Between 1999 and 2001, Kenya experienced one of its worst power rationing due to low water levels at the Seven Forks hydro-electric dams. I lived through this experience as a young resident in Nairobi. The power outages had adverse social and economic impact on key industries such as manufacturing, small and medium enterprises, as well as retail and service industries. The undersupply also led to higher overall costs of production of goods and services, which were passed on to consumers, resulting in higher costs of living.

Since then, a number of policy and regulatory changes have been implemented to enhance energy security and govern investments in renewable energy. The Energy Act (2019) [which replaced the Energy Act (2006)] the Feed-in-Tariff Policy, 2021(FiT) [which was initially issued in 2008, and subsequently revised in 2012 and 2021]. The FiT policy has been instrumental in guiding investments in renewable energy, establishing guidelines and procedures through which projects can be appraised to ensure their viability. It has also been key in diversifying the energy resource mix to include wind, biomass, mini hydro, geothermal, biogas and solar energy resources. 

In 1999, electricity production from renewable sources excluding hydropower was 11 per cent, and by 2015 it had grown up to 48 per cent (IEA, 2014) and currently is almost 80 per cent. Currently, Kenya’s peak demand is 2 GW. The installed capacity stands at 2.8 GW as a result of increased investment in the energy market. To fully utilise this generation, there is a need for the government to create a conducive environment to spur industrial growth. The socio-economic blueprint of Kenya, the Kenya Vision 2030 –  Third Medium Term Plan (2018-2022) notably highlights the need to increase generation capacity in order to meet Kenya’s industrialisation and infrastructure modernisation plans.

Electricity wheeling and captive power generation regulations can enable enterprises targeting to set up within special economic zones and industrial parks to unlock the untapped energy generation potential for use in manufacturing. Government can act to create market and regulatory conditions that make it easier for enterprises setting up in these areas, as electricity costs and reliability of supply are key enablers for these enterprises to thrive. The renewable energy potential Kenya has can match the future electricity demand for an entire green economy: for production of green fuels, fertiliser and chemicals that can serve both domestic and international markets. There is increasing interest from investors to set up such enterprises in Kenya. 

Other ways would be to trade electricity with neighboring countries, such as through the East Africa Power Pool and establishing partnerships with the South Africa Power Pool and enabling grid infrastructure to supply electricity to some of its member States which have been experiencing load-shedding.

One of the parameters that has contributed to Kenya’s ranking as 56 in the Ease of Doing Business Index (2020) is reliability of electricity supply and the duration and frequency of power outages. There is an immutable correlation between economic growth and growth in per capita electricity consumption, and the availability of generation capacity to spur that growth. Truth be told, as a nation, we are more energy secure than we were twenty years ago. This has been due to the joint effort of public stakeholders, public utilities and targeted public and private sector investments and financing that continue to progressively build an energy secure ecosystem, realising SDG 7 (clean and affordable energy). 

The ongoing power sector reforms should consider the continuity of the gains in the energy sector and the opportunities to utilise power generation capacity, with the end goal being to have a reliable power supply that can sustain growth and meet demand in the long term. Winston Churchill once said, “those that fail to learn from history are doomed to repeat it.” For Kenya to remain on its growth trajectory, policy makers should create enabling conditions to utilise generation capacity, so as to maintain and sustain power sector investments.

— The writer is the Managing Director, SOWITEC Kenya Ltd