US, Europe scramble for Kenya’s energy billions

A few days to the July 18 launch of the Lake Turkana Wind Power plant by President Uhuru Kenyatta, the then UK Secretary of State for International Development Rory Stewart made a quiet tour of the multi-billion shilling project that went largely unreported in the local media.

The tour by Mr Stewart, who was replaced last week after new British Prime Minister Boris Johnson took over from Theresa May and named a new cabinet, came just a few weeks after US Ambassador to Kenya Kyle McCarter had raised eyebrows after sending out a series of tweets in support of the massive Lamu coal project by Amu Power, at a time when the National Environment Tribunal (NET) was set to issue a ruling on its legality.

Western powers are leading an emerging scramble for Kenya’s multi-billion shilling energy generation, transmission and distribution projects under an ambitious plan aimed at connecting all homes to electricity by 2022.

Kenya has opened the door for international investors and financiers to tap into business opportunities that come with the Jubilee administration’s goal of connecting every household to electricity through expansion of the power grid and promoting off-grid sources such as solar plants.

Renewable energy

On the day before the Lake Turkana Wind Project (LTWP) launch, the European Investment Bank held a press conference in Nairobi during which it announced its ‘support for renewable energy projects’ in the country.

The EU Ambassador Stefano Dejak was present at the media briefing.

Mr McCarter’s strong defence of the proposed Lamu coal plant, Mr Stewart’s visit to LTWP and the European Union’s involvement have all shone a spotlight on the special interest that Western powers are taking in Kenya’s multibillion-shilling energy deals.

The investment projects presented by the plan to achieve universal access to electricity from 75 per cent as at last year are estimated at $14.8 billion (Sh1.54 trillion), under the Electricity Sector Investment Prospectus (2018-2022).

European and American firms, which have in the past decade lost to Chinese contractors on major infrastructure deals, already control significant stakes in the Sh71 billion LTWP wind farm in Marsabit and the Menengai Geothermal Power Station (under construction), projects which have catapulted the country to being among leading producers of renewable energy in Africa.

Some of the projects identified by the Ministry of Energy as "investment-ready" include geothermal power generation plants at Menengai which have a projected capacity of 460 megawatts (MW), Suswa 1 (150 MW) and Baringo Silali (200 MW).

Others are a hydropower plant at Grand Falls along Tana River, LPG storage and bottling facility in Nairobi as well as a power transmission line between Kitui and Lamu for the controversial coal plant whose construction has been suspended.

Public participation

The NET in June ruled in favour of environmentalists who had in October 2016 raised climate change and health concerns as well as lack of nationwide public participation in their opposition to the proposed construction of the Sh200 billion coal-fired plant.

US conglomerate General Electric as well as Chinese investors are backing the Amu Power project.

Mr McCarter, US President Donald Trump’s appointee in Kenya, appeared to hint at his country’s interest in the controversial 1,050 megawatts thermal power plant through a series of tweets following the NET ruling.

"Investors will come," the US envoy said on his official twitter handle which relays updates from the embassy, adding that coal power costs seven US cents in Illnois, the State where he served as a senator.. "Coal is the cleanest, least costly option."

LTWP executive director Rizwan Fazal in an interview said Mr Stewart’s visit was about sustainable development projects that mitigate against effects of climate change.

"It was purely an information visit for both sides to exchange thoughts and ideas on sustainable development," Mr Fazal said.

"And how, for example, being a successful role model as Lake Turkana wind power, others want to learn how they can come and participate in projects that have kind of positive impact on the country, community, development and climate change."

The 310.25-megawatt LTWP wind farm, the largest wind farm in Africa, is largely co-owned by Google of the US, Aldwych International of the UK, KP&P BV Africa of Netherlands, Norwegian state-owned private equity fund Norfund, IFU-Danish Development Bank, FinnFund, among other minor shareholders.

Menengai 1 Geothermal Power Station is, on the other hand, owned by OrpowerTwenty Two, a consortium of Ormat Technologies and Symbion Power of the US as well as Kenya’s TransCentury-owned Civicon Ltd.

Projects identified under Kenya’s investment prospectus are geothermal generation (850 MW), hydropower (1240MW), wind (500MW), transmission lines of various sizes and an LPG (2,250 million-tonne storage).