KENYA

1. GENERAL OPERATING ENVIRONMENT

2. ENERGY AND RENEWABLE ENERGY

3. ENVIRONMENTAL GOVERNANCE

4. ORGANIZATIONS, SOURCES, REFERENCES

KENYA report 2 (28)

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GENERAL OPERATING ENVIRONMENT

1.1 Basic Facts & Geography

1.2 People & Society

1.3 Culture & Business Culture

1.4 Infrastructure & Logistics

1.5 Government & Legislation

1.6 Economy & Trade

1.7 Kenya & Finland

1.8 Education

1.9 General Operating Environment - Summary

KENYA report 3 (28)

1.1 BASIC FACTS & GEOGRAPHY Location Eastern Africa Area 580,370sq km

Borders

Ethiopia Somalia South Sudan Tanzania Uganda

Climate Varies from tropical along coast to arid in interior

Terrain Low plains rise to central highlands bisected by Great Rift Valley; fertile plateau in west

Natural hazards Recurring drought; flooding during rainy seasons volcanism: limited volcanic activity

Source: CIA

Kenya lies in east Africa, and is bordered by Somalia, Ethiopia, Sudan, Uganda, Tanzania and the Indian

Ocean. Kenya has a climate ranging from tropical to temperate largely depending on the altitude.

(http://www.fco.gov.uk)

Founding president and liberation struggle icon Jomo KENYATTA led Kenya from independence in 1963 until

his death in 1978, when President Daniel Toroitich arap MOI took power in a constitutional succession. The

country was a de facto one-party state from 1969 until 1982 when the ruling Kenya African National Union

(KANU) made itself the sole legal party in Kenya. MOI acceded to internal and external pressure for political

liberalization in late 1991. The ethnically fractured opposition failed to dislodge KANU from power in

elections in 1992 and 1997, which were marred by violence and fraud, but were viewed as having generally

reflected the will of the Kenyan people. (CIA)

The Kenyan Highlands comprise one of the most successful agricultural production regions in Africa; glaciers

are found on Mount Kenya, Africa's second highest peak; unique physiography supports abundant and varied

wildlife of scientific and economic value. (CIA)

Major infectious diseases: Bacterial and protozoal diarrhea, hepatitis A, and typhoid fever. Malaria and Rift

Valley fever (CIA)

Environment – Current issues:

Water pollution from urban and industrial wastes; degradation of water quality from increased use of

pesticides and fertilizers; water hyacinth infestation in Lake Victoria; deforestation; soil erosion;

desertification; poaching. (CIA)

Environment – International agreements:

Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous

Wastes, Law of the Sea, Marine Dumping, Marine Life Conservation, Ozone Layer Protection, Ship Pollution,

Wetlands. (CIA)

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1.2 PEOPLE & SOCIETY 2009 2010 2011 Population, total 39,46 mil. 40,51 mil. 41,61 mil. Population, growth 3 % 3 % 3 % Population, density 69/km2 71/km2 … Urban population 23 % 24 % 27 % Rural population 77 % 76 % 73 % Population (0-14 years) 42 % 42 % 42 % Population (15-64 years) 55 % 55 % 55 % Population (65 years and above) 3 % 3 % 3 % Life expectancy at birth 56 56 57

Major cities Capital Nairobi (pop. 2.9 million) Mombasa (828,500) Kisumu (650,846), Nakuru (1.3 million), Eldoret (193,830)

Source: CIA, World Bank, OECD

1.3 CULTURE & BUSINESS CULTURE

Language Official: English Other: Kiswahili

Ethnic groups Kikuyu 22%, Luhya 14%, Luo 13%, Kalenjin 12%, Kamba 11%, Kisii 6%, Meru 6%, other African 15%, non-African (Asian, European, and Arab) 1%

Religion Protestant 45%, Roman Catholic 33%, Muslim 10%, indigenous beliefs 10%, other 2%

Source: CIA, Rabobank

A large majority of Kenyans are Christian, but estimates for the percentage of the population that adheres to

Islam or indigenous beliefs vary widely. (CIA)

Kenyans have strong affiliations to their ethnic group or tribe and sometimes place them in front of the

‘nation’. The family is at the heart of Kenyan life and is given priority over everything else. Several

generations will live together in one house with all family members taking care of one another. Absenteeism

from work or delays in performing tasks due to family obligations is frequently experienced in Kenya and is

viewed as perfectly acceptable. (Communicaid)

In general, Kenyans have a more relaxed approach towards time and live at a slower pace.

It is not unusual to wait half an hour for someone to arrive for an appointment and this is seen as perfectly

acceptable. Taking care of personal affairs first is regarded as more important than arriving on time. This

being said, today particularly in the private sector there is a growing trend of punctuality and observing

deadlines. (Communicaid)

Business hours in Kenya are from 9:00am to 4:00pm, with a one hour break for lunch between 1:00pm and

2:00pm. Some businesses also operate on Saturday mornings. (Communicaid)

Business appointments should be made preferably 3-4 weeks beforehand, but agreed meetings have to

follow up before actual meetings take place. (Finpro)

Kenyans have a flexible attitude towards time, so don’t be surprised if business meetings or social events

begin late. Punctuality tends to be expected when dealing with foreigners though. (Communicaid)

KENYA report 5 (28)

Kenyans do not tend to schedule a precise end to meetings. What matters is not adhering to a schedule but

ensuring that everybody involved is satisfied with the outcome. Therefore it’s important to leave enough

time in one’s agenda when attending a meeting. (Communicaid)

English is widely spoken in Kenyan business environments and you can expect your counterparts to have

good language skills so you can conduct your business in English. A little knowledge of basic Kiswahili phrases

always leaves a good impression and can help to break the ice. (Communicaid)

Local representation is a must. (Finpro)

Exporters should visit the market on regular basis and have solid partners on ground. (Finpro)

1.4 INFRASTRUCTURE & LOGISTICS Railways: 2066 km Roads: 160 886 km (total)

Paved: 11 197 km Unpaved: 149 689 km

Waterways: The only significant inland waterway in the country is the part of Lake Victoria within the boundaries of Kenya; Kisumu is the main port and has ferry connections to Uganda and Tanzania

Airports: Total: 194 Paved: 15 Unpaved: 179

Source: CIA, World Bank, OECD

Several accomplishments are notable. More than 90 %of the population has access to GSM cell signals. A

successful public-private partnership in air transport has made Kenya's airline a top carrier in the region and

its international airport a key gateway to Africa. Institutional reforms in the power sector have reduced the

burden of subsidies on the public by approximately 1 %of GDP. (World Bank)

But the power sector continues to pose Kenya's greatest infrastructure challenge. Over the next decade,

current capacity will have to double. A second challenge is to improve the efficiency of operations at the Port

of Mombasa. Other concerns include low levels of access to household services, underfunding of road

maintenance, and negative progress on the Millennium Development Goals for water supply and sanitation.

(World Bank)

Addressing Kenya's infrastructure deficit will require sustained expenditures of approximately $4 billion per

year (20 % of GDP) over the next decade. As of 2006, Kenya needed and additional $2.1 billion per year (11 %

of GDP) to meet that funding goal. The gap could be halved through the use of more efficient technologies to

meet infrastructure targets in the transport and WSS sectors. If Kenya is unable to increase infrastructure

spending, it could nevertheless meet infrastructure targets in 18 years by eliminating existing inefficiencies in

infrastructure sectors.

KENYA report 6 (28)

1.5 GOVERNMENT & LEGISLATION Official name Republic of Kenya Conventional short form Kenya Form of state Republic Regions and districts 46 legal districts

Government

President Mwai KIBAKI Parliament: 224 seats Two coalitions, the Party of National Unity (PNU) and the Orange Democratic Movement (ODM), dominate the political party scene.

Legal system Mixed legal system of English common law, Islamic law, and customary law; judicial review in High Court

Independence 1963(from UK) Corruption perception index (2011) 154 (out of 183 countries) Source: CIA, World Bank, OECD

During the political unrest that followed the 2007 general elections, some 1500 people were killed and

300,000 Kenyans were displaced. The violence brought to the fore not only unaddressed grievances of the

Kenyan population, but also re-emphasized ethnic divisions in the country. Kenya’s two main political parties,

the Party of National Unity (PNU) and the Orange Democratic Movement (ODM) decided to forge a coalition.

PNU’s Mwai Kibaki became Kenya’s president, and ODM’s Raila Odinga took the position of prime minister.

Although tensions between both parties remain, the coalition succeeded in bringing back a sense of order in

Kenyan society. (Rabobank)

Corruption is a structural problem in Kenya. In Transparency Internationals’ Corruption Perceptions

Index, Kenya is ranked 154th out of a total of 178 countries. Corruption in Kenya is widespread, seriously

impeding governance, politics and keeping in place ethnic divisions. The government is working hard to

reduce corruption - important reforms are also included in the newly adopted constitution - but tackling the

issue remains a huge challenge. (Rabobank)

The unequal distribution of wealth continues to cause a lot of friction as well. Some 40 to 45 percent of

Kenyans live below the poverty line and it is estimated that a mere 10% of Kenya’s population earns over 40%

of Kenya’s total income. (Rabobank)

The lack of stability in Sudan and Somalia, Kenya’s neighbors, poses a further threat to Kenya’s domestic

stability. Both Sudan and Somalia have been plagued by protracted conflict for many years. Thus far, Kenya

has managed to steer clear of any spill-over effects. However, the drought that has plagued the entire region

for the last couple of years has caused major problems, as

Kenya saw a large influx of Somali refugees during the first half of 2011, heightening the risk of spillover and

exacerbating drought-related problems in Kenya as well. Nonetheless, Kenya is regarded as being an

important player in East Africa. It is responsible for many peace talks in the region and maintains close

relations with key international donors and investors. (Rabobank)

KENYA report 7 (28)

1.6 ECONOMY & TRADE World bank ranking Low Income Currency Kenyan Shilling (KES)

2009 2010 2011 GDP (current US$) (billions) $ 30,58 $ 32,20 $ 33,62 Structure of the economy (% of GDP)

- Agriculture - Industry - Services

27 % 25 % 23 % 19 % 20 % 19 % 54 % 55 % 58 %

GDP growth (annual %) 3 % 6 % 5 % GNI per capita, PPP (current intl.) $ 1580 $ 1640 $ 1720 Inflation, consumer prices (annual %) 9 % 4 % 14 %

Ease of doing business ranking 82

(out of 181) 95

(out of 178) 98

(out of 183) Source: CIA, World Bank, OECD

Although Kenya is still considered a low-income country by international standards, it is seen as one of the

most important and influential markets in the region and the country is considered one

of the leading economies in the East African Community (EAC), a customs union between Kenya, Tanzania,

Uganda, Rwanda and Burundi. Kenya’s GDP per capita is among the highest of the region at USD 1,680, but

this figure masks great disparities between Kenya’s small and rich elite and the majority, who live in poverty.

(RABOBANK)

Post-election violence in early 2008, coupled with the effects of the global financial crisis on remittance and

exports, reduced GDP growth to 1.7 in 2008, but the economy rebounded in 2009-10. GDP growth in 2011

was only 4.3% due to inflationary pressures and sharp currency depreciation - as a result of high food and

fuel import prices, a severe drought, and reduced tourism. In accordance with IMF prescriptions, Kenya

raised interest rates and increased the cash reserve in November 2011. (CIA)

Kenya's economy is dependent on export of manufactured goods to the US and Europe. As such, it is subject

to alteration in demand from those markets. (Finpro)

Although an average GDP-growth of 5% in the next years may seem quite satisfactory, it falls short of the

growth rate that is needed to bring about a sustained rise in jobs and a significant decline in poverty in Kenya

(six to seven % a year). (RABOBANK)

Poor infrastructure, widespread corruption, a large informal sector, high unemployment and an unskilled

labour force continue to complicate entrepreneurship in Kenya. (RABOBANK)

On a more positive note, structural reforms by the Kenyan government, increased regional trade, and an on-

going boom in tourism, telecommunications and banking are indications of improving economic perspectives.

(RABOBANK)

Although the services industry comprises some 62% of GDP, the vast majority (75%) of Kenyans are employed

in the agricultural sector. Kenya’s main export products are tea, horticultural products, and coffee. This

dependence on primary commodity exports makes the country vulnerable to exogenous shocks, especially

environmental pressures and volatile commodity prices. (RABOBANK)

KENYA report 8 (28)

Kenya’s economy is gradually recovering from last year’s shocks and is expected to grow at 5 % in 2012. But

the economy remains vulnerable to domestic and global shocks that may reduce growth to 4.1 %. (World

Bank)

Strong growth of the East African Community (EAC) creates opportunities for Kenya to reduce its vulnerability

from external shocks. The region grew by an average of 5.8 % in the past decade, recording the second

highest growth rate of any economic block. Foreign Direct Investment to the EAC states also increased three-

fold during the decade. But the full potential of the region remains untapped and the business climate in the

region is still poor due to non-tariff barriers and infrastructure bottlenecks. (World Bank)

1.7 KENYA & FINLAND

Finnish exports (2010) € 80.8mil (Other transport equipment and Power generating machinery and equipment)

Finnish imports (2010) € 23,2 mil (Coffee, tea, cocoa, spices) Source: Finpro

A partly Finnish owned pharmaceutical company exists in Kenya that has received funding from Finnfund.

Also Nokia has an office in Nairobi. (Formin)

Kenya is showing growing interest towards renewable energy. At the same time, product development is

needed to match the prices for lower income population. Finnish products manufactured in Kenya for lower

price would have a big demand amongst the wide numbers of poor population who live at the bottom of the

pyramid. (Formin)

Finland has an embassy in Nairobi and an Honorary Consulate in Mombasa. (Formin)

1.8 EDUCATION Literacy rate, % of people ages 15 and above, 2009 87 % Primary school enrolment, % net, 2009 83 % (83 % female, 82 % male) Higher education: 7 public Universities

17 private Universities Source: UNESCO, UNICEF

The basic school system for education in Kenya is the same as in many other western countries. It's referred

to as an 8-4-4 system of education. In Kenya, the first primary school level lasts for 8 years, and then there is

4 years of secondary school. After that, there may be 4 years of college or university for those who can afford

it, and have high enough grades. Enrolment levels drop dramatically after the primary level. Wosyanju (link)

Though stricken with poverty and hardships, the people of Kenya are generally literate. It's estimated that

approximately 90% of adult males and 80% of adult females are able to read and write. While the basics are

covered, more advanced education is not as widespread. On average, children go to school for only 9 or 10

years. Wosyanju (link)

KENYA report 9 (28)

Kenya has 7 public and 17 private universities with an enrolment of about 50,000 students. Roughly 80% are

enrolled in public universities, while 20% of the total university student population attends private

universities. Wosyanju (link)

More than 60,000 students enrol in middle-level colleges. The middle-level colleges cater to a variety of post-

secondary career courses leading to certificate, diploma, and higher diploma awards. By 1990, Kenya had

about 160 middle-level colleges; by 2000 it is estimated that the country had more than 250 of them.

Wosyanju (link)

1.9 GENERAL OPERATING ENVIRONMENT - SUMMARY

Kenyan politics will be dominated by the challenge of implementing the new constitution and holding

elections in late 2012 or early 2013. The grand coalition will remain intact until the next poll, despite

frequent, bitter in-fighting.

The president, Mwai Kibaki, must stand down before the poll, fuelling a power struggle for the leadership of

his Party of National Unity. The Prime Minister, Raila Odinga, has a good chance of becoming the next

president.

The government will remain committed to pro-market reforms, including deregulation, privatisation and

trade liberalisation, but some will be delayed because of the packed legislative agenda.

Real GDP growth is expected to rebound to 5.9% in 2012, following drought in 2011, although global fragility

poses downside risks. Growth will hover in the 5-5.6% range in 2013-16, held back by persistent structural

constraints.

After surging to an estimated 14% in 2011, inflation is forecast to retreat to 8.9% in 2012 and to remain in the

5-6% range in 2013-16, helped by prudent monetary policies and more stable global commodity prices.

After rising to 10.4% of GDP in 2011, underpinned by costlier oil, the current-account deficit is expected to

narrow gradually during the forecast period, helped by steady growth in earnings from exports, tourism and

remittances.

Two presidential candidates are among four Kenyans who are set to face prosecution by the International

Criminal Court for their alleged role in facilitating the post-election violence in 2007-08.

The High Court has ruled that the next election should take place no later than March 15th 2013, but an

earlier poll is possible if the coalition dissolves.

The Central Bank of Kenya kept the benchmark interest rate on hold at 18% in January, amid signs that

inflation is starting to abate.

Real GDP slowed sharply to 3.6% in the third quarter, owing to sluggish retailing and manufacturing in the

face of rising inflation and power shortages.

Favourable rains and a strengthening shilling have led to cuts in fuel and electricity prices, heralding a gradual

decline in inflation.

The current-account deficit soared to a record US$1.4bn in the third quarter, driven by higher imports.

KENYA report 10 (28)

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ENERGY & RENEWABLE ENERGY

2.1 General Situation in Energy Sector

2.2 Energy Policy

2.3 Renewable Energy Resources

2.4 Supply & Demand for Energy Solutions

KENYA report 11 (28)

2.1 GENERAL SITUATION IN ENERGY SECTOR 2009 1990 Total energy consumption 217,6 TWh 127,2 TWh Energy consumption per capita 5,5 MWh/capita 3,2 MWh/capita Electricity consumption 5,81 TWh 2,75 TWh Electricity consumption per capita 147 kWh/capita Access to electricity 16 % Access to electricity urban population 51 % Access to electricity rural population 4 % Energy imports (% of energy use) 17 % 18 % Electricity imports (% of electricity use) 0,16 % Power production capacity 1 621 MW 723 MW Hydro power production capacity 747 MW 498 MW Electricity production 6,88 TWh 3,23 TWh Hydro electricity production 2,85 TWh 2,54 TWh Share of population using solid fuels 75 %

Fossil fuels % of total energy 17,5 % 16,8 % UN data, IRENA, World Bank, IEA

Major sources of commercial energy in Kenya are petroleum, geothermal and hydro energy. 75 % of population use

traditional solid fuels such as fuel-wood and charcoal in residential sector for heating, light and cooking. The

residential sector contributed 81 % of energy consumption in 2009. Further development of the use of biomass and

extension of national electricity grid would reduce this consumption greatly. Electricity demand in the country is

significantly rising mainly due to the accelerated productive investment and increasing population.

Self-sufficiency

17 % of energy used in Kenya was imported in 2009. Only 0.16 % of electricity was imported.

To address the energy crisis, Kenya has increased the import of electricity from Ethiopia, which offers cheap

prices and, since 2009, has good hydro-electric sites.

Kenya relies heavily on imported petroleum for local consumption. In 2007, Kenya imported 57,000 bbl/day

of crude oil. The primary energy supply is dominated by indigenous biomass use, which mainly supplies

households and SMEs in the country. Biomass supply is currently viewed as unsustainable.

Kenya has three oil refineries. Two of them are in Mombasa and one in Nairobi. Kenya’s refineries supplies

products to the Kenyan market, Uganda and Northern Tanzania

(Reegle Country Profile), (MBendi)

Electricity availability

16 % of the population had access to electricity in 2009. Urban electrification level was 51% and rural

electrification level 4%.

The national grid is operated as an integral network linked by a 220 kV and 132 kV transmission network.

There is a limited length of 66 kV transmission lines.

(Reegle Country Profile)

KENYA report 12 (28)

Electricity capacity

Kenya has weak and restricted transmission and distribution network. Kenya’s electricity mix is dominated by

hydro generation (over 50%) and thus highly vulnerable to weather conditions and climate change. The

climatic conditions of 1998–2000 and 2008–2009 curtailed hydropower generation and led to severe energy

shortages which culminated into power rationing.

Currently the electricity demand is 1,191 MW against an effective installed capacity of 1,429 MW under

normal hydrology. The peak load is projected to grow to about 2,500MW by 2015 and 15,000 MW by 2030

which means huge changes in energy sector. Government has formulated strategies whose objectives are to

rapidly expand installed electricity capacity, expand and upgrade the transmission and distribution networks,

and develop renewable energy sources: geothermal, solar, wind, biomass and small hydropower

(Reegle Country Profile)

Energy efficiency

In Kenya, it is estimated that between 10-30% of the primary energy input is wasted (IEEN, 2002).

Significant opportunities exist for improving energy in all sectors. Food, beverage and tobacco, paper and

paper products, chemicals, petroleum, rubber and plastic products are among the major consumers of

modern energy. Industrial sector using steam has potential for 25 % energy savings by improving the

efficiency of steam boilers, better steam distribution, and the use and recovery of waste heat and

condensate. Industrial motor system has potential to save 20-50 per cent through. The production of energy

efficient charcoal and fuel-wood stoves has provided significant employment opportunities in urban and rural

areas. For example, the ceramic jiko, an energy efficient charcoal stove which are produced by over 200

businesses, the bulk of which are informal sector manufacturers.

(Reegle Country Profile)

KENYA report 13 (28)

Source: IEA Country Energy Balance, 2009

KENYA report 14 (28)

2.2 ENERGY POLICY Energy policy publications Renewable energy development strategy

mentioned in various publications Organizations responsible for energy policies The Ministry of Energy Targets to increase use of renewable energy Double installed renewable capacity by 2012,œ

5,000 MW of geothermal capacity by 2030 Subsidies/ Incentives for Renewable Energy Feed-in Tariffs for renewables

Renewable energy development strategy is consist of

Least Cost Power Development Plan (LCPDP) (link)

Rural Electrification Master Plan (link)

Sessional Paper on Energy 4/2004 (link)

The Energy Act 2006 (link)

The Feed-in-Tariff Policy (link)

The Kenya National Climate Change Response Strategy (link)

Gender Audit of Energy Policies and Programmes in Kenya 2007 (link)

Kenya Vision 2030 (The National Economic Development Blueprint) (link)

o According to LCPDP Kenya’s electricity peak demand will increase from 1,302 MW in 2011 to 15,026

MW by 2030, in line with the Vision 2030 which envisages energy as a key enabler for economic

growth across the country.

o In Rural Electrification Master Plan the Government seeks to have 100% connectivity across the

country through grid extensions and off-grid systems.

o To meet the increased electricity demand there are targets to build new capacity 5,110 MW from

geothermal, 1,039 MW from hydro, 2,036 MW from wind, 3,615 MW from thermal, 2,000 MW from

imports, 2,420 MW from coal and 3,000 MW from other sources.

o The investments required for generation, transmission and distribution to meet this demand are

enormous.

o The Sessional Paper No. 4 of 2004 and Energy Act of 2006 are the policy and legal frameworks for

energy development in Kenya respectively.

o The Kenya Vision 2030 Long-term development strategy, which aims to create a globally competitive

and prosperous economy with a high quality of life. It envisages that Kenya will be transformed into

a newly-industrializing, middle-income country providing high quality life to all Kenyans in a clean

and secure environment. Simultaneously, the strategy aspires to achieve the Millennium

Development Goals (MDGs) for Kenya by 2015. Infrastructure, including energy, is identified as one

of enablers of the envisaged socio-economic transformation of the economy with a vision to provide

cost-effective, world class infrastructure facilities and services.

(Reegle Country Profile)

KENYA report 15 (28)

Subsidies/ Incentives for Renewable Energy

The Feed-in-Tariffs Policy on Renewable Energy (link) (FiT introduced in 2008 and revised in 2010) has been

formulated to promote renewable energy solutions (incl. wind, biomass, small hydros, geothermal, biogas

and solar and municipal waste energy). Under the FiT system, investment security and market stability for

investors in electricity generation from RES is provided whilst encouraging private investors to operate their

power plants prudently and efficiently to maximize returns. The Government intends to set up a Green

Energy Facility to pool donor contribution which will help firms and other institutions to generate clean

energy and manufacture energy-efficient appliances. The Facility will lend funds to viable projects at

concessional rates. (Reuters)

The Government has zero-rated import duty and removed Value Added Tax (VAT) on renewable energy,

equipment and accessories(Reegle Country Profile)

The ERC has prepared Solar Water Heating Regulations (Reegle Country Profile)

Other

The Climate Investment Funds (CIF) (link) have approved funding for Kenya Support development of Kenya’s

multiple renewable energy resources to enhance energy security, improve access to electricity, reduce the

cost of supply, and bring substantial economic, social, and environmental co-benefits to local communities.

(Reegle Country Profile)

2.3 RENEWABLE ENERGY RESOURCES Significant renewable energy resources Wide renewable energy resources Proven oil reserves 0 BBL (estimated 2011), discoveries made lately

Source: OPEC

With average altitudes ranging from 1500m to 1700m, Kenya is rich in wind and solar energy resources.

Solar energy

Solar energy potential in Kenya is high. Kenya receives daily insolation of 4-6kWh/m2. Solar utilization is

mainly for photovoltaic systems (PVS), drying and water heating. The Solar PV systems are mainly for

telecommunication, cathodic protection of pipelines, lighting and water pumping. Current installed capacity

is approximately 4 MW. There are also approximately 140,000 solar water heating systems currently installed

in the country.

In the Nairobi suburb Kibera, young Kenyans are producing small solar panels. These can generate enough

electricity to operate a radio, and charge batteries or mobile phones. They sell them for $US5, while the

average income in Nairobi is around $US1 a day. An estimated 100,000 solar home systems have been

installed in Kenyan houses. The majority of these consist of a small 12-14 watt photovoltaic panel.

KENYA report 16 (28)

Wind energy

Kenya has average estimated wind speeds of 3-10m/s. There is large potential for wind energy production.

Highest potential is in northern and eastern part of the country. Kenya’s wind installed capacity is 5.1 MW

operated by KenGen at the Ngong site. It is estimated that about 300-350 wind pumps have been installed.

High capital cost, lack of sufficient wind regime data and potential areas locating far away from exciting grid

are some of the barriers affecting the exploitation of wind energy resource.

Biomass energy

Biomass density in Kenya is moderate. There is potential to produce biomass for modern energy production.

The Government has identified substantial potential for power generation using forestry and agro-industry

residues including bagasse. The total potential for cogeneration using sugarcane bagasse is 193MW. Mumias

Sugar Company, private entity, generates 35MW out of which 26MW is dispatched to the grid. However,

opportunities by other sugar factories have not been exploited.

The FiT policy provides for biomass generated electricity with a power fixed tariff not exceeding 8.0 US Cents

per Kilowatt-hour of electrical energy supplied in bulk to the grid. Under this policy, an 18MW cogeneration

project using cane bagasse at the coastal region of Kenya has been approved.

Geothermal energy

Geothermal resources in Kenya are located within the Rift Valley with an estimated potential of between

7,000 MWe to 10,000 MWe spread over 14 prospective sites. Geothermal is reliable way to produce energy

for it’s not affected by drought and climatic variability and it doesn’t need transported fuels. It is suitable

source for base load electricity generation in the country.

The current installed capacity in the country is 198 MW with 150 MW operated by KenGen and 48 MW by

OrPower 4, both in the Olkaria Block. An additional 280 MW, scheduled for commissioning in 2013, is also

under development in the same block. Drilling is on-going in the Menengai Field for Phase I of 400 MW,

whilst initial project development activities have commenced for the development of 800 MW in the Bogoria

– Silali Block. These are geared towards meeting the Vision 2030 Medium Term target of 1,600 MW by 2016

and eventually 5,000 MW by 2030.

Hydropower

Kenya has large potential for hydro energy. Kenya’s drainage system consists of five major basins: Lake

Victoria, Rift Valley, Athi/Sabaki River, Tana River and Ewaso Ng’iro North River. These basins contain the bulk

of the country’s hydro resources for power generation. Kenya’s total installed large hydropower capacity is

764.5 MW. The potential for small, mini and micro-hydro system, with capacities of less than 10MW each, is

estimated at 3,000MW nationwide. Installed grid connected small-scale hydro-electric projects contribute

only about 15.3 MW, though there are several other small hydro schemes under private and community

generation especially in the tea estates across the country which are not grid connected.

(Renewable Energies in Africa (link), Reegle Country Profile)

KENYA report 17 (28)

2.4 SUPPLY & DEMAND FOR ENERGY SOLUTIONS

Households

Heat for cooking and warm water

Power for lighting, communication and electronics

Commercial and public services - including healthcare, education, administration, business

Power, heat and cooling

Infrastructure - including water supply, sanitation, communication, waste management

Power, heat and fuels

Traffic and transportation

Fuels and power for vehicles

Agriculture

fuels for vehicles

Fertilizer

Power and heat for processing crop

Industry

Heat, cooling and power

Tourism - including resorts, lodges etc.

Heat, cooling, electricity, warm water

Competition

There is some level of competition in electricity generation. KenGen generates over 70% of the country’s

power output, and is in direct competition with six independent power producers, who between them

produce about 30 % of the country’s electric power. KPLC has monopoly in the distribution and transmission

of electricity in the country.

Despite the liberalization of the oil industry, there are only a few companies actively trading due to tariff and

non-tariff barriers to entry.

Challenges affecting on renewable energy market development

o Insufficient data on renewable energy (RE) resource availability, potential and utilization

o Lack of coordination among RE stakeholders and regulatory authorities

o Lack of specific RE Policy, regulations and technical standards

o Limited trained and qualified personnel to implement and support RE initiatives and technologies

o Lack of appropriate and affordable financing option or knowledge thereof

o Maintaining competitive, efficient and equitable tariffs especially for green energy projects

o Attractive incentives to mobilize investments in energy infrastructure projects

o Delivering committed projects on time and within budget.

(Reegle country profile)

KENYA report 18 (28)

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ENVIRONMENTAL GOVERNANCE

3.1 Description of Environmental Governance

3.2 Environmental & Social Requirements for Projects

KENYA report 19 (28)

3.1 DESCRIPTION OF ENVIRONMENTAL GOVERNANCE

The Ministry of Environment and Natural Resources in Kenya has a mandate to “monitor, protect, conserve and

manage the environment and natural resources through sustainable exploitation for socio-economic development

aimed at eradication of poverty, improving living standards and ensuring that a clean environment is sustained now

and in the future. The Ministry is studying with UNIDO waste to energy possibilities related to solutions for waste in

general and hyacinth infestation at Lake Victoria Basin. Otherwise the Ministry of Energy is responsible for renewable

energy.

The National Environment Management Authority (NEMA) is responsible for the implementation of policies related to

the environment. NEMA's functions include identifying projects and programmes, for which environmental audit or

environmental monitoring must be conducted, monitoring and assessing activities to prevent environmental

degradation, surveys and research. NEMA issues a wide range of environmental licences and permits. NEMA has field

offices; provincial and district environment committees, in eight provinces and in some seventy localities. (Nema

2012)

According to Kenya’s State of the Environment Report (2012, 196), environmental governance remains largely

incoherent despite harmonization efforts. Environmental management is characterised by a range of sectorial

strategies, instruments and tools. The report states that it “will be mandatory to improve environmental governance,

with specific focuses on compliance and enforcement as well as the participation of all stakeholders (Ibid. 198).”

3.2 ENVIRONMENTAL & SOCIAL REQUIREMENTS FOR PROJECTS

The Environmental Management and Coordination Act (1999) lists the projects that need to do environmental impact

assessment (EIA). The projects most relevant for the renewable energy sector are listed below:

General

an activity out of character with its surrounding;

any structure of a scale not in keeping with its surrounding;

Major changes in land use.

Forestry related activities including

timber harvesting;

clearance of forest areas;

Reforestation and afforestation.

Agriculture including

large-scale agriculture;

KENYA report 20 (28)

use of pesticide;

introduction of new crops and animals;

use of fertilizers;

Irrigation.

Electrical infrastructure including

Electricity generation stations;

Electrical transmission lines;

Electrical sub-stations;

Pumped-storage schemes.

Waste disposal including

Sites for solid waste disposal.

The Environmental (Impact Assessment and Audit) Regulations from 2003 specify the EIA procedure. The EIA must

include both environmental assessments and public participation. Public participation includes information provision

and at least three public hearings. Separate social impact assessments seem to be done mainly for large international

projects, like the Lake Turkana Wind Power Project.

One noteworthy aspect in the EIA regulations is that individuals and firms wishing to do EIA studies in Kenya need to

be registered at NEMA. For registration, they need to fulfil criteria listed in the Environmental Regulations. There is

also a fee for registration. NEMA provides information on the EIA process on its website and also publishes EIA

reports.

A Kenyan EIA expert has criticised the EIA process for the insistence of NEMA that EIA reports must include approved

drawings and project costs. The EIA should evaluate options for implementing the project, but if the finances and final

plans must be made before the EIA, it seems that EIA will be of little use. According to the criticism, critical

environmental issues have also arisen from projects for which an EIA has been approved. (Amimo 2011) Similarly,

Okello et.al argue that the EIA legal framework in Kenya is enabling, but the public is still inadequately aware of their

role and are unsatisfactorily involved in EIA practice. There are also problems related to access to information and

language (Okello et.al 2009, 224 – 225).

KENYA report 21 (28)

- 4 -

ORANIZATIONS, SOURCES, REFERENCES

4.1 Organizations & Funding Possibilities

4.2 Sources of Information, References & Links

KENYA report 22 (28)

4.1 ORGANIZATIONS & FUNDING POSSIBILITIES

ENERGY

The Ministry of Energy (link)

Is in charge of development and implementation of energy policy. In addition, the Ministry is partly

responsible for the operation of the state-owned utilities in the country, and the Rural Electrification

Program

The Renewable Energy Department under the Ministry of Energy has the mandate of promoting and

developing appropriate renewable energy technologies. It also plays a lead role in renewable energy policy

formulation, review and analysis.

Rural Electrification Authority (REA)

Under the Energy Act 2006, the REA is mandated to develop and update the rural electrification master plan

and promote of the use of renewable energy sources. The authority reports to the Ministry of Energy.

Geothermal Development Company (GDC)

Realizing the need to reduce the long gestation periods in the development of geothermal projects, the

Government has set up the GDC to undertake integrated development of geothermal through initial

exploration, drilling, resource assessment and promotion of direct utilization. The GDC is 100% owned and

funded by the Government. By undertaking the initial project activities, GDC will absorb the attendant risks

associated with geothermal development and therefore open up opportunities for both public and private

participation.

The Energy Regulatory Commission (ERC) (link)

Came into effect in July 2007, was formerly the Electricity Regulatory Board established under the Electric

Power Act of 1997. The ERC is responsible for the economic and technical regulation of electric power,

renewable energy and downstream petroleum sub-sectors.

Kenya Electricity Generating Company (KenGen) (link)

The leading electricity generator providing over 70% of the effective generating capacity to the national grid.

The company is listed on the Nairobi Stock Exchange with 70% shareholding in Government and 30% private.

Currently six independent power producers (IPPs) are operating in the country contributing approximately

30% of the effective generating capacity to the national grid.

Kenya Power and Lighting Company (KPLC) (link)

The national power utility responsible electricity distribution and supply. It purchases power in bulk from

KenGen and IPPs currently in operation through Power Purchase Agreements approved by the ERC.

KENYA report 23 (28)

Kenya Electricity Transmission Company Ltd (KETRACO)

is a corporation wholly owned by the Government and mandated to plan, design, construct, own, operate

and maintain high-voltage (132kV and above) electricity transmission infrastructure that will form the

backbone of the national transmission grid and regional interconnection.

Kenya Association of Manufacturers (KAM) (link)

Provides training and energy audits on energy efficiency through the Centre for Energy Efficiency &

Conservation (CEEC). KAM also manages the annual Energy Management Award (EMA), which recognizes

major and sustainable gains in energy efficiency, energy and cost reductions.

OTHER UNEP (link)

Has a country office in Kenya and operates the Kenya Country Programme. The programme includes climate

change, disasters and conflicts, ecosystem management, environmental governance, harmful substances and

hazardous waste, and resource efficiency.

Global Environment Facility (GEF) (link)

Operates also in Kenya.

GEF funded projects concentrate mostly on biodiversity and climate change (adaptation).

UNDP (link)

Is active in Kenya with five priority areas:

o Poverty Reduction, Democratic Governance, Peace Building and Conflict Resolution, Energy and

Environment, and Disaster Risk Reduction.

o One of the sectors on Energy and Environment is Sustainable Energy Services that supports

development and implementation of frameworks for integrating energy services and efficiency in all

sectors for the achievement of the MDGs. The support also assists the poor to develop renewable

energy generation projects.

The African Development Bank (AfDB) (link)

Has several projects in Kenya. One of the most recently approved ones is the Menengai geothermal project,

designed to produce electricity for 500,000 households and displace two million tons of CO2 per annum.

The World Bank (link)

Has 24 active projects in Kenya. 5 projects are directed to carbon offsetting and several others are related to

environmental and energy issues. WB has an office in Nairobi.

KENYA report 24 (28)

Clean Development Mechanism (CDM) (link)

There are five CDM projects in Kenya. Two of them are related to the large Lake Turkana wind power project,

two are geothermal projects, and one is a hydropower project. Carbon offsetting is planned, for example, to

flower farms, which may in the future produce biogas from the farm waste. Also solar energy has been tested

at flower farms.

Nordic Development Fund (link) and Nordic Climate Facility

Implement programs in Kenya.

The Energy and Environment Partnership Programme for Southern and East Africa (EEP-SE&A)

Includes Kenya.

Finnish development cooperation

Kenya is also one of long term partners for Finnish development cooperation. The cooperation focuses on

long-term development of the rural areas, the natural resources sector and the governance and justice

sector. Finland has an embassy in Nairobi.

Kenya National Chamber of Commerce and Industry (KNCCI) (link)

Activities include business services, diplomatic services and government representation. Located in Nairobi.

Universities

There are both public and private universities in Kenya, as well as various vocational and trade schools.

For example, Kenyatta University in Nairobi has been active in the field of renewable energy and has an

Institute for Energy and Environmental Technology.

The NGO's Coordination Board (link)

Was established by an Act of Parliament in 1990. The main reason for the creation of the Board was to

streamline the registration and coordination of NGOs. The list of all registered NGOs is available at the

website.

The National Council of NGOs (link)

Exists to preserve, strengthen and promote voluntary action in pursuit of a more just and equitable society.

The Council is a forum for all voluntary agencies.

KENYA report 25 (28)

4.2 SOURCES OF INFORMATION, REFERENCES & LINKS

Kenya National Chamber of

Commerce and Industry Trade Economy Link

Rabobank An international financial service provider with a

wide range of products and services Economy Link

Communicaid

Communicaid is a culture and communication skills consultancy. They enable their clients to create profitable international relationships by

building cultural bridges that enhance understanding and establish trust.

Society Link

The system of education in Kenya. Chris Wosyanju Indiana University-Purdue

University Indianapolis Education Link

Kenyatta University Institute for Energy and Environmental Technology Education Link

CIA Central Intelligence Agency General Link

Finpro Maailmanlaajuisesti toimiva organisaatio, rakentaa

suomalaisten yritysten kasvua ja menestystä kansainvälisillä markkinoilla.

General Link

The World Bank General Link

UNEP United Nations Environment Program General Link

The Energy and Environment Partnership Programme for

Southern and East Africa Project funding General Link

The NGOs Co-ordination Board NGO Information General Link

The National Council of NGOs NGO Information General Link

Foreign & Commonwealth office Britain’s diplomatic service and represent the

United Kingdom's government overseas Government Link

Investment advice Ministry of Foreign Affairs of

Finland Government Link

International Tax Deloitte Taxation highlights in Kenya 2012 Business Link

Country Energy Information Developing Renewables Business Link

Doing Business World Bank Business Link

Economic Outlook AfDB, UN, OECD Economy Link

Country Risk Classification Finnvera Economy Link

Corruption Perceptions Index Transparency International Society Link

Country BTI Transformation Level BTI Group BTI analyzes and evaluates the quality of

democracy, a market economy and political mgmt. in 128 developing and transition countries

Economy Link

International Energy Association General Link

Renewable Energy Country Profiles International Renewable Energy

Agency (IRENA) General Link

Open Energy Info Country profile, energy maps, tools, programs,

organizations & institutions General Link

KENYA report 26 (28)

Least cost power development plan 2011-2031

Ministry of Energy Government Link

Rural electrification programme in Kenya

Faisal Abass Rural Electrification Authority Government Link

Sessional paper on energy 2004 Ministry of Energy Government Link

The Energy Act 2006 Government Link

Feed-in-tariffs policy on wind, biomass, small-hydro, geothermal,

biogas and solar resource generated electricity

Ministry of Energy Government Link

National Climate Change Response Strategy

Ministry of Environment and

Mineral Resources Government Link

Gender audit of energy policy and programmes in Kenya

Ministry of Energy Government Link

Kenya Vision 2030 Ministry of Planning and National

Development Government Link

Kenya plans open-ended green energy fund: government

Reuters Article Government Link

Climate investment funds AfDB Environmental

Governance Link

The Ministry of Environment and

Natural Resources

Environmental Governance

Link

Energy Regulatory Commission Regulates the electrical energy, petroleum and related products, renewable energy and other

forms of energy Government Link

KenGen Leading electric power generation company in

Kenya, producing about 80 % of electricity consumed in the country

Business Link

Kenya Power Public company which transmits, distributes, and

retails electricity throughout Kenya Business Link

Kenya Association of

Manufacturers Business Link

Which Way Environmental Impact Assessment in Kenya?

Amimo Sam Media for Environment, Science,

Health & Agriculture

Environmental Governance

Link

State of the environment report National Environment

Management Authority Kenya

Environmental Governance

Link

National Environment

Management Authority Kenya

Environmental Governance

Link

The doing and un-doing of public participation during environmental

impact assessment in Kenya

Okello, Beevers, Douven,

Leentvaar Ingenta Connect

Environmental Governance

Link

Country Energy Profile & Information

Reegle Clean energy info portal General Link

Renewable Energies in Africa European Commission, Joint

Research Centre Government Link

Global Environment Facility The GEF unites 182 countries in partnership with intl. institutions, civil society organizations, and the private sector to address global env. issues

Environmental Governance

Link

Clean Development Mechanism United Nations Framework

Convention on Climate Change

Environmental Governance

Link

The Energy and Environment

Partnership Africa Project funding Business Link

MBendi Economy, Risks, Industry, Business, Energy and a

lot of other information Business Link

African Development Bank

(AfDB) Contains structured and analysed information on

economic, political and social status General Link

KENYA report 27 (28)

Directory of Development

Organizations Contains list of development organizations in the

country Society Link

United Nations Development

Programme (UNDP) Un-political information on country's status on

environmental, social and financial situation General Link

Oil and Gas Profile A Barrel Full Business Link

Eastern Africa Power Pool (EAPP) Membership of EAPP comprises public utilities,

companies in charge of power generation, transmission and/or distribution in East Africa

Business Link

Comparing EIA procedures in KEN, TAN, MOZ and EU

Rebelo, Guerreiro Paper presented at the 26th annual conference of International Association for Impact Assessment

Environmental Governance

Link

Energy Systems: Vulnerability - Adaptation - Resilience (VAR) 2009

Paul Kirai Helio General Link

African Energy Supplying solar, wind and power backup

equipment on a wholesale basis Business Link

Alternative Energy Africa Information portal about alternative energy in

Africa Business Link

Inforse-Africa International network for sustainable energy Business Link

African Wind Energy Association Business Link

Renewable Energy World Conferences & Expo in Africa Business Link

Renewable Energy Africa Business Link

How We Made It in Africa Insight into business in Africa Business Link

Cleantech Knowledge Hub Business Link

The World Council for Renewable

Energy Business Link

International Network for

Sustainable Energy Business Link

Herana Gateway African higher education research Education Link

African Rural Energy Enterprise

Development Community-based organization developing a

strategy for improved access to energy Government Link

African Center for Economic

Transformation

An economic policy institute supporting the long-term growth with transformation of African

economies Government Link

Nordic Development Fund Project funding Business Link

Africa and Europe in Partnership Government Link

The Foundation for the Development of Africa

Non-profit organization supporting sustainable development

Government Link

European Biomass Industry

Association Business Link

Global Network on Energy for

Sustainable Development GNESD is a knowledge network facilitated by UN

Environmental Programme Government Link

Global Village Energy Partnership GVEP works with local businesses in developing countries to increase access to modern energy

Business Link

World Resources Institute WRI works with governments, companies, and civil society to build solutions to urgent env. Changes

Government Link

KENYA report 28 (28)

The World Bank Economy Link