Implementation of Renewable Energy Projects in Kenya

Published: 2021-07-08 10:20:04
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Category: Physics, Africa

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The most notable supportive policy development that has opened up possibilities for small and medium power producers is the advent of feed-in-tariffs. The REFiT offers investors pre-determined rates for various sources and technologies with an objective to promote the uptake of renewables and promote smaller projects. The framework takes investors cost of investments into consideration and offers pre-determined tariffs for a fixed term. However, as discussed elsewhere in the report, as a one-off negotiation concession where investors obtain licenses for projects on a first-come first-served basis, the system has its own limitations. Although many projects have been approved under this scheme a few have been realized. Difficulties and risks associated with market access related ambiguities, off-taker readiness, and social problems exacerbated by uncertainty around securing land, are some of the problems identified. Moreover, adding to these uncertainty, the announcement of the Government plan to auction based procurement scheme has left the future of feed-in-tariffs unclear.
Another potential limitation is that there are no comprehensive energy resource policies that target the biomass sector. Kenya has formulated forest legislation and charcoal rules to govern biomass energy development. However, targets, policies and guidelines in the development and promotion of other biomass technologies remain underdeveloped. For example, although the energy policy provides for the development of cogeneration in the sugar industry and other commercial establishments, this has not been accompanied by relevant technical studies or operational action plans. Thus, with no coherent policy frameworks and long-term plans, private investors are pretty much left to muddle through the somewhat confusing and contradictory policy and regulatory maze.Lack of cross agencies coordination is another possible challenge. For instance, sugar factories are regulated by the Ministries of Industries (factory) and Agriculture (cane supply) -, the Ministry of Energy (if, cogeneration). Creating an enabling environment or supporting agro-industries in this area would require for the three sectors to work together both at national and subnational levels. Currently, there is no initiative to support this or it is not clear which agency can take a lead in this area. Furthermore, the sugar sector continues to be in flux with poorly designed and managed national regulatory frameworks. On the other hand, the sugar industry is considered to be a strategic sector with significant impact on employment and local economy. Most of the large sugar factories have high profile minority shareholders or board representatives. Consequently, the larger sugar factories carry substantial policy clout and reach, thus, often in a position to push their interests effectively. Consequently, for sugar industries to become major energy players, inter-agencies coordination needs to be harmonized, as well as the development of supportive policy and regulatory measures.
Land, an important resource for renewable energy projects, is another area that needs better inter-agencies collaboration. Accessing land for projects can be difficult and subject to underhand dealings. It is often not clear which government body (Ministry of Land, National Land Commission, or the newly devolved country governments) has the authority or responsibility to resolve land access disputes or governance challenges.
Feedstock insecurity is a potential impediment for agro-industry based clean energy development. In the sugar belt of Western Kenya, the collapse of sugar zoning has largely lead to a destructive competition among millers. As a result, millers are uncertain and cautious to invest in cogeneration with surplus until the sugarcane poaching problem is resolved. Efforts to unlock agro-industries potential in clean energy requires the joint efforts of diverse institutions as well as between the different national and county government bodies. Kenya could also draw lessons from countries like Mauritius where some level of consolidation of sugar mills assist in expanding renewable energy investment in this important economic sector (Long se, 2017).
Finally, data on energy use in agro-industries is not readily available. The limited information that is available is scattered across various databases that complicate attempts to collate useful data sets. For example, electricity use in agro-industries may be categorized under the heading of industrial electricity consumption which may or may not include electricity used in irrigation. To date, the authors have not identified any data that tracks heat or steam energy consumption in agro-industries. In general, data on heat is largely absent across most energy sub-sectors in Kenya. Ensuring access to reliable information and technical studies is an important step to addressing risk perceived by potential clean energy developers.
On the other hand, as demonstrated in the agro-industrial sectors analysis, there is a lot to be hopeful about. The tea and horticulture sectors are increasingly adopting clean energy solutions to meet their energy needs and sell their excess to the national grid. For instance, a commercial vegetable farm in Kenya is Africa’s first grid connected biogas that uses vegetables waste to generate power and feed the grid. The analysis also demonstrates that what sets the tea and horticulture sectors apart is that they are both large export oriented sectors with a well-structured regulatory, value chain linkages, with a relatively limited Government interference. On the other hand, the performance of the sugar and coffee have been well below potential and expectations. As noted in this report, for decades now the two sectors have been in decline due to mismanagement, political interference and elite capture. Based on these macro-level analyses of the main cash crop sectors in Kenya the table below summarize the potentials for agro-industries to become cleaner energy producers. In closing
Kenya has the building blocks for the successful implementation of renewable energy projects in its agro-industry. It has vast renewable energy resources and can provide high capacity factors for wind, solar and geothermal plants. On the other hand, so far, agro-industries production of energy and electricity has been too small to sell excess to the national grid. Those with potentials for a larger generation and contribution to the national grid (i.e. sugar and coffee), investments and expansion in this area has been limited due to sectoral specific management and operational challenges. On the other hand, while policies to promote the use and marketing of renewable energy have been in place for years, these have not yet led to effective engagement of agro-industries. This is because partly regulatory support that supports biomass based energy production is underdeveloped, and lack of incentive structures that could help to overcome some of the fundamental barriers including feedstock supply and management are not in place.
With mapping of the four main agro-industrial sectors as well as overview of the energy sector, this report has identified key stakeholders, their interests as well as possible barriers to engaging in clean energy production in their respective sectors. This is done to provide a foundational understanding of the influencing factors, the motivation as well as constraints that imped agro-industries from participating or scaling up their capacity in energy production. The report also observes that sectors that have managed to retain their share of the global market (tea and horticulture) driven by the need to the cut cost and ensure reliable supply have registered incredible success in utilising their agricultural waste and deploying renewable energy technologies. With more direct support and better cross-agencies coordination, the Government can create conducive environment to support and scale up the emerging trend.

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