Energy security is key to growth

High energy costs continue to be a major impediment to the expansion of manufacturing sector in Kenya.

The situation has been worsened by unreliable supplies, resulting in huge losses in the manufacturing industry.

Due to the key role provision of energy plays, the cost of the products from a manufacturing process will be related to the cost of energy, all other factors such as efficiency of production, cost of labour and raw materials notwithstanding.

The higher the cost of energy is, the higher the price of the products will be.

The cost per unit of electricity in Kenya is high and volatile depending on the amount of thermal energy in the system which is susceptible to changes in international oil prices.

In 2011 for instance industry witnessed an increase in prices up to 60 per cent from January to December 2011. Over 60 per cent of generated energy in the national grid is used in manufacturing enterprises.

Kenya currently generates about 1,400 megawatts (MW) of electricity. Additional capacity in the pipeline could increase this by 500MW in the next 3 years if projects are implemented on time. But this is not enough.

The current electricity demand is 1,191 MW against the effective installed capacity of 1500 MW. The peak load is anticipated to grow to about 2,500 MW by 2015 and 15,000 MW by 2030.

To meet this growing demand, the projected installed capacity should increase gradually to 19,200 MW in the next two decades.

It is prudent therefore that any energy policies that are proposed must be aligned to the industrialisation policies as well as Kenya’s Vision 2030 if we are ever to unlock our overdependence on imported goods.

It is estimated that flagship projects outlined in Vision 2030 will require an estimated 42,700 MW, meaning that there is need for a lot of investment for the country to be energy secure.

Weak transmission and distribution network, low countrywide electricity access and overreliance on hydropower are some of the critical challenges facing the country’s electricity sector.

This fluctuation in hydro-electric power generation must have been a lesson to the country to appreciate the linkages between energy, environment and the country’s socio-economic development.

A strong policy framework will guide this new shift. Indeed, currently Kenya is pursuing an energy mix that greatly emphasises on carbon–neutral energy sources such as geothermal, wind, solar and renewable biomass.

The country’s building codes are also being reviewed to incorporate measures that will encourage climate–proofing and the construction of energy–efficient buildings.