Energy Sector in Kenya Presents ‘Golden, Immediate Opportunities to Invest’
December 5, 2011 by Staff Reporter
Filed under Business Opportunities
Electric power supply in Kenya falls far below the demand. This calls for private sector investment in power generation for sale to the national grid. The current peak electric power demand is estimated at 1,180 MW and it is projected to grow at 7% annually to reach 2,263MW by 2018. And, according to the government, this growth in demand presents a “golden, immediate opportunity to invest in the energy sector.”
Installing a transformer
High Growth in Demand
The demand growth is driven by an accelerated consumer connection policy and anticipated robust economic growth performance. Annual electricity consumer connections have continued to rise sharply over past years following a government policy is to connect at least one million new consumers the year 2012.
To meet this projected demand in electricity, the installed generating capacity will have to be raised to 1,860MW by 2013 and to 2,600MW by 2018. And this projected growth rate in demand will require corresponding increases in capital outlay to increase capacity and associated supply and distribution infrastructure. The private sector is expected to play a key role in providing the required capital either on its own or through public- private partnerships.
External Funding
Recently, the Kenya Electricity Generating Company (KenGen), the country’s main power producer, has raised $920 million in loans for a 280 megawatt (MW) geothermal project, the company’s managing director said on Wednesday.
“We have just accessed some $920 million concessionary funding for a 280 MW geothermal project,” Edward Njoroge told reporters at a regional energy conference in Yaounde, Cameroon.
Olkaria Geothermal Plant
The funds came reportedly from the Kenyan government, the World Bank, Germany’s KfW, the European Investment Bank, the Japan International Corporation Agency and the French Development Agency (AFD)
KenGen has said the Olkaria IV geothermal plant, an extension of the Olkaria I and II plants that already produce a total 115 MW, is expected to be operational in 2014 and will cost about $1 billion.
Kenya is the first African country to drill geothermal power, tapping vast steam energy in the country’s Rift Valley.
The country has the potential to produce 7,000 MW of geothermal power and is targeting production of at least 5,000 MW by 2030.
Transformer Manufacturing
In order to achieve the government’s objective of connecting one million customers in the next five years, a total of 60,000 transformers will be required. It is also estimated that an additional 2,000 transformers will require repairs annually.
This provides a very good investment opportunity for manufacturing and repairing of transformers. In addition, there exists a high potential for manufacturing of other related equipment such as switchgears, insulators and electricity energy meters. Indeed, transformer manufacturers will also benefit from both the East African Community and COMESA markets.
