Kenya has set its sights on becoming a net-zero carbon emitter within the next three decades. To achieve this objective, it is becoming clear that the transition to a low carbon economy is likely to require significant, additional investment in the renewable energy sector.
Even as we anticipate an increase in renewables on the grid, and a growing level of non-controllable, variable generation resources, we need a holistic long-term approach that defines what our energy needs are, how they are likely to evolve over time and what prices we are willing to pay. That approach should also take into consideration public participation and the interests of all stakeholders.
From a policy perspective, the Climate Change Act, 2016 lays the regulatory framework for the implementation of the National Climate Change Action Plan (NCCAP) 2018-2022.
Weaved into the country’s NCCAP is a key priority climate action area whose central objective is to increase the share of renewable energy generation. This policy framework ensures that Kenya delivers on its Nationally Determined Contribution (NDC) under the Paris Agreement of the United Nations Framework Convention on Climate Change (UNFCCC).
The Paris Agreement now forms part of the law of Kenya since it entered into force on January 27, 2017, and as set out in Article 2(6) of the Constitution.
The following questions can help to guide us on our renewables journey, going forward; Is our power system well equipped to deal with the changing load patterns? And what groundwork and planning are needed to deliver a carbon neutral energy sector?
Policymakers, regulators, and beneficiaries of the power sector will have to come to terms with the realities of securing energy within environmental constraints and prepare to make choices between competing interests.
Non-discriminatory
Our shared future requires all stakeholders to come to the table and discuss and develop a harmonised approach to address the “energy trilemma”, as it is known – accessibility, affordability, and availability.
Non-discriminatory access needs to be granted to resources that generate the primary energy and the benefits that come from useful, productive energy.
Kenya continues to make progress in democratising access to primary energy and has taken a more progressive stance toward developing and commissioning various technologies that deliver a diversified energy portfolio.
Low-carbon systems are characterised by increasingly complex interactions of different generation technologies with different supply characteristics. The current system, however, is built to balance supply and demand in a fossil fuel-based economy as opposed to an emerging renewable one.
Affordable
Diversification should not be pursued for its own sake. We need to examine the impact of our energy choices through a sustainability lens and ensure that they are not only designed to meet our current needs but also developed to safeguard our shared future and prosperity.
Affordability relates to cost and cost effectiveness. We must analyse and clarify the role of direct and indirect subsidies in Kenya, their impact on power consumption and the evolution of energy economics, both at national utility scale and at small decentralised scale.
According to the Africa Mini-grid Developers Association (AMDA), the sub-sector’s growth between 2014 and 2018 also coincided with a tremendous drop in costs, with the average price per connection falling from $1,555 to $733 in 2018.
While this makes a strong case for the potential for renewables, the reality is that fossil fuels have consistently been able to provide unique yields at unique prices, not just globally but also locally.
However, we need to ask ourselves if the market’s pricing considers all costs, such as those associated with pollution and other hidden costs in the electricity system.
A level playing field could entail pricing for pollution, and companies benefitting from fossil fuels may then need to either comply with carbon sequestration requirements or pay a fine for their emissions.
Accessible
Availability indicates the ease with which everyone can tap into final energy, on demand, from a transmission and distribution standpoint.
Transmission and distribution systems are the bedrock of our electric system. The distance between source and load and the level of transmission will continue to influence the economic dispatch of generation units.
Thinking futuristically, we may need to make bold decisions to design a more reliable grid which could allow wholesale prices to go negative and generators to pay the utility for taking the energy during oversupply times.
Certainly, we know that renewables are not the only path to achieving a low carbon economy. But to meet our Nationally Determined Contribution goals under the Paris Agreement, we will have to undertake deep restructuring of our entire energy system.
A coordinated policy development effort will be required, driven by a proactive State and radical changes in behaviour impacting all of those who harness, transform, transport, and consume energy.
The difficulties inherent in reaching 100 per cent carbon-free energy assail us from all directions, but difficult does not mean unachievable. There are many opportunities, as well, and therefore what remains now is for us to do the work and walk the talk.
Mr Ogore is an Associate and Mr Otolo is an Associate Director at PricewaterhouseCoopers’ Transactions Advisory practice in East Africa.
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