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Kenya Power Report Q2 2011
Business Monitor International, April 2011, Pages: 55
In this new Kenya Power report, we forecast that the country will account for just 0.70% of Middle East and Africa (MEA) regional power generation by 2015, with efforts being made to diversify supply away from hydro-electricity and boost the contribution of geothermal energy. BMI’s MEA power generation assumption for 2010 is 1,222 terawatt hours (TWh), representing an increase of 4.0% over the previous year (where markets were depressed by the economic slowdown). We are forecasting an increase in regional generation, to 1,508TWh, by 2015, representing a rise of 18.5% between 2011 and the end of the period.
MEA thermal power generation in 2010 is estimated by BMI to have been 1,140TWh, accounting for 93.3% of the total electricity supplied in the region. Our forecast for 2015 is 1,370TWh, implying 16.1% growth in 2011-2015 that reduces slightly the market share of thermal generation to 90.8% - thanks in part to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Kenya’s thermal generation in 2010 will have been an estimated 2.3TWh, or 0.20% of the regional total. By 2015, the country is expected to account for 0.28% of regional thermal generation.
Direct burning of wood and waste materials, plus some renewables-based power generation, will have been the dominant energy source for Kenya in 2010, accounting for an estimated 78% of primary energy demand (PED), followed by oil at 20% and hydro with a near 2% share of PED. Regional energy demand is forecast to reach 1,114mn tonnes of oil equivalent (toe) by 2015, representing 15.9% growth over the period since 2011. Kenya’s estimated 2010 market share of 2.18% is set to reach 2.46% by 2015.
Kenya now shares sixth place with Nigeria in BMI’s updated Power Business Environment Ratings. Its position is vulnerable given the modest size of the market. Growth prospects are good and the proportion of renewables is the highest in the region. However, import dependency is also high and the power sector is not particularly competitive, with limited progress towards privatisation.
BMI forecasts that Kenya’s real GDP growth will average 5.7% a year between 2011 and 2015, with 2011 growth forecast to be 6.0%. The population is expected to expand from 40.9mn to 46.5mn over the period, with GDP per capita and electricity consumption per capita forecast to increase by 70% and 29% respectively. Power consumption is expected to increase from an estimated 6.4TWh in 2010 to 10.0TWh by 2015, providing an improvement in market coverage on the basis of 6.5% average annual growth in electricity generation over 2011-2015. Losses of more than 1TWh during power transmission and distribution mean the market is likely to remain tight for several years.
Between 2011 and 2020, we forecast an 82.1% increase in Kenyan electricity generation, in the top half of the regional range. This equates to 35.2% growth in 2015-2020, up from 34.6% in 2011-2015. PED growth is set to ease from 27.5% in 2011-2015 to 24.1% in 2015-2020, representing 58.1% for the entire forecast period. From 2014, the availability of coal-fired power is one key element of generation growth. Thermal power generation is forecast to rise by 163% between 2011 and 2020. Details of the longer term BMI power forecasts can be found later in this report.
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