Kenya Energy Situation

Overview

Republic of Kenya
Flag of Algeria.png	Location Algeria.png
Capital	Nairobi (1° 16′ 0″ S, 36° 48′ 0″ E)
Official language(s)	Swahili, English
Government	Semi-Presidential Republic
President	Mwai Kibaki
Prime Minister	Raila Odinga
Total area	580,367 km2
Population	40,046,566 (2010 estimate) 38,610,097 (2009 census)
GDP (nominal)	$32.417 billion (2010 estimate)
GDP Per capita	$887
Currency	Kenyan shilling (KES)
Time zone	EAT (UTC+3)
Calling code	+254

Energy Sector

The energy sector in Kenya is largely dominated by petroleum and electricity, with wood fuel providing the basic energy needs of the rural communities, urban poor, and the informal sector. An analysis of the national energy shows heavy dependency on wood fuel and other biomass that account for 68% of the total energy consumption (petroleum 22%, electricity 9%, others 1%). Access to Electricity (15% of households) MOE study 2002.

Kenya has an installed capacity of 1.48 GW, while about 57% are hydro power, about 32% are thermal and the rest is divided by geothermal and emergency thermal power. Solar PV and Wind power play a minor role with less than 1%. However, hydropower has ranged from 38-76% of the generation mix due to poor rainfall. Thermal energy sources have been used to make up for these shortfalls, varying between 16-33% of the mix.

Due to increased poverty, there is a significant shift to non-traded traditional biomass fuels. The proportion of households consuming biomass has risen to 83% from 73% in 1980.

Charcoal, firewood, paraffin, and LPG continue to be the main sources of cooking fuel. At the national level 68.8% of the households use firewood as the main cooking fuel. Almost 90% of the rural population is dependant on firewood for cooking and heating, whilst in urban areas approximately 10% of the population use firewood. Firewood is increasingly supplied from private smallholder lands and farm woodlots. Charcoal, on the other hand, is mainly an urban fuel, 82% of urban households depend on it as part of their energy mix, compared to 34% of households using charcoal in rural areas. It is estimated that Kenyans now consume 2.4 million tons of charcoal each year. One set of biomass users includes educational institutions (primary and secondary schools, as well as colleges). Of Kenya’s 20,000 educational institutions, about 90% use wood fuel to prepare meals.

Many are engaged in production, transformation, transportation and sale of wood and charcoal, making it one of the most important sources of paid livelihood. As a result woody biomass is diminishing due to poor management and utilization in unsustainable ways. Government ministries are supporting in one way or the other the sustainable production of energy crops, trade of charcoal and the dissemination of improved cooking stoves.

As of 2007, the contribution of the energy sector to the overall tax revenue was about 20%, equivalent to 4% of GDP. The sector provides direct and indirect employment to an estimated 16,000 persons.

Problem Situation

Fuelwood demand in the country is 35 million tons per year while its supply is 15 million tons per year, representing a deficit of 20 million tons. The massive deficit in fuelwood supply has led to high rates of deforestation in both exotic and indigenous vegetation resulting to adverse environmental effects such as desertification, land degradation, droughts and famine among others. It is in an effort to reduce these problems that PSDA through collaboration with other Development Partners initiated “Promotion of Improved Energy Stoves” in January 2006. Nevertheless, a high population share still uses firewood for cooking – more than 80% of the population use traditional three stones technology for the same.

In the first phase of the EnDev programme, GTZ has disseminated a significant amount of improved cook stoves (ICS). In addition GTZ promoted the uptake of ICSs by institutions. However, many people without improved stoves still do not know where to get them although they express desire to acquire them. Current improved stove production centres do not meet the demands of the new project areas, especially in the arid and semi-arid regions which need them more than any other regions in the country. This has largely contributed to unsustainable harvesting of biomass with negative impacts on the environment and poor health among users due to excessive inhalation of noxious gases. Up-scaling of improved cook stoves is therefore necessary.

Renewable Energy

The record of the national utility Kenya Power and Light Company (KPLC) in rural electrification is very poor, with only 0.94% of rural households connected in 2002 [Karekezi et al, 2004]. Between 1993 and 2001 the number of rural households increased by 1.4 Million, whilst the number of rural households connected to the grid increased by only 24,000. Hence, the rate of grid-based rural electrification is far below the rate of increase in potential customers, despite a levy on electricity bills to fund it. Innovative approaches to off-grid electrification are helping to make up for the lack of grid-based rural electrification.

Biomass

As of 2007, biomass energy, i.e. firewood, charcoal and agricultural wastes contributes approx. up to 70% of Kenya’s final energy demand and provides for almost 90% of rural household energy needs, about one third in the form of charcoal and the rest from firewood. It is estimated that 80% of urban households’ wood-fuel demand is met by charcoal. Charcoal is produced inefficiently using tradition earth kilns whose efficiencies range between 10–13% yet higher recoveries of between 30-40% have been achieved using brick kilns. Biomass comes from various forest formations such as closed forests, woodlands, bushlands, wooded grasslands, farms with natural vegetation and mixtures of native and exotic trees, industrial and fuel wood plantations, and residues from agricultural crops and wood-based industries.

However, although there are apparently large wood volumes available from the various vegetation types, not all of it is accessible for energy. Accessible wood depends on a number of factors such as legal issues, environmental issues, ownership, objectives of management, distance, and infrastructure.

Furthermore, Kenya has the potential for generation of electricity from biomass sources generated from agricultural wastes from the sugar cane (bagasse), sisal, timber (saw dust) and meat industries.

For information on challenges and issues affecting the exploitation of biomass in Kenya, click here.

Biomass stoves: best practice case study

The energy-saving institutional stove project in the Mt. Kenya Region involves replacing open fire cooking systems in schools with heavy-duty, brick-insulated stainless steel stoves that require 60 - 70% less firewood. In doing so, schools save money on fuel costs and reduce smokeand emissions. In schools where children must collect firewood, the use of more efficient stoves allows children to spend more time studying.

The implementing NGO, the Renewable Energy Technical Assistance Programme (RETAP), has addressed financial barriers via a credit system that enables a school to pay off the cost of a stove over two years. Some schools have also starting planting their own woodlots, using certain varieties of eucalyptus trees, to grow their own fuel. Since thenew stoves use much less fuel than before, the schools may even be able to sell excess wood to other schools and tea and tobacco factories in the region, thereby generating income for the school. A number of schools estimate that the financial savings resulting from the stoves and woodlots may translate into 5-10% reductions in the cost of education per year.

For more information on impacts and benefits of the projects, click here.

Hydropower

Hydropower is the single largest generation source for grid electricity in Kenya providing some 677 MW of the total installed grid capacity. As of 2007, a 60 MW hydro generation plant was being developed on the Sondu Miriu with a further 20 MW planned for 2008. With the exception of Turkwell Gorge (Rift Valley) and Sondu Miriu (Lake Victoria) some 470 MW or 70% of the total developed hydro capacity lies on the Tana River alone, a conspicuous over reliance.

Kenya’s drainage system consists of five major basins, Lake Victoria, Rift Valley, Athi and coastal area, Tana River, Ewaso-Nyiro and North-Eastern. These basins contain the bulk of the country’s inland hydro resources. The total hydropower technical resource is estimated to be about 6 GW, with half this potential being attributed to small rivers. The hydro resources lie in areas of high domestic energy demand.

The hydroelectric power potential of economic significance available for large scale power development is estimated to be 1,500 MW of which 1,310 MW is for projects of 30 MW or bigger. Of this, 434 MW has been identified in the Lake Victoria basin, 264 MW in the Rift Valley basin 109 MW on Athi River basin, 604 MW on Tana River basin and 146 MW on Ewaso Ngiro North River basin.  On the Tana River and Ewaso Nyiro basins, a further 420 MW have also been identified.  However, the projected generation costs for these currently exclude them from the least cost power development plan (LCPDP).

As of 2007, Kenya’s hydropower stations have had a total installed capacity of 677.3 MW. The power stations comprise the Seven Forks hydro stations, the Mini hydro stations and Turkwel Power Station.

Small, mini and micro hydropower

Small, mini and micro hydro system (with capacities of less than 10 MW each) is estimated at 3,000 MW nationwide. In 1997, Kenya’s Electric Power Act allowed independent power producers to supply electricity to the grid, but small decentralized schemes, such as micro hydropower, were not fully addressed. Micro hydropower is not new to Kenya; prior to the 1960s micro hydro was used to power grain mills. However, these out-dated systems were quickly outpaced by the diesel engine for milling grain. Mini and micro hydropower in Kenya was among the earliest recognized sources of electricity in the early 1900s.  Approximately 55 river sites have been identified as attractive commercial possibilities, with maximum mean capacities in the range of 50 kW to 700 kW. These are useful for off-grid or isolated grid rural electrification. Unlike large-scale hydro-projects, small-scale hydro is more environmentally benign and suitable in remote off grid areas.

Today, improved technology makes micro hydropower economically viable in many situations, but the country lacks the infrastructure for production and installation of micro hydro systems, or for repair of systems once they are installed. In addition, there are no standards or other policies to encourage and enable local communities to take advantage of this renewable and environmentally benign source of power.

Installed grid connected small-scale hydro-electric projects contribute about 6.3 MW. These include Gogo and Selby falls in the Lake Victoria basin, and Ndura, MESCO, and Sagana Falls in the Tana River catchment, all developed between 1925 and 1958. As well there are several micro hydro schemes under private generation especially in the tea estates, whose exact capacities have not been established. The highlands in the wetter part of the country like the Mt. Kenya, Aberdare, Nyambene and Mt. Elgon hold the largest potential. Other areas with considerable potential are the Kisii highlands, Nandi hills, Cherangani hills, Kerio and Mau escarpment, and to a lesser extent the Shimba hills at the coast. A feasibility study commissioned by the Ministry of Energy in western Kenya identified two sites with quite a considerable hydro electric potential. More recently several sites with various potentials have been identified, especially around Mt Kenya, Aberdare, Mt. Elgon, Kerio and Nandi Escarpments.

Pico hydro community mini-grids

Pico hydro is generally classified as water powered generating systems that produce up to 5kW of electrical power. In Nepal there are more than 600 pico hydros serving a total of more than 10,000 households. In Kenya, three schemes have been installed since 2001, which together supply 325 households. The first two schemes were part-funded by the European Commission, though the communities paid for the distribution systems, house wiring components and contributed free labour and trees to make distribution poles. The third scheme, for 150 households, was carried out without subsidy or grant by a small engineering company that had been involved in the earlier projects. Technical details of the first two projects are presented in case studies [Maher2002]. The electricity is distributed at 230 Volts single phase and restricted to houses that are within 1km of the turbine. Each household subscribes to one or more 10 Watt ‘light packages’ which are sufficient for one 8 Watt Compact Fluorescent Lamp (CFL) and a radio, for which they pay US$0.65 per month per package. This is used to pay a member of the community who operates and maintains the system andcontributes to a repair fund.

Pelton turbine assembly in Kenya (Maher)

Whilst the power supplied to each house is very similar to the peak output of a Solar Home System (SHS) the actual energy supplied is significantly higher as the power output is continuous unless there is a prolonged drought. A cost comparison between pico hydro and SHS gives a cost of $0.15 per kWh for pico hydro compared to more than $1 for SHS [Maher et al, 2003]. The power is currently used for lighting, radios, small TVs and mobile phone charging. At one site a cordless drill is recharged and loaned to community members. The shaft power of the turbine could be used for agro-processing, though this application has not been developed. Pico hydro is mainly limited to the upland areas of Kenya with moderate or high rainfall, such as the Aberdare and Kirinyaga districts, as this is where most suitable sites exist. These upland areas experience more cloudy weather, including three months with almost continuous cloud called the Gathano season during which SHS produce very little power. Locally implemented pico hydro is cheaper than SHS and is a more versatile source of power, it also relies less heavily on imported equipment.
While the Government of Kenya deliberately seeks reforms in the energy sector by encouraging private sector ownership and implementing policies that support diversification of energy sources, several specific steps to off-set current vulnerabilities have yet to be implemented. Several key instruments supporting increased resilience in the energy system such as the availability of flood maps, existence and enforcement of power plant silting and construction guidelines and emergency plans to react to extreme weather events are not available. Even though the country depends heavily on hydropower systems for electricity supply, there are no national plans for optimising hydropower plants operation under alternative future flow regimes.

Despite the fact that traditional biomass dominates the energy landscape, little or no budget is provided for research, development and dissemination for heat and drought resistant crops, biofuels and modern biomass energy use. While some progress has been made in disseminating efficient wood and charcoal stoves, more needs to be done to building more diversity and strengthening the resilience of the energy system.

For information on challenges and issues affecting the exploitation of hydropower in Kenya, click here.

Hydropower: best practice case study

The Community Based Rural Electrification – Micro Hydro: Thima and Kathamba Pico-Hydro Project, Kenya sought to remove the policy, technical and institutional barriers that limited the development and use of renewable energy sources to meet the energy needs of poor, off-grid communities. By demonstrating how communities can organize themselves to build and operate a micro hydropower plant, and by showing how the new supply of energy can improve their lives, the Tungu-Kabiri community project has stimulated changes in national policy and encouraged efforts to build domestic capacity to produce micro hydro system components.
The grantee, the Intermediate Technology Development Group Eastern Africa (ITDG-EA), worked closely with the Tungu-Kabiri community in developing and carrying out the micro hydropower scheme . About 200 members of this300-house-hold community came together to form a commercial enterprise to own and operate the micro hydropower plant. Each individual purchaseda share in the company, with the maximum share having a value of approximately $50. The 200 members contributed free labor and participated in building a run-of-the-river, “penstock” type micro hydropower system, dedicating one day per week for over a year. In addition, government involvement was sought from the start, and the Ministry of Energy provided technical support throughout the project. The community acquired one acre of land from the government, where they built a micro-enterprise centre that now receives power through the project. A 10-member community power committee manages the day-to-day operations of the plant, and conducts community consultations to decide upon additional uses for the power generated by the system. In this way,the power committee is also playing the role of a village development agency.

For more information on the impacts and benefits of the project, click here.

Solar energy

Kenya has high insolation rates with an average of 5-7 peak sunshine hours (The equivalent number of hours per day when solar irradiance averages 1,000 W/m²). Only 10-14% of this energy can be converted into electricity due to the conversion efficiency of PV modules.

Stand-alone PV systems represent the least-cost option for electrifying homes in many rural areas, especially the sparsely populated arid and semi-arid lands. “Solar home systems” (SHSs) are practical for providing small amounts of electricity to households beyond distribution networks. The systems typically consist of a 10 – 50 Watt peak (Wp) PV module and a battery sometimes coupled with a charge controller, wiring, lights, and connections to small appliances (such as a radio, television, or mobile phones). Other PV applications include water pumping, telecommunications and cathodic protection for pipelines, power supply to off-grid non-commercial establishments and off-grid small commercial establishments.

Kenya has one of the most active commercial PV system market in the developing world, with an installed PV capacity is in the range of 4 MW. An estimated 200,000 rural households in Kenya have solar home systems and annual PV sales in Kenya are between 25,000-30,000 PV modules. In 2002, total PV sales were estimated to have been 750 kWp and have grown by 170% in 8 yrs, even without government intervention or policies to promote the uptake of PV technology.

In comparison, the Kenya’s Rural Electrification Fund, which costs all electricity consumers 5% of the value of their monthly electricity consumption (currently an estimated 16 million US$ annually), is responsible for 70,000 connections. With access to loans and fee-for-service arrangements, estimates suggest that the SHS market could reach up to 50% or more of un-electrified rural homes.

Since 2006-2007, the Ministry of Energy has been actively promoting use of solar energy for off grid electrification. In particular, it has funded the solar for schools programme and is targeting to extend this to off grid clinics and dispensaries.  

Grid connected PV systems covering an area of 15-20 km² (3% of the Nairobi area) could provide 3801 GWh of electrical energy a year, equivalent to the total grid electricity sales for Kenya in 2002-2003. The costs, however, are prohibitive.

Private sector led electrification using solar home systems

An estimated 200,000 rural households in Kenya have solar home systems. This success has been largely due to private sector activity. The high level of uptake has been through the sale of products that best fit the purchasing power of rural households, and by making these products available within the mobility range of potential customers, typically less than 40km from the customers home [Van der Vleuten et al, 2003]. In mature market areas, such as central and western Kenya, between 20 and 40% of households have systems. Most units are in the power range of 10 to 20 Wp. With prices being as low as US$50, the products have been affordable by medium class families without a need for subsidies and credit. However, financial assistance will be necessary if poorer families are to be able to afford an SHS. Most of the SHS sellers started selling these products in the 1990s. As the Kenyan business culture is mainly based upon imitation, once a few shops had been convinced by the Nairobi based distributors, businessmen all over the country replicated their success by selling systems. The level of competition is high with over 800 rural outlets, and by shopping around even the least informed end-user will buy at a reasonable price. Information from friends and relatives is currently the main source that new customers turn to for advice on the best system to use, as the shopkeepers are rarely trusted. More needs to be done to both help customers understand the importance of purchasing quality systems and to help purchasers to identify them. The high level of sales demonstrates the effectiveness and efficiency that the private sector can bring to disseminating SHS – success that has yet to be matched by any utility or donor programme.

For information on challenges and issues affecting the exploitation of solar energy in Kenya, click here.

Solar energy: best practice case study

In 1995, the US-based group 'Solar Cookers International' (SCI) started a pilot project in Kakuma that addressed this problem by providing refugees with portable, lightweight solar cookers called 'CooKits'. The project Solar Cookers: Expansion of Solar Cooking Program at Kakuma Refugee Camp, Kenya distributed the CooKits and taught people how to use them effectively. The aim was to demonstrate that solar cooking was a practical alternative that would save both money and wood.
At the beginning of the pilot project, SCI spent several weeks working with community leaders and refugee women, learning about cooking and eating habits in the camp, and how people got extra wood if they needed it. They cooked solar meals with the refugees and made some adaptations to recipes to suit the CooKit. This helped them plan how best to introduce the idea of solar cooking. A group of trainees were taught how to use the CooKit and then shown how to train others. The Lutheran World Federation (LWF), under the auspices of UNHCR, manages Kakuma Camp. SCI has been working closely with LWF and with GTZ Rescue, a German NGO, in implementing this project.

For more information on the impacts and benefits of the project, click here.

Wind energy

The Equatorial areas are assumed to have poor to medium wind resource. This could be a general pattern for Kenya. However, some topography specifics (channeling and hill effects due to the presence of the Rift Valley and various mountain and highland areas) have endowed Kenya with some excellent wind regime areas.

The North West of the country (Marsabit and Turkana districts) and the edges of the Rift Valley are the two large windiest areas (average wind speeds above 9 m/s at 50 m high). The coast is also a place of interest though the wind resource is expected to be lower (about 5-7 m/s at 50 m high). Many other local mountain spots offer good wind conditions. Due to monsoon influence, some seasonal variations on wind resource are expected (low winds between May and August in Southern Kenya).

It is expected that about 25% of the country is compatible with current wind technology. The main issue is the limited knowledge on the Kenya wind resource. The meteorological station data are quite unreliable while modern measurement campaigns have started recently when investigating wind park locations.

Kenya’s wind resource is determined from wind speed data from meteorological stations. The Department has 35 stations spread all over the country. Information gathered is not adequate to give detailed resolutions due to sparse station network.

There is significant potential to use wind energy for grid connected wind farms, isolated grids (through wind-diesel hybrid systems) and off-grid community electricity and water pumping. 

Use of wind turbines or wind pumps in Kenya is marginal. As of 2007, the installed capacity of wind turbines was 750 kW; 150 kW of which were small isolated wind turbines and 600 kW of medium grid connected wind turbines; 2 at Ngong Hills and 1 in Marsabit. There were plans underway to develop a 10-15 MW wind farm in Kinangop. An average of 80-100 small wind turbines (400 W) have been installed to date, often as part of a Photovoltaic (PV)-Wind hybrid system with battery storage.

Wind pumps are more common than wind turbines, 2 local companies manufacture and install wind pumps. As of 2007, the number of installations was in the range of 300-350.

For information on challenges and issues affecting the exploitation of wind energy in Kenya, click here.

Wind energy: best practice case study

Two manufacturers in Kenya have pioneered the local manufacture of wind pumps and wind generators in Kenya, Bobs Harries Engineering Limited (BHEL) and Craftskills Entreprises, and are providing local energy solutions for off grid households and institutions.
Bobs Harries Engineering Limited (BHEL) located near Thika Town, in Kenya, manufacture wind pumps for water pumping locally. The machines, which bear the brand name ‘Kijito’ come in a range of rotor diameters from 8 ft(capable of pumping heads of up to 36.5 m), to the larger 24 ft diameter windpumps, which are able to lift water from deep boreholes of 152 m.
CraftskillsEnterprises started working on wind power machines in 2001. The firm, after experimenting on a range of technologies that could provide cheaper, durable and efficient wind turbines, has managed to devise windcruisers of various specifications. Unlike conventional wind turbines, which use gears and hence require strong winds to be propelled, Craftskills machines operate on bearings, are rugged, strong against windstorms and utilize any slight breeze. The bearings, which the wind cruisers run on, take 5-6 years to replace and their spare parts are locally available. The machines also have charge controllers that enablethem to regulate themselves during high wind. Ninety percent of the materials used to manufacture the turbines are sourced locally; recycledmetals are used to make the machines and the only imported components are magnets.

For more information on impacts and benefits of the project, click here.

Fossil Fuels

Petroleum is Kenya’s major source of commercial energy and has, over the years, accounted for about 80% of the country’s commercial energy requirements. In 2006, 4.4 million cubic meters in petroleum products were sold in Kenya. Of this 420,000 m³ was kerosene and 68,000 m³ was LPG.

Total petroleum consumption in Kenya has grown from 2.6 million cubic meters in 2003 to 3.73 million cubic meters in 2006. As of 2007, Kenya had one refinery, the Mombassa refinery, with a nameplate capacity of 90,000 barrels per day. Since its commission the refinery has not operated at full capacity.

As of 2007 there were 4 prospective petroleum basins in Kenya, about 30 exploration wells had been drilled and although none has encountered a commercial discovery, a number of drill stem tests have recovered or tested gas.

LPG

Consumption of LPG has increased by about 59% between 2003-2006 from 40,000 to 65,000 metric tons/year. The Kenya Petroleum Refinery makes about 30, 000 metric tons of LPG and to balance growing demand reliance on imported LPG has increased.  However, there are plans underway to upgrade the refinery to make 115,000 metric tons of LPG.

Coal

The Ministry of Energy has identified two areas with possible commercially exploitable quantities of coal. These are the Mui basin of Kitui and Mwingi Districts and Taru basin of Kwale and Kilifi Districts. As of 2007, 10 wells have been drilled in Mui basin with encouraging results indicating possible existence of commercial quantities of coal.

For more information on fossil fuel resources in Kenya, click here.

Policy framework, laws and regulations

The energy policy for Kenya was formulated in 2004, but recently high oil prices and need for energy security have become more urgent drivers for alternative energy. This may call for re-assessment and update of the policy and strategy. For Kenya, high oil prices and the need to increase overall energy per capita supply are strong motivators for development of alternative forms of energy. Transportation fuels remain the most emotive of all energy segments, especially when prices are going up, as this is where lifestyles and livelihoods are visibly impacted. Alternative energy is not only focusing on economics alone, but also looks at security of supply and and other social economic benefits to the country.

A number of options are being considered:

• The proposed grass-root Garsen sugar project ( bio-ethanol)
• The government and stakeholders are planning to introduce bio-diesel for both rural energy use and for blending into automotive diesel.
• Expansion of the geothermal power supply
• Exploration of the coal deposits in Kitu.

Up until the 7th of October 2004, when the Sessional Paper No. 4 was passed in parliament, Kenya operated without a comprehensive energy policy. Three key legislations that have been in application all addressing the commercial energy sub sector:

• Electrical Power Act of 1997 currently under review
• Petroleum Act Cap 116 – regulates importation, transportation and storage
• Petroleum Exploration and Production Act – prior to the deregulation of the petroleum sub-sector, this was the legislation that the government to control pricing of petroleum products

In addition to these, there are other legislations relevant to operations within the energy sector;

• Licensing Act – for licensing of operators in for instance in the petroleum and electricity sectors
• Standards Act
• Environment management and coordination Act
• Local Government Act
• Physical Planning Act
• Weights and measures Act
• Monopolies Act

The new Energy Act 2006, sets out the National Policies and Strategies for short to long-term energy development. Whether or not it is adequate to fulfill Kenya’s vision of emerging as a newly industrialized country by 2020 remains to be seen. Strong regulatory and legislative frameworks are required to manage the activities required to achieve this vision. The Energy Regulatory Commission (ERC) was established as an Energy Sector Regulator under the Energy Act of 2006 in July 2007. ERC is a single sector regulatory agency, with responsibility for economic and technical regulation of electric power, renewable energy, and downstream petroleum sub-sectors, including tariff setting and review, licensing, enforcement, dispute settlement.

The broad objective of the new Energy Policy is to ensure the provision of adequate, quality, cost-effective, affordable supply of energy while ascertaining environmental conservation.

Identified key challenges

The policy has identified a number of key challenges these include;

• Upgrading and expanding the current energy infrastructure
• Promoting energy efficiency and conservation
• Protection of environment
• Mobilizing requisite financial resources
• Ensuring security of supply through diversification of sources and mixes in a cost effective manner (not substitution – which is unrealistic)
• Increasing accessibility of energy services - not only electricity - to all segments of the population
• Institutional corporate governance and accountability
• Enhancing legal regulatory and institutional frameworks to create consumer and investor confidence
• Enhancing and achieving economic competitiveness
• Effectively mainstreaming the rural energy issues – framework unclear on how rural energy will be addressed. Rural energy suffers low priority and status in both planning and development resource allocation.
• Disproportionate promotion of fossil fuels and grid electricity

Strategic actions that need to be taken

In line with achieving the policy objectives strategic actions need to be taken;

• Training and technology transfer – to build up local/rural capacity for small scale development which could subsequently be built up and strengthened
• Campaigns for identifying exploitable schemes and establishing feasibility
• Technical support for and financing of demonstration schemes to familiarize local personnel with the various technologies
• Permit gaining operating experience as well as provide an initial basic electricity supply for the local population
• Develop skills Project planning, implementation and monitoring.

In addition, energy planning activities should integrate socio-economic, cultural and environmental aspects, which is only possible through strong links between policy makers, implementers and researchers - research findings are infrequently incorporated during the decision making process of policy development.

Although economic survey findings, and findings from donor funded projects or studies have been used as references in Policy Development, whether or not these are sufficient is questionable. Little attention is paid to University based research findings. These studies are often the source of economic survey data, but receive little or no recognition. Policy makers need to actively engage researchers and there is great need to move towards evidence based policy and decision-making - policymaking is not an experimental process.

The New Energy Policy

The New Energy Policy is as a result of the Government recognizing that the energy sector plays a key role in the achievement of GoK’s socio-economic strategies. It lays the policy framework for the provision of cost-effective, affordable and adequate quality energy services on a sustainable basis.

Some of the key policy proposals are:

Legal and Regulatory Framework

• The enactment of an Energy Agency (EA) to facilitate prudential regulation, enhance stakeholder interests and boost investor confidence. It will consolidate EPA, 97 and the Petroleum Act Cap 116; and bring under its purview the other energy sources not currently covered by other legislations.
• Establishing a single independent energy regulator.

Institutional Arrangements

• Creation of a Rural Electrification Authority to accelerate rural electrification
• Promotion of privately or community owned energy service entities operating renewable energy power plants /hybrid systems
• Establishment of a state owned Geothermal Development Co. to undertake geothermal resource assessment and development and to sell steam to generating entities

Energy Trading Arrangements

• Creation of a domestic power pool with provision for wholesale and retail market to create competition and hence reduce cost of electricity7
• Streamlining biomass energy trading arrangements
• Increasing lifeline tariff to recover the cost of electricity generation
• Divestiture of GoK from oil refining, marketing and transportation in favour of private sector investments in the same

Energy Security

• Financing of 90-day-demand strategic petroleum stocks by GoK and the private sector
• Encouraging wider adoption and use of renewable energy technologies to enhance their role in the energy supply matrix
• Formulation of plans for biomass energy development
• Development of a national energy research agenda

The Energy Act 2006 is a consolidation of the Electric Power Act and the Petroleum Act 2000, and has a section on petroleum and a section on electricity. The energy policy already recognizes the biomass sector and how biomass regulation should be done in terms of pricing and sets a good basis for drafting the biomass plan. It also recognizes the importance of renewable energy and energy efficiency.

Institutional set up in the energy sector, activities of other donors

Ministry of Energy

• Energy Policy and Development

Energy Regulatory Commission, Ministry of Energy, Local Authority and Kenya Revenue Authority

• Licensing

Kenya Bureau of Standards

• Standards

National Environmental Management Authority

• Environmental Management and Coordination

Ministry of Planning, Local Authority

• Physical Planning

Rural Electrification Authority and Ministry of Energy

• Rural Electrification

Links to further reading

The Energy Act 2006

Kenya Energy Policy Overview

Kenya: Integrated assessment of the Energy Policy

EAC Strategy to Scale-up Access to Modern Energy Services, Kenya Country Baseline Report and Workplan, April 2008