Resolve Land Acquisition to Spur Renewable Energy Growth in Kenya

The Kenyan Government has been asked to resolve land acquisition problems for private players to efficiently establish and run renewable energy projects in the country.

“From an investor’s point of view, Land acquisition and other questions still remain unresolved. The expectation of large amounts of private sector finance will be a challenge. These concerns mean many projects may not be commercially viable at the outset,” Inge Stolen, Senior Investment Manager –Clean Energy (Norfund) said.

He was speaking at a panel briefing of the Kenya International Renewable Energy Congress (KENREC) and Green Power Global in Nairobi.

Various speakers at the briefing acknowledged Kenya’s initiatives that have provided a sound framework for renewable energy, but cited land acquisition as one area hampering the sector. They also said the infrastructure in place is not adequate to absorb the power being generated.

Robert Wilson, Director Emerging Markets, Green Power highlights, “Our stakeholders and partners from across the global renewable energy sector are always on the lookout for the next growth market. Increasingly Kenya is featuring higher and higher on their list of where this could be. From investors to developers and service providers there’s a real belief that Kenya’s renewable energy sector is on the brink of sustained, long-term growth. In coming to Kenya and launching KENREC we want to be a part of this and help build a platform for the entire value chain to deliver cost effective clean energy.”

What makes Kenya an attractive investment opportunity for renewable energy?

• 1000% increase in electricity by 2033 under the least-cost power development plan
• $1.3 Billion USD to be invested in transmission infrastructure in the next 4 years
• Ranked 2^nd for clean energy investment in Africa
• 10gw geothermal potential
• Home to the largest wind power project in Africa
• Solar PV capacity to be 500mw and Wind 3gw by 2030
• Zero rated import duty and removal of VAT from renewable energy equipment

George Aluru, Managing Director, SOWITEC Kenya said, “A national conversation is needed to address the land issue.it limits an investor’s entry.”

Aluru also faulted the initiatives in place that are being used to bring down the cost of power and urged the policy makers to ‘push more on the option side’ however, for the players he said they have to evolve and work with the system.

Read: Our Road Map to a sustainable energy future

Speaking at the panel briefing, Charles Muchunku, Chairman, Kenya Renewable Energy Association emphasized that the key objectives of industry stakeholders should be to 1. Improve the business environment for renewable energy in Kenya. 2. Develop infrastructure so that renewable power can feed into the main grid. He further highlighted the need for adequately addressing policy challenges within this nascent industry particularly around land rights.

They proposed Kenya to adopt the Rwandan way where the government deals with the land acquisition as an efficient way instead of holding the society hostage.

Energy Industry authority, Green Power has developed a report on the country’s potential: Renewable Energy Opportunities in Kenya as part of the build up to Kenya’s first ever conference on Renewable Energy (KENREC) scheduled to take place in early 2017.

Issues to be deliberated include: Energy demand and grid infrastructure, Economic feasibility of projects, Stakeholder relations and land access among others.

Annual Renewables 2016 Global Status Report published by REN21 ranks Kenya eighth among the largest geothermal energy producers in the world, putting the east African country among the top green energy economies.

The government has reported that currently 615 MW of power have been added to the National grid and this has significantly reduced the cost of power. To reduce the cost of doing business, spur growth of enterprises and industries, and accelerate the creation of jobs in the industrial and other sectors, Treasury CS Henry Rotich during is 2016/17Fiscal Year Budget speech, “We have allocated KSh 120.2 billion of which KSh 81.6 billion is from our development partners and KSh 38.5 billion is GOK in FY 2016/17. This will cater for: Geothermal Development; Power Transmission; Rural Electrification Programme; Last Mile Connectivity; National Street lighting Programme; Electrification of Public Facilities; Exploration and Distribution of Oil and Gas; Installation of Transformers in Constituencies; Connectivity Subsidy, and LPG Distribution and Infrastructure Programme.”

Kenya’s ‘2030 Vision’ targeting 5gw of Geothermal Power, 3gw of Wind and 500mw of Solar PV to be grid connected.

These conditions are not going unnoticed on the global stage. German bank, Deutsche Bank has earmarked a US$500million fund dedicated to investing in renewable energy locally. International investors are typically looking at investment rates of return of 12.5% and above on projects emphasises Eugene Obiero, Senior Manager at CAMCO Clean Energy, a company focussed on financing renewable projects across the continent.