About half of the Kenyan population lives without a mains connection. To expand its power supply, the country is investing in geothermal, wind and solar technology. We spoke to Michael Andres, an energy expert at KfW, about Kenya's quantum leap from emergency power diesel generators to a geothermal power plant.
Innovative energy policy
Why Kenya's government is investing in renewables (KfW Group/photothek). Video partly in German, partly in English with German subtitles.
Mr Andres, Kenya is a pioneer when it comes to generating renewable energy in Africa. Why is that?
The entire continent has enormous potential for renewables. But Kenya lacks substantial fossil fuel deposits, which is why the country has been forced to search for alternatives: even today, around two thirds of the electricity demand is met by renewable sources.
Is that enough to supply the entire population with energy?
Unfortunately not. About half of the population still lacks a mains connection. Because, even though generating capacities have increased by around 60 per cent since 2010, there are still many power supply deficiencies. Rapid population growth and positive economic development have placed expansion of Kenya’s power supply in a position of central importance.
Which strategy is the Kenyan government pursuing?
The potential of hydropower has by and large been exploited and, due to prolonged periods of drought, it has lost reliability. So Kenya is intensifying its use of geothermal, wind and solar energy. Kenya’s geothermal potential is distributed across close to 23 locations and is estimated to be over 10,000 MW. This is far more than Kenya’s current power generation capacity of 2,400 MW.
Michael Andres is responsible for the energy projects of KfW Development Bank in Kenia. He has been working at KfW since 2000 in the area of international financing. Among others, he managed commercial financings of KfW IPEX-Bank, as well as energy sector projects of KfW Development Bank in the Caucasus Regional Office.
What benefits does geothermal energy offer when compared to other energy resources?
Geothermal energy is not only a renewable and nearly carbon-neutral technology; it is also largely independent of factors like the seasons and climate. Expansion of geothermal energy exploitation is also an important element of Kenya’s adjustment to climate change, as it reduces dependency on hydropower. Due to the high intensity of radiation near the equator, experts also see strong potential for solar energy. While photovoltaic technology has mainly been used for decentralised, small-scale solutions in the private sector known as “solar home systems” until now, their share in power production is expected to increase to five to ten per cent in the coming years.
How will this goal be achieved?
By 2030, investments of USD 30 to 50 billion in power production, transmission capacity and connections to the electricity mains are expected. This could increase the percentage of renewable energy sources to 80 per cent of the electricity mix. To conserve Kenya’s limited budget funds, the market was opened for private power generation companies. The Kenyan government has already concluded long-term off-take agreements with 11 private electricity producers.
Read more below the image gallery.
Rising out of the cracks in the earth, thick clouds of steam power the turbines in the geothermal power plant. This part of the East African Rift is known as Hell's Gate. Here in Olkaria, the heat from the earth's core almost reaches the surface.
KfW provided EUR 70 million for the expansion of the Olkaria I and IV power plants. EUR 380 million came from the French development agency AFD and the Japanese development company JICA. KfW, JICA and AFD belong to the IDFC network of development banks. Further donors to the billion-euro project include the World Bank and the European Investment Bank.
How much of this progress has been due to German participation?
Germany has already been supporting the Kenyan energy sector for 20 years. The Federal Republic primarily promotes the construction of geothermal power plants, including the cost-intensive and high-risk test drillings, with involvement from the private sector. Overall, KfW and GIZ have committed close to EUR 380 million to Kenya for energy projects. In addition, KfW is also participating in investments in the private sector through its subsidiary DEG, such as the privately operated Olkaria III geothermal power plant and the Turkana wind farm. The financing costs can be significantly reduced thanks to the discounted long-term loan .
Do consumers also benefit from this?
The Olkaria geothermal power plant alone reduces emergency power generation with diesel generators so significantly that end consumers saw a drop in energy prices of about 24 per cent. The people now also have access to reliable power.
How does the local population react to the construction works?
When it comes to this type of project, it is extremely important that the livelihoods of local communities are not compromised and that losses are balanced with appropriate compensation and targeted support programmes. The example of Olkaria illustrates this well: its construction required the resettlement of several Maasai communities. Resettlement plans were then developed and implemented together with them. In the end, the living conditions were significantly improved: the people live in new houses with a higher quality of life, have a secure water supply for the first time and social services in the immediate vicinity.
Which KfW projects are being planned?
In addition to developing geothermal power like the exploitation of the geothermal field in Baringo-Silali, we will support Kenya as it develops new wind power generation capacities. Its generation potential is estimated to be close to 5,000 MW. In this manner, the Meru wind farm is being planned with support from Germany and is intended to supply an overall capacity of 400 MW in several phases.
Beyond financing, what can KfW achieve?
Kenya, like other countries, is striving to not only expand renewable energies, but is also actively planning to invest in coal and gas energy sources. Other African countries even want to invest in nuclear energy. By consistently further promoting renewables in the context of development cooperation, Germany and other donors can make a contribution to keeping the proportion of these energy sources as small as possible. The potential for generating renewable energy is large enough.
Published on KfW Stories: Wednesday, 24 January 2018
The described project contributes to the following United Nationsʼ Sustainable Development Goals
Goal 1: End poverty in all its forms everywhere
Around eleven per cent of the worldʼs population lives in extreme poverty. In 2015 that figure was around 836 million people. They had to live on less than USD 1.25 a day. The global community has set out to end extreme poverty completely by 2030.
All United Nations member states adopted the 2030 Agenda in 2015. At its heart is a list of 17 goals for sustainable development, known as the Sustainable Development Goals (SDGs). Our world should become a place where people are able to live in peace with each other in ways that are ecologically compatible, socially just, and economically effective.