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September 23, 2018

Kenya Needs To Put Its Energy Act Together

This is an exciting announcement from Eritrea: Ashegoda Wind Farm, an investment of USD290m with a 120MW capacity, has come on stream - great news for Ethiopia.

But I do wonder: What on earth happened to Kenya? Turkana Wind – previously praised as the largest wind energy project in Africa ‑ has a much greater anticipated output of 300MW when completed. But when is that finally going to happen?

 Kenya is constantly operating at the limit of its energy generation output (never mind that we all know that power cuts are frequent), plus energy prices are high. If you look at anticipated GDP growth rates – and the GoK is certainly always very bullish about those – then surely you can anticipate how much additional generating capacity you need every year just to stand still.

Never mind all those plans about becoming a middle-income country, running entire tech cities and so on. Manufacturing is hardly internationally competitive at these rates either.

 None of this – the lack of capacity, the ridiculous prices – is anything new. It’s a long-running problem. So long-running, so predictable, it’s practically boring.

Of course you can open up any policy paper and also find all those analyses reflected, and with Groundhog Day predictability, you will find pledges to invest in energy yada yada yada.

 If you were a government, and you have known for years that you’d need more power (and alternative power sources, because those regular droughts don’t just roll around out of nowhere to affect your hydro-electricity generation), wouldn’t you be really excited if someone offered to invest in energy?

 So here’s a group of entrepreneurs offering to help sort out the problem with what could be Africa’s largest wind farm in Turkana.

Why doesn’t the government bend over backwards to help make this happen? For example, readily, cheerfully, joyfully offer to build the road and transmission line, extra quick?

(You could also have argued that the GoK could have just built a facility like Turkana itself rather than pay for emergency power year after year, but let’s not go there for now). Instead, Turkana has been delayed for years and years. Why is this so difficult?

 Well, you might think that perhaps things will change now that there is a new government. And indeed (an expression that Mr Kenyatta likes), the president has now announced a 5,000MW+ plan.

This is from the presidential press release (I corrected a couple of typos): ‘Government is set to implement an ambitious 5000+ Megawatt power project to provide reliable and adequate power and ensure affordable and competitive cost of electricity to spur economic growth.

The project, the largest single initiative to be undertaken in the country, will mark a shift from unreliable hydro and expensive thermal based power generation to reliable green and cheaper natural gas and large scale coal fired power plants, President Uhuru Kenyatta said. (…) “The shift will reduce the cost of doing business and make Kenya one of the low cost countries. It will also reduce electricity generation fuel costs from the current US$ cents 26 - 36 range to less than 6.51 per unit of electricity.”’

 Wonderful, wonderful. But: What exactly makes us assume that the government institutions suddenly have more capacity to manage such ambitious plans?

Coal sounds great. Except the mining and extractive industries sector is hardly looking up – it’s managed by a politician cabinet secretary who was accused of demanding cash to re-issue licenses. Tullow Oil have been forced to suspend their work because of local vested interests.

Also, how will Mr Kenyatta address the widespread vested interests in legal and illegal fuel trade and transport? Those people – many of whom are in political office – who gain from the annual emergency power allocations for fuel purchases? Energy generation isn’t a question of technology (it’s been done elsewhere before), but a question of governance.

 Does it matter? In the larger scheme of things, if Kenya can’t get its act together, then of course it could still import energy from Ethiopia.

Because Ethiopia isn’t just fiddling with the 120MW wind farm. My learned friends over at Wikipedia say that ‘Three hydropower plants with a combined capacity of 1.18 GW were commissioned in 2009 and 2010 alone, more than doubling the previous installed capacity of the country.’ Giga watt, not mega watt.

 You may well have issues with Ethiopia’s human rights track record, their loose grasp of the principles of democracy, and environmental concerns about their dam construction projects, and their unwillingness to let the private sector- whether local or international – flourish without overbearing government controls. But in large infrastructure project, they are definitely ahead of Kenya and get stuff done.

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