In this special four-part series, Alternative Energy Africa will look at Kenya’s feed-in tariff and the revisions the government is making to create a more investor friendly climate for the country’s renewable energy sector.
Many people believe that South Africa was the first African nation to enact a feed-in tariff (FIT) policy, but nearly a year prior to South Africa’s highly publicized FIT in 2009, Kenya had actually put into place its own FIT and Mauritius has over a period of nearly two decades, developed a FIT policy on co-generated power. In 2006, the Kenyan Parliament began hearings held in connection with the UN Climate Conference with later meetings resulting in the introduction of a private members bill to Parliament in 2008.
FIT systems, as defined by Energy, Environment, and Development Network for Africa (AFREPREN/FWD), are incentives for renewable energy generation including solar, wind, and other renewable energy sources that have a guaranteed market for the electricity produced ensuring a return investment. Afrepren also noted in its September 2009 paper “The Role of Feed-in Tariff Policy in Renewable Energy Development in Developing Countries: A Toolkit for Parliamentarians” that incentives have been successful for African nations even encouraging interest in other countries across the continent including Uganda, South Africa, and Tanzania.
best replica watches Financed by the Kenyan government, the FIT stipulates the price that the country’s power utility Kenya Power and Lighting Co. should buy the electricity generated from renewable energy sources with limited financing implications. AFREPREN/FWD said that while the amount of planned RE development under the system is significant – about 42% of the current national installed capacity – the legal status of the program is at risk of not reaching its goal of 500MW of renewable energy. The organization said in its report, “The FIT policy should be transformed into an Act of Parliament to ensure that any changes to its original intentions and design are only made after a significant amount of scrutiny and deliberations in Parliament.”
Kenya’s FIT is still in its early stages and results are undetermined, but Mauritius proves that it is feasible that an oil-importing country like Kenya to have the ability to reduce its dependency on crude imports with a successful FIT in place. The initial FIT in Kenya covers wind (up to 50 MW), small hydro (up to 10 MW), and biomass (up to 40 MW). The government released its first revisions in January 2010 detailing that two power purchase agreements (PPAs) had been signed while negotiations were ongoing for the establishment of a PPA with another four developers. And an additional 12 projects are on the verge of completing feasibility studies. However, developers are complaining that they are unable to undertake projects at the set tariff rates as a result of the increase in generating costs, equipment, and financing. The Ministry of Energy said, “It is apparent that to attract private investment, a realistic review of the tariffs needs to be undertaken, while also widening the scope to cover all the other green energy sources, particularly geothermal.”
It added, “The FIT policy provided for review every three years from the date of publication; however, due to the reasons given, it has been deemed necessary to undertake a mid-term review to facilitate accelerated investment in generation from renewable [energy] sources, as well as incorporate other renewable energy sources namely geothermal, biogas, and solar.”
Alternative Energy Africa will continue its special report analyzing Kenya’s FIT and the possibilities it entails for the East African country as well as the continent.
Read more from Alternative Energy Africa’s special series:
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