A Publication of AFREPREN/FWD
and HBF – HA Initiative on
Renewables in Eastern and Horn
Karekezi, John Kimani, Jared Atiang', Oscar Onguru and Justus Mbithi
resources available in Kenya include biomass, petroleum (imported), hydropower,
geothermal power and renewable sources of energy such as solar, wind and, to a
small extent, small-hydropower and biomass - based cogeneration in the sugar
The energy scene in Kenya is dominated by two key factors: an over reliance on
dwindling biomass energy resources which meets the energy needs of most of the
rural households and a heavy dependence on imported petroleum which drives the
needs of the modern economy. Biomass is the main source of primary energy for
majority of the population and accounts for up to 68% of the total energy
consumed. Petroleum and its related products, though mainly used by the modern
sectors of the economy, accounts for a further 22% of the total energy consumed.
Use of electricity is usually associated with a rise or change in lifestyle and
its consumption accounts for 9% of the total energy consumed.
The other energy sources, though used, are not widely disseminated and harnessed
across the country. They mainly include renewables such as solar energy
technologies, wind energy technologies, small scale renewable energy
technologies and biomass cogeneration. Cumulatively, their usage at the national
level only accounts for 1% of the total energy consumed.
The key objective of this study was to investigate what it would take to achieve
a fully participatory and vibrant sustainable energy sector in Kenya with
specific emphasis on cogeneration.
This report is divided into five chapters. Chapter 1 provides a background
review of the energy sector in Kenya including energy supply and demand as well
as the status of power sector reforms. This chapter also examines the
Government’s agenda for action vis a vis the Rural Electrification Programme.
Chapter two reviews cogeneration development in Kenya including the current
status and the key stakeholders involved in the cogeneration industry. This
chapter also provides a justification for cogeneration in rural areas.
The third chapter assesses the involvement of local groups in the cogeneration
industry in Kenya. It begins by providing a rationale for involving local groups
in cogeneration development and then outlines suitable models for local groups’
participation in cogeneration. The chapter concludes by providing a description
of barriers that may affect/hinder local groups’ involvement in cogeneration.
Chapter four reviews the existing policy and legal/regulatory framework for
sustainable local participation in cogeneration and identifies the key policies
that need to be strengthened in the National Energy Policy document.
The final chapter (chapter five) provides the study’s key conclusions and
recommendations. One of the key conclusions is that there is a significant
potential for cogeneration in the sugar industries demonstrated by the amount of
bagasse available e.g. in 2006, a total of 1,878,153 metric tonnes of bagasse
with a potential to generate 120 MW of electricity. In addition, there are
several drivers that enhance the attractiveness of cogeneration: the increased
price of cane is compelling sugar factories to maximise value extracted from
sugarcane; the rising cost of generating oil based electricity; employment
opportunities created by the cogeneration installation; additional incomes to
the small scale farmers arising from the cogeneration installation; and,
contribution to the rural development.
There are several opportunities for local participation in the cogeneration
industry. Buying shares or co-investing in the privatised or yet to be
privatised sugar factories by the Government; co-investing in the revival of the
defunct sugar factories; and purchasing shares of profitable sugar companies
through the stock exchange. A good model is the Mauritius revenue sharing
mechanism that ensures that even the smallest sugar farmer benefits from
There is an already a market for the bagasse - based co-generated electricity
owing to the low levels of electrification in the rural areas. Furthermore, the
Government has zero rated tax and accrued revenue from the capital invested in
cogeneration i.e. dividends earned are not taxed.
The Government has also drafted legislation that promote cogeneration. In
addition, technical and financial support is available to assist the local
groups and other investors interested in investing in the development and
promotion of cogeneration.
In spite of the aforementioned opportunities, there are some barriers identified
that constrain the involvement of local communities in the cogeneration
industry, for example;
The legal and regulatory frame work needs to be strengthened to provide
incentives to local investors who include local groups in the implementation of
Provision of a standard price offer as well as implementation of a standard
(Power Purchase Agreement (PPA) for cogeneration. This will not only make it
lucrative for local investors but also ensure a level playing field among
Implementation of an appropriate revenue sharing mechanism, similar to the one
implemented in Mauritius, should be adopted to strengthen the participation of
local groups and communities in the cogeneration industry and ensure wider
distribution of accrued benefits.
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