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Kenya has signed a power purchase agreement with Ethiopia in a deal that will see Kenya receive 400Mw of hydro-power in the next eighteen months. Work on the 500kv power line which will be used to transmit the power is already underway with contractors on site. Ethiopia Prime Minister Hailemariam Desalegn showed keen interest in the investment made by Kenya in clean energy saying that geothermal energy is clean, green and its carbon footprint on the environment is minimal. This emerged when the Ethiopia Prime Minister, the First Lady Roman Tesfaye and his delegation visited Olkaria Power plant in Naivasha as part of their tour of the country. KenGen Managing Director Abert Mugo hailed the PM’s tour of Olkaria, noting that energy-related projects topped the agenda of the bilateral discussions, which also dwelt on the review of progress on the ongoing LAPSSET projects, among others.
The World Bank Board of Executive Directors has approved 200m US dollars from the International Development Association for Tanzania Rural Electrification Expansion Programme. A newly approved loan for the programme will connect 2.5 million poor households in rural areas to the national electricity grid over the next five years. The Programme aims to build on the recent achievements of expanding nationwide access to 36 per cent in 2014. In addition, the Programme will scale up the supply of renewable energy in rural areas while strengthening sector institutional capacity. "Access to electricity is critical to extend economic opportunities and reduce poverty," noted Bella Bird, World Bank Country Director in Tanzania, who also covers Malawi, Burundi and Somalia. "This programme not only offers the opportunity for many more Tanzanians to have access to power in their homes and businesses, but also enables small power producers to access finance to invest in production, including with renewable energy sources," she added.
Energy and power industry influencers attended the first East African donors’ coordination meeting in Ethiopia recently, dedicated to promoting geothermal investments. The conference was also organised to highlight the importance of improving access to equity or other funding sources and therefore play a catalytic role in establishing geothermal energy as a strategic option in power expansion planning for the region. While addressing delegates, Commissioner for infrastructure and energy Dr Elham Ibrahim noted the need to increase the deployment of geothermal projects in efforts to increase the rate of energy access in Africa especially with the growth in populations. She further stated that to increase the rate of energy access that could be achieved with reliable and competitively priced modern energy such as geothermal. The Commissioner also touched on Agenda 2063 (a global initiative to optimise use of Africa's resources for the benefit of the African continent) and the Programme for Infrastructure Development in Africa (PIDA). She noted that on the road to achieve an integrated, prosperous and peaceful Africa, the first ten year plan, where energy is taken to be one of the major enabling aspects, has been elaborated.
Taking place in London for the first time, the Africa Energy Forum 2016 (AEF) which runs from 22-24th June, is set to highlight the huge renewable energy growth that is underway to meet the continent's increasing energy needs. With a growing population and recent economic progress Africa is seeing its energy demand soar. This calls for a rapid increase in supply on the continent and all forms of energy must contribute in the decades ahead. Africa therefore has a unique opportunity to pursue sustainable energy development as a basis for long-term prosperity. In its recent report entitled 'Africa 2030: Roadmap for Renewable Energy Future', the International Renewable Energy Agency (IRENA) observed the region is richly endowed with fossil-based and renewable energy sources. However, it noted that the continent's continued reliance on oil and gas, along with traditional biomass combustion for energy will bring considerable social, economic and environmental constraints. Tackling today's energy challenge on the continent, the report noted, requires a firm commitment to the accelerated use of modern renewable energy sources.
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Leaders of three key climate change negotiating blocks have called for more global use of renewable energy and energy efficiency. The African Group of Negotiators (AGN) represents 54 African countries while LDC has 48 members and Aosis encompasses 44 small island states. The climate change negotiators noted the importance of Africa Renewable Energy Initiative (AREI) launched last year as an encouraging development towards the fight against climate change. AREI which got a pledge of US$10 billion in financial support as a starting point for up-scaling renewable energy worldwide, was launched at the 21st Conference of Parties to the United Nations Conference on Climate Change held in Paris, France in November 2015. Seyni Nafo, the chairperson of the African Group of Negotiators, said Africa has taken a lead in renewable energy use. He said with a mandate from 54 African heads of state, the Africa Renewable Energy Initiative was launched with the transformational goal of ensuring universal energy access to all Africans and adding double current electricity generation through renewables beyond 2030.
Kenya has been ranked second behind only South Africa for clean energy investment in Africa and sixth globally. Kenya’s renewable energy potential is vast; already the world’s 8th largest producer of geothermal energy. 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. 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. Speaking at the panel briefing, Charles Muchunku, Chairman, Kenya Renewable Energy Association emphasized that the key objectives of industry stakeholders should be to improve the business environment for renewable energy in Kenya and to 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.
East African Centre for Renewable Energy and Energy Efficiency (EACREEE) which will be based at Makerere University has been launched. The Centre will champion promotion of sustainable energy development in East Africa by improving access to modern services, energy security and mitigating negative environmental impacts. The centre will also create economies of scale as well as a competitive sustainable energy market and business sector in the East African Community in addition to attracting potential public and private investors in the region. The decision to establish the centre was adopted at the 9th Meeting of the East African Community (EAC) Sectorial Council on Energy in April 2014 in Nairobi, Kenya, the Ministers of Burundi, Kenya, Rwanda, Tanzania and Uganda adopted the project document.
A new report by the global auditing firm, PriceWaterHouse Coopers (PwC) says that new renewable off-grid technologies, in combination with innovative business models and mobile payment systems, hold the key to rural electrification and creating universal access to power. The PwC report says, a new approach which better recognises the part that off-grid technology can play is needed, adding that new approaches to beyond the grid electrification need to be adapted to achieve the UN 2030 target of electricity for all. It also noted that policymakers need to get out of a top-down mindset and support the role that a range of renewable energy off-grid technologies and new business models can play, adding that advanced renewable technologies and storage solutions could also threaten the existing business models of power utilities across the African continent in the future. According to the report, “Energy transformation means the time is right for policymakers to reappraise their approach to energy access. On current trends, two-thirds of the world’s population will remain without electricity by 2030, which is the target year to achieve the newly agreed post-2015 UN Sustainable Development Goal of universal access to energy.”
According to the latest annual Renewables 2016 Global Status Report by REN21, Kenya ranks in the eighth position among the largest geothermal energy producers in the world, putting the east African country among the top green energy economies. The report further states that by the end of 2015 the amount of geothermal energy in Kenya's national grid had expanded to a total of 600MW. The analysis stated that geothermal now accounts for over a quarter of the country's total power capacity of 2,333MW. Government officials have in recent years renewed their interest in geothermal energy to reduce the economy's use of expensive electricity from diesel generators and to boost the country's competitiveness. It is said that the country has an untapped potential of 10,000MW of steam energy in its Rift Valley basin where a series of exploration works are ongoing. About 280MW of steam power was fed to the grid in 2014 from the Olkaria fields in Naivasha that helped to cut the share of thermal power, easing power bills by about 30%.
Zambian Minister, Siliya and AfDB representatives will discuss modalities of supporting local entrepreneurs seeking to develop renewable energy projects. Siliya said her Government is keen on working with the AfDB to empower local entrepreneurs of small and medium enterprises with the capacity to explore avenues of how the power deficit hit country could generate renewable energy. “Zambia has the political will to make sure that renewable energy projects work and I will in the next two weeks be meeting officials from AfDB to put this vision into reality,” Siliya told the audience. She announced that her Government has shortlisted 15 private companies to undertake solar power infrastructure development projects across the country. During the same discussions, International Renewable Energy Agency (IRENA) Director for Knowledge Policy and Finance, Henning Wuester said there was need to build the local financial capacity of African states to implement off-grid electricity power projects. He noted that institutions such as AfDB, with its strategy on lighting up and powering Africa as enshrined in the High 5 vision of President Akinwumi Adesina, were better placed to support the continent realise the goal of producing renewable energy.
The African Renewable Energy Fund (AREF) announced that it successfully reached its target of $200 million in committed capital to support small-to-medium-scale projects. The fund is targeted at supporting sustainable private-sector led economic growth in renewable and alternative energy generation. The fund held its first close of $100 million in March 2014 and since that time has been investing capital in grid-connected development stage renewable energy projects, including small hydro, wind, geothermal, solar and biomass projects. The African Development Bank (AFDB) and its Sustainable Energy Fund for Africa (SEFA) are AREF’s lead sponsors, with equity investment of $25 million and $25.5 million respectively. SEFA committed an additional $10 million as Project Support Facility (PSF) to structure early stage bankable deals. The Global Environment Facility (GEF) also makes the list of top sponsors with its $4.5 million contribution. In total, the AfDB-mobilised a package of $65 million, providing a solid foundation for attracting capital from commercial and institutional investors to the renewable energy segment in Africa. With the current attention and surge of investors in renewable energy in Africa, the potential of the continent is more evident, positioning it as a likely gold mine. Africa is endowed with substantial renewable energy resources; over 300 gigawatts of hydro power capacity, a significant amount of geothermal potential, and abundant biomass, solar and wind potential.
A programme that’s making South Africa the top destination for green-power investments across the continent and the Middle East is not only easing an electricity crisis: returns are beating those in bonds and stocks. The Renewable Energy Independent Power Producer Procurement Programme secured about R196bn since 2011 and will attract another R550bn by 2020. With state-guaranteed contracts to buy the power over the next decade - and annual returns of as much as 20% - the project is a treasure trove for money managers and private equity companies seeking growth in an economy struggling to avoid a recession and the risk of a credit downgrade to junk. An index of rand-denominated debt has lost 23% over the past year in dollar terms, the biggest decline among 31 emerging markets. “It’s very hard to see getting stable returns like that in other asset classes where there’s a lot of uncertainty and yields are relatively low,” said Jean-Pierre du Plessis, a portfolio manager at Prescient Investment Management in Cape Town, whose R700m renewable energy fund is up 14% since it started in September. “The majority is long-dated debt linked to inflation, so it suits the liabilities of pension funds and insurers.”
African governments have been called upon to consider shifting policy in the energy sector by investing in industrialisation and providing subsidies on electricity for people in rural areas who are extremely poor. African Management Services Company (AMSCO) Chairperson Ali Mufuruki proposed that governments should consider powering their communities using renewable energy as it is environmentally safe and easier to manage for people in remote areas, besides also being readily available. He said a lot of money is being allocated in budgets on rural electrification, which uses extensive infrastructure just to light up one village when those villages can use renewable energy as an alternative. Mufuruki called on governments to look at investing in green energy as it can lead to greater productivity on the African continent, besides helping these governments move forward at a faster rate.
Africa’s energy revolution, one of the biggest overlooked stories of our time, is poised to change the lives of millions of Africans. The best-known example is Africa’s “leapfrogging” directly to mobile phones, bypassing landline connections and using mobiles to move money, consult farm prices and much more. A less well-known example is Africa’s embrace of renewable energy to leapfrog older power generation technologies, while also reducing the need to extend the national energy grid to remote villages. From an African perspective, renewable energy technologies such as solar and wind power, have two powerful advantages: speed and decentralization. They can be rolled out much more quickly than fossil fuel-fired power plants and they can operate both on grid and off grid.
Key issues affecting electricity and energy supply in Africa currently include dependence on diesel power, erratic electricity grids and insufficient generation capacity. If the current power consumption trends continue, it is estimated that by the year 2030, 655 million people in Africa will be without access to power. Overall, it is estimated that approximately 600-million people in Sub-Saharan Africa currently lack access to electricity. At the heart of Africa’s power sector problem is the fact that insufficient generation capacity and limited electricity supply results in low access. Together with geographic constraints, these are barriers to the development of the electricity market in Africa says Issam Darwish, Executive Vice Chairman and CEO of IHS Towers Group. Research also showed that a 680 percent increase in net renewables capacity deployment is required if Africa is to achieve the ambitious goal of 300gW of renewable capacity by 2030 set by the African Renewable Energy Initiative. Moreover while fossil fuels, notably coal, oil and gas, continue to provide a significant quantity of energy to the continent, there is also a need for cleaner and more long-term, sustainable energy solutions to be developed. As a result, renewables must play a greater role in Africa’s energy mix.
The potential to produce electricity from wind turbines in South Africa is significantly greater and much more widespread than initially thought, according to a recent study by the Council for Scientific and Industrial Research (CSIR). Using Port Elizabeth as an example, scientists demonstrated that the supply of wind and solar power could provide a constant stream of electricity. They said South Africa has almost twice the solar resource of Germany, where solar power is close to cost competitiveness. In addition, they remarked that South Africa had outpaced the United States in terms of wind energy in just two years. “The magnitude and cost-competitiveness of wind power in South Africa are on par with that of solar power,” CSIR Energy Centre research group leader Crescent Mushwana said. “[Also], wind and solar power are complementary, with wind supply peaking in the evening and solar power at midday.” Wind and solar projects in Port Elizabeth were used to demonstrate this point. Mushwana said the study had found that the total technical wind power potential in South Africa was 6 700GW, which was large enough to supply the entire world’s electricity demand.
Morocco has been picked up to participate in a project to spread the use of green technologies in farming and food processing. The project, launched in 2015 at the initiative of the Food and Agriculture Organization, the EBRD and the International Energy Agency to promote the use of green technologies in farming, is primarily destined to the countries of the southern Mediterranean and Eastern Europe. Twelve technologies applicable to the sectors of farming and food processing were selected after the completion of several studies. The first results show that these technologies have the potential to reduce emissions of greenhouse gas by 8 megatons of CO2 per year. Participants in the Tuesday workshop, including experts from the FAO Investment Centre, stressed the need to promote the marketing of these green technologies in Morocco.
Kenya’s public utility KenGen has announced that the construction of a 140MW geothermal power plant in Olkaria is planned to begin in Q3 2016. Albert Mugo, managing director at KenGen confirmed the development during an investors’ conference in Nairobi on Monday that the project, also known as Olkaria V, was currently in the tendering process, which will end in June. "We expect to sign the contract in October with the contractor so that construction can begin by the end of this year," Mugo said. KenGen’s boss stated that the firm has obtained an estimated $410 million for the power plant project, which is expected to take 30 months for completion. Mugo also revealed that the utility is seeking to connect 720MW of new power to the national grid in the next four years. He also encouraged the investors to invest more in the firm, stating that its "dividend scheme" is "one of the most competitive, reliable and sustainable in the country". "With the country's power demand expected to cross the 4,000MW mark by 2020, success in the future is dependent on early planning and that is why we are asking shareholders to take up their rights at this time so that we can have enough capital for expansion," he said.
President Paul Kagame of Rwanda and his Kenyan counterpart Uhuru Kenyatta have endorsed the ‘New Deal on Energy’, a vehicle through which the African Development Bank (AfDB) will invest in delivering electricity for all Africans, by 2025. Speaking to a fully packed audience, the three leaders shared their ideas on the ‘path to universal access to energy in Africa by 2025’, which is what the AfDB’s new deal on energy intends to achieve. “This new deal on energy is a big deal for Africa,” said President Kagame adding that it brings a new momentum in the efforts of doing what Africa should otherwise have done, long time ago. Kenya President Uhuru Kenyatta also backed the ‘new deal’, noting that Africa has a lot of potential in renewable energy sources that just needs further enhancement. “We have heard and had enough of the theory. It is now time for practical engagement by supporting the AfDB to leverage Africa’s huge potential,” said President Kenyatta.
Rwanda’s energy sector reforms are striving to improve energy pricing efficiency, subsequently increasing sustainable investment in the sector. These reforms target an ambitious goal of connecting over 70% of the country’s population to electricity by 2018. Only 16% of Rwanda’s households are connected to the grid. But it’s not all doom and gloom. The country is emerging as a regional high-tech hub and one of the world’s most competitive economies. It is one of the countries showing that it is possible to reverse the trend of not having adequate electricity. Its approach is showing that adapting new technologies, policy reform and innovative business models offer promising pathways to renewable energy transformation. Its vision on energy transformation could be the inspiration the Africa region needs to reverse the energy deficit.
The future competitiveness of the African continent and its sustainable development hugely depend on every stake holder redoubling their efforts to tackle the persistent power supply issues which are not only affecting citizens’ quality of life but also pushing up the high cost of doing business on the continent. As a recognised engine of growth, private sector companies can and should help African countries provide access to clean and affordable electricity. This is because Africa has incredible renewable energy resources, as it can source an additional 10 terawatts of solar energy, 1,300 GW of wind power, and 15 GW of geothermal potential. Private companies have the financial resources and clout to significantly scale up investment in renewable energy. Last year, Google announced that it is investing in the Lake Turkana Wind Power Project in Northern Africa, the continent’s largest wind project. Once complete, Lake Turkana will bring 310 MW of clean energy onto Kenya’s grid – enough to power more than 2m households across the country. These investments are beneficial to all stakeholders: companies are helping to strengthen the infrastructure that they need to operate on the continent.
From the recently concluded World Economic Forum on Africa, various issues were highlighted. They include, examples of successful renewable energy projects across the continent, barriers to these projects and promoters of success within the sector. The key findings made were: First, Renewables must play a greater role in Africa’s energy mix. The case for building renewable energy infrastructure in Sub-Saharan Africa is stronger than ever and positive experiences in lead markets such as South Africa and Kenya highlight successful strategies and best practices. However, Africa requires up to US$90 billion of investment annually to meet its current energy shortfall. Secondly, The African renewables sector resembles the mobile phone sector of a decade ago. It has the capacity to leapfrog heavy infrastructure with a larger-than-assumed market, the emergence of smart business models and improved technology. However, long-term renewable procurement programmes are needed to build the greenfield infrastructure necessary. The third finding was, There has been huge growth in technology sales and financing innovation. The market for pico-solar units has grown from almost zero in 2009, to 4.5 million in 2014 and, in January 2016, Africa saw its first solar bonds, a securitisation financial product for small scale off-grid solar projects. Finally, Ambitious energy targets are not enough. Investors are carefully assessing the technical capacity of host governments, the country’s infrastructure track record and the connection between renewable targets and economic needs.
Engineer Francis Ngunjiri is the first Kenyan to privately own a commercial power plant with enough electricity generating capacity to feed to the national grid. The 63-year-old has signed a power purchase agreement with Kenya Power to supply 0.6 megawatts of electricity, raking in about Sh2.3 million per month. Using water from a small river right in his backyard in Gaikundo in Nyeri County, Mr Ngunjiri has put a mark on the sector and his community. To him, success is not in the massive profits that come with the energy sector but breaking the monopoly of big players in the energy sector. This has been made achievable through the feed-in tariff (FIT) adopted by the Kenyan government in 2008, which makes it mandatory for energy companies that operate the national grid to buy electricity from renewable energy sources at a pre-determined price.
The potential for renewable energy development in Africa is experiencing an increase in attention lately as investors and world leaders seek a new clean energy frontier. The continent could become a gold mine for renewable energy due to abundant solar and wind resources. But roadblocks to clean energy worldwide are amplified throughout the troubled regions of Africa - financial resources are thin and infrastructure is often unreliable. So far, Africa has benefited the least among all continents from the $7 billion annual CDM market. Since the European Union began trading "carbon credits" through its Emissions Trading Scheme in 2005, only 27 of the 1,156 CDM projects included under the scheme have been registered in Africa, Yvo de Boer, executive secretary of the U.N. Framework Convention on Climate Change (UNFCCC), told the carbon forum. But a World Bank report released recently provides further evidence of the continent's potential. Sub-Saharan Africa could provide more than 170 gigawatts of additional power-generation capacity - more than double the region's current installations - through 3,200 "low-carbon" energy projects, such as combined heat-and-power, biofuels production, mass transportation, and energy efficiency, according to the report.
Three sugar companies in Kenya are seeking to generate 18MW of power to alleviate the pressures felt on their operational costs ahead of the market place opening to other entrants in 2017. The three firms, Butali Sugar Mills, South Nyanza Sugar Company (Sony), and Muhoroni Sugar Company have all published notices of plans to apply for electricity generation licenses from the Energy Regulatory Commission (ERC). The millers can further boost their revenue through supplying any excess power to the national electricity grid. The internally generated electricity from bagasse, a by-product of cane, could boost the fortunes of the sugar millers who face stiffer competition when special safeguards on sugar imports from the regional trade bloc Common Market for Eastern and Southern Africa (COMESA) are lifted in early 2017.
Kenya, Rwanda and Uganda will commence trade of 15 MW of power from the Olkaria Geothermal power plant beginning in May. Progress for a transmission line in the region is currently at 50 percent and substation at 61 percent due to slow performance of contractors. The 400-kilovolt (kV) transmission lines would connect Olkaria in Kenya, where the country is building geothermal power plants, and Birembo in Rwanda through Uganda. Uganda and Kenya are already connected by older lines. The grid is needed to improve reliability and security of the region's power supply, and improve trade and sharing of resources among the three East African countries.
Zanzibar currently relies heavily on electricity imported from Tanzania mainland through submarine cables through Tanga and Dar es Salaam, but some researchers are worried that the supply of the energy from hydropower and Natural Gas may dwindle and become inexpensive for many people in future. The argument has been taken on board by some young researchers, suggesting promotion of different types of renewable energy resources-such as wind and solar energy, sea waves and Biogas, as alternative sources of electricity.
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