Dismal allocation to renewable energy sector

Renewable energy players are disappointed that the allocation made to the sector is dismal and may further derail Kenya’s efforts to tap power from renewable resources like solar, wind, and biofuels.

Investors in the sector were expecting increased funding would create demand for equipment and services and add to the private sector’s efforts to help the country cover electricity and other energy deficiencies.

The renewable energy sector has been allocated Sh100 million in the development budget mainly for “wood fuel resources development”.

Its recurrent expenditure has been increased from Sh28 million in 2008/09 to Sh60 million.

Nowhere do the estimates mention allocation to wind, solar, or biofuels indicating that the government has decided to leave development of these aspects to the private sector.

Even for the geothermal energy which has been allocated Sh7 billion, the amount is still less by Sh200 million compared to the previous allocation.

Simon Mwacharo Guyo, the director of Craft Skills which makes wind turbines using local materials, said the sector requires at least Sh400 million to roll.

“Setting up a small scale wind turbine plant would cost Sh25 million, so you can compare that with the Sh100 million national allocation,” he said.

Sector players expected tax incentives and subsidies to increase investments in the industry, which has the potential to close the energy gap needs of the country and improve rural livelihoods.

Biofuel, wind and solar energy investors as well as those investing in projects with the sole purpose of participating in the global clean energy trade (carbon trade) said tax concessions, especially on equipment, are crucial.

Ms Lorna Omuodo, the head of Vanilla Development Foundation, said the government should have taken the budget presentation as an opportunity to increase its commitment to subsidising production to make Kenya a major biofuel producer.

Biofuel has the potential of reducing the country’s oil import budget, reducing pollution, and offering a livelihood for farmers in arid and semi arid areas through growing of biofuel crops like jatropha and rapeseed.

Crops like jatropha which do well in arid areas are seen as major gains for the country because they will transform the currently vast lands in these areas to be economically productive.

“Most African governments remain asleep. No allocations are made to research in these areas,” said Ms Omuodo.

Although Kenya has taken several steps in encouraging biofuel production, like developing a strategy paper for biofuel that will soon be launched by President Kibaki, the general feeling among players is that it is more of a “wait and see attitude.”