Kenya Seeks Alternative Energy Investors To Help Lower Electric Bills

Kenya Seeks Alternative Energy Investors To Help Lower Electric Bills

Despite being a dirty form of energy, coal power generation has been adopted by many developed nations because it’s cheap and reliable.

As long as there is enough coal, electricity will be in plentiful supply, the Kenyan government says. Coal is also cheaper than other fossil fuels and the byproduct — ash — can be used to make construction materials.

With the high cost of power being blamed for a stagnating industrial growth, the Kenyan government is aggressively seeking investors in cheap alternative energy including coal to help the country increase electricity generation.

The government aims to lower the cost of electricity by half in the next three years, so as to reduce the cost of doing business and make the country more attractive to investors. This will also make it possible to light up more homes and spur growth of the informal business sector — at least that’s the plan.

A kilowatt of electricity is currently sold for 17.20 shillings ($0.20). This puts electricity beyond the reach of many Kenyans, and the government expects to halve this cost to 9.10 shillings ($0.10). Just 16 percent of the households in the country have access to electricity, according to The Guardian report.

To do so, the East African nation plans to increase its installed capacity to 5,000 megawatts by 2016 from the current 1,700 megawatts. This, President Uhuru Kenyatta said recently, will enable more households to be connected to the national grid and spur industrial growth.

The Ministry of Energy and Petroleum has been scouting for qualified investors who can partner with the Kenyan government to either build, own and/or operate new alternative energy plants.

The new energy plants will be powered by coal and natural gas compared to present operations, which are mainly rain-fed hydro generation by the Kenya Electricity Generating Company, a state-owned organization, and other smaller independent producers.

Hydroelectric Power

Despite hydroelectric power production being a comparatively cheap source of electricity in Kenya, it faces tough challenges such as an over dependence on rainfall. This is susceptible to changing weather conditions.

Many times when drought has hit the horn of Africa the hydro-dams have run low forcing power producers to switch to expensive diesel-run generators. This has in many cases led to high electricity costs and frequent blackouts that affected manufacturers and other business operators.

The country’s current total energy mix is about 1,708 megawatts, with hydroelectricity making up about a half of this at 808 megawatts. Diesel-powered plants contribute about a third of the total energy production at 542 megawatts.

Diesel delivers energy at a cost of $0.26 to $0.36, making it a very expensive source of energy; moreover, this is the main source of energy during dry spells.

“Diesel-powered plants are over relied upon during dry hydrology, making electricity very expensive,” said Davis Chirchir, cabinet secretary in the Ministry of Energy and Petroleum during the Energy Day Stakeholders Forum at the Kenyatta International Conference Centre.

The private sector carries the greatest burden of high electricity costs, Chirchir said. Goods manufactured locally cannot compete competitively with imported products.

“Electricity constitutes about 20 percent of the cost of the goods I produce. Any source of electricity is welcome, as long as it is affordable and reliable,” said James Omondi, a welder based in Mangu on the outskirts of Nairobi.

Coal and Gas

The Kenyan government has subsidized domestic and small commercial electricity consumers to offset high energy prices, but industrial consumers have been left to grapple with volatile electricity prices.

According to the Ministry of Energy, 700-800 megawatts of the additional electricity capacity will be gas-powered in a plant to be located near Mombasa. The ministry is also planning to build a 900-1,000-megawatt power plant in Lamu that will be coal-driven.

“Coal power plants could offer far cheaper electricity compared to diesel power generators,” said Christopher Muriithi, an electrical engineering lecturer and technical director at the Jomo Kenyatta University of Agriculture and Technology on the outskirts of Nairobi.

However he said that coal could be “dirtier” than gas and would have similar environmental effects to diesel. The negative environmental effects would come from huge production of carbon dioxide, which he said could be solved by investing in highly efficient plants and environmentally friendly means of disposing of the toxic gas.

“The high cost of diesel-generated electricity is mainly due to fluctuating oil prices,” said Daniel Komen, a mechanical engineer at Total Kenya, Kenya’s leading oil retailer. He added that the price of crude oil keeps fluctuating and thus the price of diesel also has to change.

Kenya recently discovered huge deposits of coal in the eastern district of Machakos, while tests are ongoing for confirmed oil deposits to determine commercial viability.

Discovery of oil and gas deposits in the country and in neighboring Uganda and Tanzania has also pushed the government to seek alternative sources of electricity.

Natural gas power plants have an obvious advantage over coal. They are more environmentally friendly and can serve well in coping with short-term electricity demands. Gas as a source of energy generation is also cheap and clean.

Experts say natural gas as a source of electricity should be used as a backup mechanism for hydroelectric power generators.