By Michael Duncan
A report by Germany-based Frankfurt School shows that Kenya and South Africa were leading on the continent in terms of investment in renewable energy last year.
The countries were named by the institution which also serves as the United Nations Environment Programme (Unep) centre for climate and sustainable energy finance in a survey that examined global investments in renewable energy.
Both Kenya and South Africa crossed the one billion mark in investments committed to generation of cheap and reliable energy during the period, according to the report.
The global trends in renewable energy investment 2015 report also names Indonesia, Chile, Mexico and Turkey as having made significant contributions to investments in renewable energy in 2014.
The leading locations for renewable energy projects during the year were China, US, Japan, India and Brazil, according to the report.
In total, investments in renewable energy projects in developing countries stood at $131.3 billion (Sh12.7 trillion) last year, up 36 per cent compared to the previous year, coming closely to the total for developed economies which was $138.9 billion (Sh13.4 trillion), having increased by just 3 per cent.
“The trend last year was, arguably, even more impressive that it would seem from the investment numbers because a record number capacity of wind and solar photovoltaic power was installed. A key feature of 2014 was the continuing spread of renewable energy to new markets,” notes the report.
The global investment in renewable power, excluding large hydro-electric projects, was higher by 17 per cent at $270.2 billion (Sh26.1 trillion) during the period under review, mainly driven by increased solar installations in China and Japan and wind projects in Europe.
The report also shows that equity raising by renewable energy projects on capital markets around the world increased by 54 per cent to $15.1 billion (Sh1.4 trillion) in 2014.
Overall, renewable energy projects were estimated to have contributed 9.1 per cent of the world electricity generation last year compared to 8.5 per cent in 2013.
Last year, 280 megawatts of geothermal electricity were connected to Kenya’s national grid, propelling the form of power production to the top position in the country’s generation mix. The additional geothermal capacity came from plants operated by the Kenya Electricity Generating Company (KenGen) located in Olkaria.
KenGen also upgraded the capacity of its Ngong-based wind farm from 5.1 megawatts to 25 megawatts with funding from the governments of Belgium and Spain.
However, even as Kenya has been praised for her investment in renewable energy, the country is yet to increase generation from such sources as wind and solar to make a significant contribution to its generation mix compared to other expensive sources of electricity like diesel driven thermal generation.
For instance, a plan to build a 300-megawatt wind power plant in Marsabit that is being undertaken by the Lake Turkana Wind Power company has suffered delays due to failure to acquire guarantees for the project on time both from the government and the World Bank.
This would be the largest single wind power plant in Kenya and the first investment by the private sector to add wind power to the grid, as currently only KenGen generates wind power.
Also, there is no single solar power plant that feeds electricity to the national grid despite the country being endowed with the resources. The existing solar plants only generate power for off-grid use and are often in small capacities.
Geothermal is currently the leading source of electricity generation in the country since August last year, followed by hydro generation and thermal power in that order.
Data from the Kenya National Bureau of Statistics (KNBS) however shows that thermal generation has been on the rise for three consecutive months to March due to prolonged dry season and a heavy reliance on hydro generators, raising alarm over the fate of electricity costs.
According to the Leading Economic Indicators report for March prepared by KNBS, thermal generation contributed 134 million units of electricity out of the total 756 million.
In December, electricity output from thermal generators stood at 93 million units. It increased consecutively in January and February to 109 and 121 million units respectively.
Under the plan to install an additional 5,000 megawatts of electricity by the end of next year, the government is targeting to increase power production from renewable sources such as wind and geothermal and other cheap sources of electricity like coal to drive the cost of electricity down.
In January, the ministry of Energy and Petroleum embarked on an audit to establish the level of compliance with the requirements for investments in renewable projects among the various investors who have received approval from the energy regulatory commission (ERC) to set up power plants.
The results of the exercise are yet to be made public. The audit is also meant to weed out firms that have held licences for power generation merely for speculative purposes.
The study was undertaken following a circular issued by the cabinet secretary for Energy and Petroleum, Davis Chirchir in July, directing all investors who had been cleared to generate electricity from solar, wind, cogeneration and biomass to file status reports on their projects by the end of last year.^