Ideas & Debate

How ‘energy transition’ will impact Kenya this decade

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The world is changing to low-carbon renewable energy like wind. FILE PHOTO | NMG

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Summary

  • Global energy transition is already happening and is expected to gain momentum from 2021.
  • Kenya, which mostly relies on foreign capital for its energy resources development, will not be spared the ongoing transition.
  • The prime drivers for the energy transition are a multitude of globalised efforts and strategies for climate change solutions aimed at reducing carbon emissions.

In the just started 2021/30-decade, fossil fuels (coal, oil, gas) will continue to lose global market share as the world energy supply and demand transition to low carbon renewable energy (wind, solar, geothermal, nuclear etc).

Global energy transition is already happening and is expected to gain momentum from 2021. Kenya, which mostly relies on foreign capital for its energy resources development, will not be spared the ongoing transition.

The prime drivers for the energy transition are a multitude of globalised efforts and strategies for climate change solutions aimed at reducing carbon emissions.

These solutions are anchored in fast-evolving energy technologies which continue to improve renewable energy applicability and economics; ready investor capital for low carbon investments; strong climate change lobbies; and enabling environmental and energy policies by governments around the world.

In Kenya, energy transition is already happening as the country gradually de-emphasises high carbon fuel oil for power generation while prioritising renewable primary energy (geothermal, wind and solar).

High carbon coal, whether imported or from Kitui prospects, is now a condemned input for national power generation.

Turkana oil is directly a victim of collapsed oil markets and indirectly a victim of energy transition as global capital in general avoids investments in new oilfield developments.

In Kenya, leaving coal and oil buried in the ground is gradually becoming a near reality, not imaginable a few years ago. A trend being experienced by new fossil fuel prospects around the world.

However, should Kenya discover natural gas it would be accommodated into power generation mix as this resource is considered a relatively low carbon transition energy resource.

In 2021, the most impactful game-changer for energy transition will be Joe Biden’s US presidency. Specifically, appointment of Secretary John Kelly as the climate-change envoy will accelerate US return to global climate change platforms after four-year absence, speeding up global energy transition.

BIDEN FACTOR

Under Biden, US oil majors ExxonMobil and Chevron are expected to join their European counterparts (BP, Shell, Total and ENI) in the ongoing energy transition. And by the end of the decade, these companies are likely to rebrand from “oil companies” to “energy companies” investing and trading in both oil/gas and renewable energy. And any multinational oil company doing business in Kenya will likely change accordingly.

The most impactful energy transition agent is the ongoing global commercialisation of EVs (electric vehicles) mainly in the US, Europe, and China.

This will see a major fraction of transportation energy shift from oil to electricity, which strategically and incrementally should be “green electricity” from renewable sources.

Global EV and battery manufacturers are currently competing to develop the most cost-effective vehicles to permit mass adoption, while governments are focusing on EV charging infrastructure. In about five years, EVs and charging stations are expected to be new features in Kenya, and oil demands will start coming down.

BATTERY STORAGE TECH

Perhaps the most revolutionary energy technology in 2021/30 will be large-scale battery storage technology which will permit storage of intermittent renewable (solar and wind) power generation for input into grid systems during peak demands.

Already battery storge systems of more than 300MW capacity have been achieved. In future, these batteries will likely be a “must” for newly licensed solar and wind plants to permit effective grid integration.

Kenyan energy regulators, planners and investors need to accommodate and plan for the expected energy supply and demand scenarios in 2021/30. EVs will come and we need to plan for them. Large-scale energy storage batteries will be part of future power generation investment packages.

Turkana oil will likely remain a stranded asset for some time to come. Kitui coal will also likely remain underground unless the mining authorities come up with a clear policy position on these deposits.

Kenya continues to use imported coal and fuel oil for industrial process heating in heavy industries like cement and steel.

Economic common sense supports use of Kitui coal for industrial purposes, until effective renewable energy technologies are developed for industrial heating.

Indeed, there was an ambitious plan to use Kitui coal to kiln limestone and iron ore deposits in that region to make cement and steel.

By 2030 the energy sector in the world and in Kenya will look vastly different, mostly driven by climate change solutions and capital.