solar energy in East Africa and a project manager for renewable projects at PricewaterhouseCoopers.

Ondraczek points out that on grid solar energy production does not feature in the aforementioned investment prospectus and enthusiasm for solar on a government level is weak.

"There is much less conviction from the government that this is what they want to pursue," said Ondraczek. "There is very little mention of solar in the document and on-grid solar has no mention at all. The government effectively foresees that solar will contribute zero percent of power generation on-grid," he adds.

Ondraczek also points out that the government’s preference for wind energy over solar is considerable.

"Wind has been around for longer than solar and people are only just starting to lobby properly for solar projects in Kenya. The state also sometimes points to some evidence that suggests wind is more competitive than solar but this is based on outdated numbers. Technology and costs improvements are constantly being made when it comes to solar and it is catching up with wind," he added.

Insufficient subsidies for solar projects have prevented the industry from really taking off, argues Ondraczek. "Despite the fact that feed in tariffs have been in place for a few years nothing significant has really happened because of insufficient subsidies," Ondraczek said. "The tariffs for sale are not sufficient to facilitate any major uptake," he added, pointing out that this is perhaps unsurprising for a sub-Saharan African country; they have limited funds to "play around with subsidies," Ondraczek argues.

Off-grid Solar Steadily Rising

Although the government has limited enthusiasm for on-grid solar projects, it has pursued a policy of ramping up off-grid solar production in rural areas as part of its 2009 Rural Electrification Master Plan. So far around 744 public places in isolated areas, from health centers to schools, have been hooked up to off-grid solar power through the initiative. Demand for PV panels is estimated to have risen by around 200 kW peak. Five off-grid stations have been put in place and as they enjoy solid internal rate of returns of 20 percent, the operation is being expanded to build new plants and also make existing ones bigger.

Source : http://www.renewableenergyworld.com
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