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Kenya: Bold Bet on Renewable Energy

While most African states have exuberantly praised renewable energy, Kenya’s new wind power project shows its one of the few actually putting words to action

Kenya, East Africa’s largest economy, never disappoints when it comes to backing words with action.  After years of strongly advocating for renewable energy, Kenya has finally put its mouth where its money is. The nation’s President, H.E. Uhuru Kenyatta, recently flagged off the construction of a $690 million wind farm in Turkana, a dry region in the northern part of the country that also boasts of economical viable reserves of oil.

The 310 MW wind farm in Turkana, with its 365 turbines and 162 square kilometer land area, is billed to be the largest in Africa, relegating Tarfaya wind farm in Morocco, which is currently Africa’s biggest wind farm with 131 turbines.

Kenya’s bet on not just any wind farm, but the biggest in Africa, is a welcome departure from what has been witnessed before in the broader African continent. Many African states have—and continue to—shower praises on renewable energy, describing it as a sure-fire solution to the continent’s gaping energy deficit.

But very few states, however, have actually followed through on their bold pledges. This is despite the fact that renewable energy, particularly wind, has been a success in areas such as South Africa. The Rainbow Nation has five large scale wind farms in operation and several others under construction.

Wind power in Turkana

Kenya will now become the leader in wind energy across the whole of Africa

Kenya is now not only stepping into the world of renewable energy, but doing so with strong convictions. It will relegate Morocco and South Africa as the benchmarks of successful renewable energy in Africa. But displacing the likes of Morocco and South Africa in wind energy is not Kenya’s prime objective. The goal is to reduce reliance on fossil fuels and hydro electric sources.

KenGen, the main producer of power in Kenya, currently produces approximately 80 percent of electricity consumed in the country. Of that, 65 percent comes from hydro-power sources and around 33 percent from diesel.

This heavy reliance on hydro-sources, however, makes expansion of electricity supply in Kenya uniquely challenging. This is because rain patterns, not just in Kenya, but globally, have become increasingly erratic as climate change continues to gain momentum. Moreover, diesel is painfully expensive and subject to commodity price swings in the global oil market.

Wind energy is therefore a refreshing departure from hydro-power sources and fossil fuels, which are fraught with their own difficult set of challenges.

Cheaper energy

But Kenya’s bet on renewable energy is not just about broadening the energy mix. The country wants to increase the overall supply of power to the grid in order to lower the cost of energy for both domestic and commercial customers.

The Kenyan government has a bold plan to add 5,000 MW to the national grid over the next five years. The 310 MW wind power project in Turkana will generously serve toward the attainment of this goal. With cheaper energy, Kenya will be able to reverse the decline in manufacturing.

Manufacturing has been performing dismally in Kenya, having contracted in the first three months of the year. Data from the Kenya National Bureau of Statistics (KNBS) shows that in the first quarter of 2015, manufacturing activity in Kenya declined to 3.5 percent compared to 6.4 percent in the year-ago quarter.

One of the reasons why manufacturing in Kenya has taken a downturn is the high cost of energy in the country. High energy costs have pushed the cost base up and Kenyan manufacturers have been unable to remain competitive both locally and in export markets.

But with the 5,000 MW being injected into the grid, power costs are billed to decline considerably, allowing manufacturers to make a comeback on lower costs.

Kenya’s spirited effort to turnaround manufacturing comes at a time when the country’s, and indeed Africa’s, demographic landscape is shifting. Increasingly, Africa is becoming a continent of young people. There is nowhere in the world where more young people are joining the work force at a higher pace than Africa. By 2035, the number of Africans starting to work will shadow the rest of the world combined, a report on Quartz Africa says. The only challenge with this young population is providing jobs, failure to which could inspire the worst episode of social unrest Africa has ever seen.

manufacturing in Kenya

 

Cheaper energy will inspire a turnaround in manufacturing and absorb the youth into jobs

Manufacturing is known for providing permanent jobs that have prospects for upward mobility and skills improvement. Kenya’s push to lower the cost of energy through the wind farm is therefore a step in the right direction. It will reinvigorate manufacturing and help the country absorb its ever growing youth bulge.

What can other African nations learn from Kenya? Besides learning to follow through on pledges, Kenya has more lessons to offer other African states that want to replicate the same success in renewable energy.

Governance key

The biggest concern when it comes to renewable energy is that investors usually need to commit massive amounts of capital upfront in the initial stages. Very few investors will commit during the costly and difficult stages of early development, partly because it is hard to mobilize capital, but mostly because they fear that their money may be swindled by the government in place.

All over Africa, there is no shortage of investors who have had the fingers burnt because of putting too much trust in governments that had no concern for the rule of law. There is simply no trust. But in Kenya, investors are willing to commit because the country has come a long way in strengthening governance structures.

Kenya Power, the key distributor of energy in Kenya and a government entity, has inked an agreement to buy the power produced at the 310 MW wind farm at a fixed price over a two decade period. Over these twenty years, the investors of the project are not only sure that they will recoup their investments, but they are also sure that the Kenyan government will uphold its end of the deal.

If other African governments can inspire the same level of confidence in investors like Kenya, then there is no doubt that investments in renewable energy and other capital intensive areas will start pouring in at every corner of the continent.

Moreover, there is a need for Africa to maintain an open mind when it comes to diplomatic, trade and economic relations.  Although most of Africa (including Kenya) has turned to China for major infrastructure and energy projects over the past ten years, Kenya has maintained a balance between her traditional Western allies and the fast growing Asian Tiger. The financing of the $690 million wind project was provided by a consortium of investors backed by the European Union, with the African Development Bank as the lead arranger.

About the Author

Lennox is a public relations professional and seasoned writer who works with leading local and multinational brands operating in
Kenya and Africa. He is also an assistant catechist at his local Catholic parish and uses this position to sensitize members of his
community on the importance of fighting inequality. In the long-term, Lennox aspires to inspire Africans in all sectors of society to fight
all forms of inequality, as the continent is disproportionately affected by inequality when compared with the rest of the world

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