NAIROBI, October 22, 2010—For some time, the high cost of, and limited access to, energy in Kenya has held back business and development. Now, thanks to continued harnessing of the country’s natural resources—in particular ‘green’ geothermal energy—the outlook for farmers, entrepreneurs and investors is brightening.
This is in part thanks to the Kenya Electricity Expansion Project. The project, launched on October 21, seeks to bolster the Kenyan government’s goal of connecting one and a half million people and businesses to the electricity grid by 2015.
Low-income households will benefit. For the first time, electricity will reach the homes and businesses of some of the country’s largest slums and most remote rural areas.
In urban slums, such as Kibera, in Nairobi, the project will support efforts of the Government and by the Kenya Power and Lighting Company (KPLC) to improve supply where some of the greatest social inequality exists. Seventy-three percent of people living in slums live on less than US$42 per month after paying rent.
The Kenyan government has identified the lack of electricity as the main brake on growth in the agribusiness sector. And so, in the first year of the project, new distribution lines will enhance agricultural productivity in communities along the Kenyan coast, in Nyanza and the Rift Valley, as well as in Eastern and Western Kenya. One in every 10 IDA dollars invested will focus on this rural challenge.
“We’ve accelerated electricity connections countrywide, adding 220,000 customers a year, up from 60,000 customers four years ago,” says Joseph Njoroge, managing director and chief executive of the Kenya Power and Lighting Company (KPLC). “This has been achieved through innovative and attractive schemes encouraging Kenyans to connect to the national grid.”
According to Njoroge, enhanced connectivity, supported by the World Bank and other development partners, has increased revenue for KPLC and enabled the company to invest more in grid improvement and expansion.
Using green energy to increase access
Despite making considerable strides during the past decade, access to electricity in Kenya remains extremely low compared to other African economies of similar size. The countrywide access rate (defined as households with a connection to the national power grid) is presently just over 23 percent.
The Kenyan government has set a goal of 40 percent household access by 2020. This aims to meet their target level of economic development, spur competitiveness and make growth more equitable by reducing imbalances between regions, as well as between urban and rural areas.
The Electricity Project will see a total investment of US$1,391 million, of which the World Bank’s fund for the poorest countries, the International Development Association (IDA), is providing US$330 million. It will expand clean, geothermal power generation capacity and add new transmission lines which will deliver power to areas of the country that have potential for economic growth, but which are not connected to the national grid.
The project builds on years of successful investment in Kenyan energy by the World Bank, including the recent World Bank Energy Sector Recovery Project (2004).
Looking beyond hydro-power
Through IDA, the World Bank has been supporting sustainable geothermal energy development in Kenya’s Rift Valley site of Olkaria since the 1980s. By financing such a large expansion of geothermal capacity, in constructing 280 megawatts to add to the 198 megawatts of current installed geothermal capacity, this project will reduce the drought-prone nation’s precarious dependence on hydropower.
It will also help the country meet the critical needs of businesses and industry for reliable, high-quality power. The Kenyan drought of 2007 to 2009 caused extensive power shortages and blackouts, underscoring the high cost of reliance on hydropower and the consequent need to diversify sources of supply. Currently, of the total installed capacity of 1,473 megawatts, hydropower accounts for about 51 percent, with geothermal capacity at just 13 percent.
“The impact of climate change has exposed weaknesses of the weather-dependent power sources, especially hydro, leading to a compelling case for sustainable and renewable energy sources like geothermal,” says Eddy Njoroge, managing director of Kenya Electricity Generating Company Limited (KenGen). “Our strategy is to add the required capacity mainly through green energy with particular focus on this cost effective energy source, which is environmentally friendly and has no carbon emissions.”
The encouraging signs from Kenya are proving inspirational to other countries looking at ways of exploiting renewable energy sources.
“Africa’s development imperative means that all available energy resources will be needed and geothermal is one of the key clean ones that can be scaled up substantially,” says Vijay Iyer, energy sector manager for the World Bank’s Africa Region. “The Olkaria project is a model for other African countries and the World Bank will remain supportive.”