Category Archives: Kenya

What does 2024 have in store for renewables in Africa?

February 1st, 2024 By Ben Payton Image : rufous / Adobe Stock

The private sector is playing an ever increasing role, but grid capacity constraints and macroeconomic headwinds pose key challenges
February 1st, 2024
At the beginning of 2024 Africa has come to a key juncture in its renewable energy rollout.

The potential of technologies such as wind and solar energy to help close the continent’s energy access gap is now beyond doubt. Across Africa, however, there are multiple challenges in accelerating the speed and scale of the drive for renewables.

Roughly half of Africa’s population, around 600m people, lacks access to electricity; millions more endure an unreliable or intermittent supply.

Solar, in particular, has a key role in bringing more reliable access. Most of Africa enjoys excellent conditions for solar generation; and solar is well-suited for both utility-scale projects and smaller schemes designed to serve homes and businesses in remote areas.

Last year’s COP28 climate conference, along with the Africa Climate Summit held in Nairobi last September, reaffirmed the importance of renewables on the continent.

But whether 2024 will see donors and development finance institutions (DFIs) turn commitments into action remains to be seen. The International Energy Agency (IEA) estimates that $28bn in concessional capital is needed each year up to 2030 to mobilise $90bn in private sector investment – a more than tenfold increase from the present level.

Technologies mature

Hydropower, which has played a key role in the power sectors of many African countries for decades, remains the leading source of renewable energy on the continent. However, it is solar that is increasingly emerging as the main source of new capacity.

According to the African Solar Industry Association (AFSIA), the continent installed a record 3.7 GW in 2023, representing year-on-year growth of 19%. AFSIA notes that utility-scale solar projects are less common in Africa than in the United States, Europe or China. By contrast, it says 65% of the capacity added last year came from commercial and industrial projects – a large share of which are in South Africa.

“In [the] absence of reliable utility companies and grids supplying the required electricity, African companies and businesses finally have found an alternative with solar and storage thanks to plummeting prices of both key components,” AFSIA said in a report.

Meanwhile, cash-strapped utilities are increasingly looking to the private sector to supply electricity from large-scale wind and solar projects to the grid. In South Africa, a bidding round for independent power producer (IPP) projects, which will conclude in April, will be crucial for efforts to end the country’s disastrous power shortages.

Zambia is another country where the government is turning to the private sector, as it looks to extend electricity access to 60% of its population by 2030. Reforms introduced by President Hakainde Hichilema have facilitated private investment in the power market, with a focus on streamlining regulator approvals.

“Most renewable energy projects will continue to be financed at an increasing rate by the private sector in Zambia,” says Kusobile Kamwambi, head of the country’s Presidential Delivery Unit.

But one challenge, likely to become ever more evident in 2024, is that electricity grids in many African countries are struggling to absorb the power supplied by renewables. In Zambia, for example, ZESCO has set a cap of 50 MW on IPP projects – a limit that makes investment less attractive for some players in the sector.

Grids and batteries

The electricity shortages in countries such as South Africa highlight the importance of upgrading grid infrastructure at both the national and regional levels. Holger Rothenbusch, managing director and head of infrastructure and climate at British International Investment, the UK’s DFI, says that investment in cross-border transmission infrastructure will increase. He notes that there are “many exciting prospects” in decentralised renewable energy systems, which enable renewable generation in areas where grid access remains difficult.

“We are starting to see the potential of mini-grids to bring power to countries such as DRC and Burundi with historically low rates of access,” he says.
“Projects are being delivered with attractive financing models such as grants and private capital to mitigate offtake risk.”

Source: African Business , 1st February 2024


AfDB wants Kenya, Tanzania electricity deals finalised

A police officer patrols substation of Kenya Electricity Transmission Company Limited in Suswa on August 4, 2017. PHOTO | AYUB MUIYURO | NMG

The African Development Bank (AfDB) wants Kenya and Tanzania to speed up the signing of three key agreements to pave the way for the exchange of excess electricity between the two countries via a Ksh43 billion ($309.26 million) line.

The three are a wheeling agreement between Tanzania Electric Supply Company (Tanesco) and Kenya Electricity Transmission Company Limited, a power exchange deal between Kenya Power and Tanesco and a tripartite deal for the maintenance of the interconnected grid.

The two neighbours were last month expected to complete the 507.5-kilometre line that runs from the Isinya substation to Arusha through Namanga. The line will have an intended transfer capacity of 2,000 megawatts.

Read: Kenya, Tanzania power line to be launched this year

AfDB— a major financier of the project— in its latest review said that the three deals are key to rolling out the regional power trade meant to boost electricity supply and cut reliance on the dirty and costly thermal power in the two countries.

“It is of significant importance that the afore-mentioned agreements are concluded as soon as possible to coincide with the completion and commissioning of the cross-border electricity infrastructure to pave the way for regional power trade,” AfDB says in the review.

Wheeling is the transfer of electricity from an electrical grid to an electrical load outside the grid boundaries through the use of existing distribution or transmission networks.

Completion of the 400 kilovolts line had been plunged into uncertainty as Ketraco delayed completing its share of the line due to hitches in compensating and resettling families along the project area.

The line whose construction started in 2015 will allow cross-border exchanges of cheap and cleaner surplus power from neighbouring countries in the Eastern Africa Power Pool countries.

Nations in the Eastern Africa Power Pool are Kenya, Tanzania, Uganda, the Republic of Sudan, South Sudan, Burundi, the Democratic Republic of Congo, Djibouti, Ethiopia, Egypt, Somalia, Rwanda and Libya.

Kenya currently imports cheap hydroelectricity from Ethiopia and Uganda and the supplies have been critical in helping avoid power rationing especially last year when hydro-generation hit record lows on prolonged drought.

Read: Kenya electricity imports from Ethiopia halve on drought

Tanzania has recently been forced to ration power in some parts due to low hydro generation, highlighting the critical role of the line to the neighbouring country. The line will also allow Tanzania to tap cheap hydroelectricity from Ethiopia.

Ketraco had delayed the completion of the line on the Kenyan side which spans about 93 kilometres between Isinya substation and the border town of Namanga.

Source: The East African, 31st January 2024


IMF approves new $941 m loan for cash-strapped Kenya

Kenya President William Ruto speaks during a plenary session at the COP28 U.N.   –  Copyright © africanews Peter Dejong/Copyright 2023 The AP. All rights reserved.

The International Monetary Fund has granted Kenya a new loan of more than $941 million to help reinforce the finances of the cash-strapped East African nation.

Kenya is grappling with a host of economic challenges including a vast debt mountain, cost of living crisis and tumbling currency.

The IMF said in a statement published on Wednesday that its executive board had approved the $941.2 million loan, with an immediate disbursement of $624.5 million.

Total payments under various credit facilities amount to about $2.6 billion, it added.

The Washington-based agency said it forecast Kenya’s economic growth at around 5 percent this year, from an estimated 5.1 percent in 2023.

“Kenya’s growth remained resilient in the face of increasing external and domestic challenges,” said Antoinette Sayeh, IMF deputy managing director and acting chair, said in the statement.

The credit arrangements for Kenya “continue to support the authorities’ efforts to sustain macroeconomic stability, strengthen policy frameworks, withstand external shocks, push forward key reforms, and promote more inclusive and green growth”.

According to the latest Treasury data released this month, Kenya’s public debt stands at 10.585 trillion shillings ($65.5 billion).

In December, Kenya ditched a promise to buy back a portion of a $2 billion Eurobond that is due to mature in June.

Instead, Finance Minister Njuguna Ndung’u said the country had paid $68.7 million in interest on the bond, sidestepping a potential default.

“In its unwavering commitment to upholding a resilient sovereign credit rating and facilitating access to new development financing, Kenya remains dedicated to fulfilling all debt obligations with international lenders,” Ndung’u said.

President William Ruto had announced a plan in November to buy $300 million of the Eurobond, saying public debt had “become a source of much concern to citizens, markets and our partners”.

Ruto has imposed a raft of new or increased taxes to try to replenish government coffers, but they are deeply unpopular among people struggling with rising costs for basic goods, and several have been challenged in court.


Kenya, Ethiopia revive hopes of Lapsset with talk of new railway

Casual labourers at work at the new Lamu Port site in Kililana in Lamu West, Kenya. PHOTOS | KALUME KAZUNGU | NMG

Is Lamu Port South Sudan Ethiopia Project (Lapsset) on its way back or it is yet another episode in the fanfare associated with the project?

Observers have been wracking their brains over this after Kenya and Ethiopia, entered a deal to jointly search for a financier, and help erect one of the big-ticket projects associated with the Lapsset corridor.

Kenya’s Transport Cabinet Secretary Kipchumba Murkomen and his Ethiopian counterpart Alemu Sime signed a bilateral agreement for a standard gauge railway network between Lamu Port-Moyale-Addis Ababa.

Read: Why Lapsset is stuck on the starting blocks

“We are currently working on the development of the railway line from Lamu to Moyale through Isiolo with a link from Isiolo to Nairobi to connect with the Mombasa-Nairobi-Malaba SGR,” Murkomen said.

The move meant Nairobi had, in one month, reached out to two of its neighbours to extend the SGR to their territories from next year.

Last month, Kenya and Uganda agreed to extend the SGR from Naivasha to Kampala. They, too, agreed on a joint search for financiers, with each side footing the logistical bill on its territory.

For Lapsset, Kenya had pushed this path before.

In January 2020, Kenya, Ethiopia and South Sudan signed a memorandum of understanding for development and funding and met prospective financiers including the African Development Bank (AfDB), the United Nations Economic Mission of Africa and the African Union’s New Partnership for Africa Development (Nepad).

Read: Kenya: Ethiopia’s peace vital for development

It was then that the project was adopted as an African Union project and redesigned to link the Lamu port on the eastern African Coast of the Indian Ocean to Douala port in the western Africa Atlantic Ocean earmarking the project as one of the pillars in the realisation of the African Continental Free Trade Area (AfCFTA).

Some of the projects under the Presidential Infrastructure Champion Initiative being considered by the AU included the Nigeria-Algeria gas pipeline project (Trans-Sahara Gas Pipeline); Missing links on the Trans-Sahara highway and optic fibre link between Algeria and Nigeria; Dakar-Ndjamena-Djibouti road/rail project.

Others are North-South Corridor Road/rail project; Kinshasa-Brazzaville bridge road/rail project; unblocking political bottlenecks for ICT broadband and optic fibre projects linking neighbouring states and construction of navigational line between Lake Victoria and the Mediterranean Sea.

But previous delays in buy-in have often derailed the Lapsset project whose entire infrastructure was meant to cost $22 billion as at 2012 when it was launched. At the time, countries agreed on crowdfunding for their specified projects on their territories.

In January 2020, Kenya, Ethiopia and South Sudan agreed on joint budgetary allocation to establish a coordinating structure to accelerate infrastructure projects.

Read: Lapsset project adopted by AU to boost free trade area

Today, very little has been achieved. South Sudan has, in fact, preferred the Northern Corridor to Lamu corridor.

Increasing insecurity has also discouraged implementation or simply diverted attention of governments. Al Shabaab attacks in Lamu, South Sudan’s civil war and civil strife in Ethiopia have all come in since 2020.

At last week’s meeting, Kenya and Ethiopia came up with a working committee.

“We further agreed to establish a Bilateral Steering Committee comprising officials from Kenya and Ethiopia to fast-track the development of the Lapsset Corridor and its supporting infrastructure,” said Mr Murkomen.

As in the case of Uganda, Kenya is this time providing enticements to Ethiopia. Those privileges include a special yard as well as stationed customs officials should Ethiopia choose to use Lamu in future, for imports.

For Ethiopia, its buy-in into the project is important to revive Lapsset. Kenya recently completed three berths of the new Lamu Port worth $400 million and is expected to serve as a transshipment facility and import port for southern Ethiopia.

Source: The East African,  19th August 2024