Why transport electrification is an economic opportunity for Kenya

Kenya is already taking baby steps towards creating an electric transportation sector. A few electric buses and cars are already on Nairobi roads. Local assembly of electric motor bikes and tuk-tuks is already happening. When completed the BRT (bus rapid transport ) project will have pioneered electric mass public transportation.

Two State electricity companies and an oil marketer have announced plans to invest in electric vehicle (EV) charging infrastructure. What is missing is a national plan to guide national transport electrification.

Globally, evolving EV technologies continue to lower vehicle unit costs, prompting more EV sales. Driving ranges between charges have increased to above 500 kilometres and charging capacity continues to expand.

In 2021 global new car sales were about 10 percent EVs with expectation of hitting 23 percent in 2025. Kenya should plan to keep abreast with the rest of the world in mobility electrification. I see two key policy motivations for Kenya to focus on electrification of road and railway transport.

Firstly, converting transport sector from imported oil to indigenous electric energy will enhance energy imports substitution which will significantly reduce dollar import bills and strengthen a struggling balance of payment.

It will simultaneously reduce energy insecurity and inflationary pressure from volatile global oil markets. The number two motivation is climate change mitigation by reducing transport sector carbon emissions by shifting from oil to renewable energy.

This presumes that Kenya will systematically eliminate thermal electricity generation. The dual economic and environmental justifications for transport electrification are strong enough to justify special focus by the incoming government.

There is need for a special purpose inter-ministerial unit to steward implementation of transport electrification by preparing a coordinated national strategy backed by suitable fiscal policies. The unit can include departments of Transportation, Petroleum, Energy, and Environment with Treasury’s inputs on fiscal implications.

Other interested parties are vehicle dealers associations. Inputs from this unit can make planning for new power generation investments more effective considering the high electricity demands associated with transport electrification. Such a plan should of necessity include electrification of the SGR and public transport systems for our metropolises.

Transport electrification is a global eventuality that will mature in the next 10 years, making it necessary for Kenya to prepare a clear path forward for the transition.

Such a path will deliver on energy transition and climate goals while strengthening Kenya’s balance of payments and energy security. It will additionally provide clarity on energy investments and correctly guide green capital investors.