Kenya’s national electrification strategy seemed overly ambitious when it was announced in 2013.
Yet the latest figures from the Energy Regulatory Commission and Kenya Power suggest that great progress is being made. The proportion of the population with access to electricity has jumped from 27% in 2013 to 55% at present and the government is on course for universal electrification within just a few years.
In its latest financial results, which were published at the end of February, Kenya Power revealed that it increased the number of customers from 4.4m in January 2016 to 5.7m by the end of the year. Under the National Connectivity Project, the government wants to boost power penetration to 70% by the end of this year and 95% by 2021. These are far quicker rates of electrification than those achieved in the industrialised world or China.
Kenya Power revealed that it is prioritising the campaign over short term shareholder reward. Revenues increased 9.9% from KSh41.6bn ($397m) to KSh45.8bn ($437m) for the six months to December 2016 and it generated a KSh4.2bn ($40m) post-tax profit, up 13.5% on the same period in 2015.
However, the firm has decided not to pay shareholders an interim dividend. Rather, it is using the money to continue its electrification programme.
The company’s acting CEO Ken Tarus said: “Cash balances decreased significantly due to an aggressive implementation of capital projects. The company is focused on implementation of key capital projects to ensure reliable power supply … the new infrastructure will expand the network, enhance the system’s flexibility and reliability of power supply.
“The projects are at various stages of implementation with some scheduled for completion in the current financial year.” Its capital expenditure on distribution increased from KSh13bn ($124m) in the second half of 2015 to KSh16.1bn ($153m) for the same period last year.
Kenya Power is one of two companies that dominate the Kenyan power sector. It controls transmission and distribution infrastructure, while KenGen generates most of the electricity.
Kenya Power is 50.1% owned by the government, with the remaining 49.9% in private hands. Its biggest challenge will be achieving rural electrification, where distances are bigger and people are less able to pay.
Aside from new transmission and distribution infrastructure, the electrification programme will also require the generation of a lot more electricity. The government has decided that this will be provided by a combination of new KenGen projects, independent power producers (IPPs) and power imports from Ethiopia, probably from the Grand Ethiopian Renaissance Dam, via a new cross-border interconnector that is scheduled for completion sometime after 2020.
National generating capacity stands at 2.3 GW but new geothermal plants in the Baringo-Silai block in the northern Kenyan Rift Valley will double that when they are finally developed. Geothermal energy is particularly attractive because it provides baseload electricity and is as reliable as oil, coal or gas-fired thermal power plants.
However, it is also a low-carbon source of energy and so it is easier to tap into many international sources of funding than for more polluting technologies. The European Union has already agreed €123m financing for the development of the 70 MW Olkaria VI plant.
At the other end of the carbon scale, a regulatory battle is underway over the construction of a 985 MW coal-fired plant at the Port of Lamu by Amu Power Company, a Chinese-Kenyan joint venture. Some environmental groups oppose the scheme, in large part because of the associated air pollution. In addition, the discovery of up to 1.8 trillion cubic metres of gas on Block 9 by Canadian firm Africa Oil in 2014 could provide feedstock for a gas-fired power plant.
Kenya’s established large hydro schemes have been badly affected by drought and the accompanying low water levels on feeder reservoirs, but 550 MW of new hydro capacity has been slated. In addition, the government hopes to oversee the development of 650 MW of wind power generating capacity. Nairobi has set a new target of achieving 6,766 MW installed capacity by 2020, which again is highly ambitious and unlikely to be met by that date but it could be reached soon after.