Competitive auctions beckon as Kenya’s power sector adapts to changing realities

Electricity generation capacity may be moving towards excess supply, but a blend of technologies will be needed in the Kenyan system as auctions to allocate new renewables projects come into view. In one of the region’s most dynamic energy sectors, government officials, off-grid entrepreneurs, traditional developers and financiers all have ideas about the way forward, write Jon Marks and Dan Marks from the AIX: Nairobi meeting

Competitive auctions for renewable power projects are moving slowly towards becoming a reality in Kenya’s dynamic electricity supply industry. An encouraging number of projects are progressing, even while the government often moves with what one developer calls “glacial policy-making” speed. But the general direction of travel is clear, as off-grid programmes emerge as the technology of choice for remote regions, Kenya Power’s access programmes continue and more independent power producers (IPPs) move towards financial close and construction.

More private investment will be sought along the supply chain as the government struggles with rising debt and popular disquiet at the way taxes are spent. But the devil is in the detail. In two days of discussion, the Africa Investment Exchange (AIX): Nairobi event organised by CbI Meetings on 3-4 October revealed only limited agreement on how to create a diversified electricity supply industry. Private developers remain wary after several years in which the government has tinkered with investor protections and arbitration. Meanwhile, changes to technology and demand patterns are creating a very different investment environment for planners to work with.
Read the full African Energy article

 

AIX: Power & Renewables (14- 15 November, London) will pick up and expand on many of the themes discussed in Nairobi. A continent-wide examination of FiT, negotiated deals and energy auctions will be led by a range of stakeholders including Ragnar Gerig, Director Energy (Africa and Asia), DEG; Steven Mandel, Director, Denham Capital; and Anton Eberhard, Professor, University of Cape Town.

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