Kenya moves closer to power supply deal with Ethiopia

Kenya and Ethiopia have resolved differences over the electricity import deal that stalled two years ago amid opposition by environmental groups to the construction of a new hydropower dam in the neighbouring state.

The move adds a new impetus to Kenya’s quest to turn to its northern neighbour for additional electricity to fix an energy supply shortage that has deepened in the last three years with rapid economic growth and erratic weather.

Top Ministry of Energy officials are this morning expected to meet their Ethiopian colleagues in Nairobi for talks on a deal that could see Kenya get hooked to Ethiopia’s national power grid.

Energy permanent secretary Patrick Nyoike says the parties have cleared major obstacles to the 400 Kilovolts international power transmission line.

The 1200 kilometer power grid is to be built at a cost of Sh29 billion.

“Environmental issues have been cleared and we are meeting the Ethiopians tomorrow (today) to finalise the details,” said Mr Nyoike on the telephone.

The African Development Bank (ADB), the lead financier of the project, is also set to meet environmental activists later this week.

Ethiopia is the only Eastern African country with a sufficient power supply backed by a reserve margin of more than 30 per cent – double the recommended margin of 15 per cent.

The Horn of Africa country is expected to realize a generation capacity of 2,000 mega watts by the end of this year once the three new hydropower projects it is building are complete and intends to export the surplus to neighbouring states.

Today’s meeting is expected to pave the way for construction to begin mid next year and enable Ethiopia to export electricity to Kenya in 2012.

Energy experts see the project as critical to Kenya’s long term energy security needs with the potential to add more than 500MW to the national grid at a cost of Sh29 billion “within the shortest time possible.”

It takes at least seven years to develop new hydropower sources even with ready financing. Geothermal power, which has proved to be Kenya’s viable alternative energy source, costs more and much longer (at least 10 years to develop).

Heavy reliance on hydropower at a time when weather patterns are becoming unpredictable has only deepened Kenya’s energy crisis that began in earnest two years ago as economic growth rose past six per cent per annum without a corresponding growth of new energy sources.

Kenya was initially set to import power from Ethiopia’s contentious and biggest hydropower project, Gibe III —with a potential power generation capacity of 1800MW, but the plan was put on hold after activists raised concerns over the possible environmental and social impact of the new dam forcing financiers to withhold their support.

Delay of Gibe III saw Kenya and Ethiopia governments open negotiations for a possible electricity supply deal from Ethiopia’s national power grid upon commissioning of the Gibe II hydroelectric dam that is currently undergoing trials.

Converting stations

Kenya and Ethiopian governments are expected to meet the project financier, the World Bank, early next year for a $380 million grant to be spent on construction of a transmission that will interconnect the two national power grids and facilitate the power export plan.

In a joint funding proposal presented to the World Bank, Kenya and Ethiopia have indicated that the project involves the construction of a 1200 km power line with the capacity of transmitting 500 kilovolts between Sodo sub-station (Ethiopia) to metropolitan Nairobi.

It will also include construction of two converting stations to transport 2,000 MW from Southern Ethiopia to the Eastern Africa Power Pool that could see Ethiopia export electricity to as far as South Africa where an acute power shortage has persisted since 2007.

Kenya has been inching closer to a power deficit in the past three years forcing the country to rely on expensive thermal power generators to meet its short term needs as it develops additional sources.

Failure by the October-December rains to replenish the hydro power dams has left consumers with the reality of paying inflated bills till the onset of long rains early next year.

Last week, KPLC warned consumers that they will this month pay a record Sh7.90 for a unit of power to finance the running of diesel powered plants across the country.

Dr Eric Aligula, an energy expert, says interconnection is the least cost solution for power supply while hydro is the cheapest source of electric power.

Geothermal is the most renewable form of energy.

According to the Bank’s economists, Kenya is among African countries where the hydro electric generation is least exploited.

Ms Vivien Foster, an economist with the bank, notes that power trade between countries with surplus power to those with deficits can help to reduce current high power costs across the continent.

Apart from Ethiopia, other potential exporters with cheap hydro sources include DRC and Guinea.

“The Congo River has vast hydro potential enough to meet requirements for all the East and central African economies,” said Dr Aligula.

The low quality supply of electricity supply throughout the country is largely due to neglect and stagnation in upgrade and expansion of the transmission grid.

Still, the ageing KPLC electricity distribution infrastructure has been cited among the factors that are hurting the country’s electricity security through high system losses or power leakages.

Ms Foster recommends state subsidies for wider access through more connections than incentives on the tariff regimes.

Kenya has an electricity capacity of 1,215 megawatts, compared with a peak demand of 1,150, leaving a reserve capacity of less than the 15 percent recommended international average.

Current supply is also of poor quality due to neglect and stagnation in upgrade and expansion of the transmission grid.

Overall, some Sh32 billion is to be spent constructing 2,300 kilometers (1 429 miles) of 132 kilovolt power lines across the country by 2015.

Also, Kenya’s electricity access although fast rising, still remains low at 18 percent; and is planned to increase to 40 percent by 2020, which will require the timely development of new generating plants.