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Kenya Power Report Q4 2011
Business Monitor International, Oct 2011, Pages: 49
BMI View:
Hydropower has been a frustrating energy source for Kenya, given its shortcomings in drought conditions. Nonetheless, more hydro facilities are being developed in order to reduce dependence on costly oil-fired capacity. The favoured form of renewable energy is geothermal, where potential is believed to be vast. Meanwhile, coal-based generating schemes should provide medium-term electricity supply.
During 2011-2015, Kenya's overall power generation is expected to increase by an annual average of 6.94%, reaching 9.9TWh. Driving this growth is an annual 5.7% gain in hydropower and a 9.8% rise for renewables-based electricity supply. Oil-fired generation is set to fall by more than 20% per annum as hydro availability is increased. Coal-fired power should become available at the end of the forecast period.
There are plans to commit US$1.4bn towards the immediate development of geothermal capacity. Government-backed interests acquired rigs for a major drilling programme that aims to push the contribution of geothermal above that of hydropower by the middle of the current decade. There is talk of 5GW of capacity by 2030, which would put Kenya among world leaders in geothermal terms.
Electricity FiTs in Kenya have increased interest in renewable energy sources in the country. Kenya's FiTs guarantee the price paid for electricity from renewable sources, ensuring these technologies are cost competitive with more conventional power plants, and therefore encouraging the development of renewable facilities in the country.
Following an increase in 2011 real GDP of an estimated 4.4%, BMI forecasts average annual growth of 5.1% between 2011 and 2020. The population is expected to rise from the current level of 42.0mn to 46.5mn in 2015 and net power consumption looks set to increase from 6.7TWh to 8.5TWh by 2015, rising further to 11.1TWh by 2020.
During the period 2011-2015, the average annual growth rate for electricity demand is forecast at 6.08%, but slowing later in the decade to an average 5.32% in 2016- 2020.
Thanks partly to the forecast rise in net generation, growth of which looks set to exceed the underlying demand trend, Kenya's power supply shortfall should eventually fall and potentially become a useful net for export capability later in the decade as new capacity kicks in.
A gradual decline in the percentage of transmission and distribution losses from around 15% will help balance the market. The theoretical net import requirement by 2015 is put at 0.15TWh, which could be transformed into net export potential of almost 1.0TWh by 2020.
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