Kenya Energy Situation - Revision history

Fernanda Wynter: /* Tax policy */

2021-08-10T15:27:30Z

Tax policy

Ranisha: /* Tax policy */

2020-09-24T08:13:19Z

Tax policy

Katharina Telfser: /* Further Information */

2020-09-11T14:41:53Z

Further Information

Ahmed El-Sherbini at 10:58, 8 July 2020

2020-07-08T10:58:38Z

Show changes

Ranisha: /* Further Information */

2020-06-08T13:07:30Z

Further Information

Ranisha: /* Energy Situation */

2020-06-08T13:02:20Z

Energy Situation

Ranisha: /* Biomass */

2020-06-08T12:48:18Z

Biomass

Ranisha at 12:25, 8 June 2020

2020-06-08T12:25:56Z

Ranisha: /* Activities of Donors: */

2020-06-08T12:25:11Z

Activities of Donors:

Ranisha: /* Kenya Green Mini-grids Facility */

2020-06-08T12:20:40Z

Kenya Green Mini-grids Facility

← Older revision		Revision as of 15:27, 10 August 2021
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	== Other Policy ==		== Other Policy ==
		+


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	On 23 July 2020, Kenya has passed a Finace bill that will introduce a 14% VAT on all off-grid solar products<ref name="https://www.gogla.org/news/policy-alert-kenya-introduces-vat-on-off-grid-solar-products">https://www.gogla.org/news/policy-alert-kenya-introduces-vat-on-off-grid-solar-products</ref>.		On 23 July 2020, Kenya has passed a Finace bill that will introduce a 14% VAT on all off-grid solar products<ref name="https://www.gogla.org/news/policy-alert-kenya-introduces-vat-on-off-grid-solar-products">https://www.gogla.org/news/policy-alert-kenya-introduces-vat-on-off-grid-solar-products</ref>.
		+
		+	On 30 June 2021, the H.E. President Uhuru Kenyatta signed the Finance Act 2021 which excepmpts VAT on renewable energy products including solar and wind generation equipment, and clean cooking solutions.<ref>https://www.gogla.org/news/a-big-win-for-kenya-government-reinstates-vat-exemption-on-renewable-energy-products?mc_cid=bfea68e26e&mc_eid=59703eae16</ref>

@@ Line 403: / Line 403: @@
 == Other Policy ==
 === Tax policy ===
-Kenya introduced a VAT on solar products totalling 16% in 2013, but the government has now decided that it will dismiss this tax in a move to cut cost of renewable energy products.
+Kenya introduced a VAT on solar products totalling 16% in 2013, but the government in 2014 decided to remove this tax in an attempt to cut cost of renewable energy products<ref name="https://solar-aid.org/kenya-celebrates-vat-exemption-solar/">https://solar-aid.org/kenya-celebrates-vat-exemption-solar/</ref>.
 === Kenya National Electrification Strategy (KNES) 2019 ===

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 <br/>
 = Further Information<br/> =
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://www.erb.go.ke/energy.pdf The Energy Act 2006]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://www.erb.go.ke/energy.pdf The Energy Act 2006]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://www.enable.nu/publication/D_1_7_Kenya_Energy_Policy_Overview.pdf Kenya Energy Policy Overview]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://www.enable.nu/publication/D_1_7_Kenya_Energy_Policy_Overview.pdf Kenya Energy Policy Overview]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://bit.ly/1xGWBFu Kenya: Integrated assessment of the Energy Policy]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://bit.ly/1xGWBFu Kenya: Integrated assessment of the Energy Policy]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[[:File:Kenya country report.pdf|Kenya Country Report]]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[[:File:Kenya country report.pdf|Kenya Country Report]]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[[Mobile Phone Market in Kenya|Mobile Phone Market in Kenya]]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[[Mobile Phone Market in Kenya|Mobile Phone Market in Kenya]]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://bit.ly/1B0tNxz Disseminating Wind pumps in Rural Kenya - Meeting Rural Water Needs using Locally Manufactured Wind pumps.]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://bit.ly/1B0tNxz Disseminating Wind pumps in Rural Kenya - Meeting Rural Water Needs using Locally Manufactured Wind pumps.]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://swera.unep.net/ SWERA (Solar and Wind Energy Resource Assessment) Programme]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://swera.unep.net/ SWERA (Solar and Wind Energy Resource Assessment) Programme]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://www.erc.go.ke/erc/LCPDP.pdf Least Cost Power Development Plan]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://www.erc.go.ke/erc/LCPDP.pdf Least Cost Power Development Plan]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://www.energy.go.ke/wp-content/uploads/2010/08/Updated SREP Draft Investment Plan-May 2011.pdf Renewables Investment Plan for Kenya]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://www.energy.go.ke/wp-content/uploads/2010/08/Updated SREP Draft Investment Plan-May 2011.pdf Renewables Investment Plan for Kenya]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://www.gdc.co.ke/index.php?option=com_content&view=article&id=191&Itemid=163 Geothermal Development Company of Kenya]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://www.gdc.co.ke/index.php?option=com_content&view=article&id=191&Itemid=163 Geothermal Development Company of Kenya]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[http://www.erc.go.ke/erc/fitpolicy.pdf Feed-in tarriffs for renewables in Kenya]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[http://www.erc.go.ke/erc/fitpolicy.pdf Feed-in tarriffs for renewables in Kenya]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">[[Kenya - Information Sources|External information sources for Kenya]]</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">[[Kenya - Information Sources|External information sources for Kenya]]</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">ProSolar handbooks: [[:File:GIZ2014-en-where-shall-we-put-it-kenya.pdf|site selection]], [[Mini Grid Licensing|licensing]], [[Mini-Grid Sizing|system sizing]].</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">ProSolar handbooks: [[:File:GIZ2014-en-where-shall-we-put-it-kenya.pdf|site selection]], [[Mini Grid Licensing|licensing]], [[Mini-Grid Sizing|system sizing]].</span>
-*<span style="font-family: arial, sans-serif; font-size: small; background-color: rgb(255, 255, 255)">ProSolar 2016 factsheets: [[:File:2016 GIZ ProSolar brief Leading the way to rural electrification.pdf|ProSolar]]&nbsp;project, [[:File:Mini-Grids RBF Brochure.pdf|Mini-Grids Result Based Financing]]&nbsp;(RBF) project.</span>
+*<span style="font-family: arial, sans-serif;  font-size: small;  background-color: rgb(255, 255, 255)">ProSolar 2016 factsheets: [[:File:2016 GIZ ProSolar brief Leading the way to rural electrification.pdf|ProSolar]]&nbsp;project, [[:File:Mini-Grids RBF Brochure.pdf|Mini-Grids Result Based Financing]]&nbsp;(RBF) project.</span>
 *USAID Power Africa [https://www.usaid.gov/powerafrica/kenya Kenya Factsheet]
 *[https://www.afdb.org/en/news-and-events/kenya-goes-all-out-for-renewable-energy-18559/ Kenya goes all out for renewable energy]
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 *[http://pubdocs.worldbank.org/en/413001554284496731/Kenya-National-Electrification-Strategy-KNES-Key-Highlights-2018.pdf Kenya National Electrification Strategy 2018]<br/>
 *[https://www.gogla.org/news/policy-alert-kenya-introduces-vat-on-off-grid-solar-products Policy Alert: Kenya Introduces VAT on Off-Grid Solar Products]
 <br/>[[Kenya Energy Situation#toc|►Go to Top]]
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 <br/>
 = References<br/> =

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 <br/>
 = Further Information<br/> =
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 *[https://www.afdb.org/en/news-and-events/kenya-goes-all-out-for-renewable-energy-18559/ Kenya goes all out for renewable energy]
 *[[Publication - Energy Safety Nets: Kenya Case Study|Publication - Energy Safety Nets: Kenya Case Study]] (2020) and the [https://www.seforall.org/sites/default/files/2020-02/ESN_Kenya_Policy-SEforALL.pdf policy brief]
 <br/>[[Kenya Energy Situation#toc|►Go to Top]]
 <br/>
 = References<br/> =

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 [[Kenya Energy Situation#toc|►Go to Top]]
 = Energy Situation =
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 Kenya has an installed capacity of 2.3 GW. Whilst about 57% is hydro power, about 32% is thermal and the rest comprises geothermal and emergency thermal power. Solar PV and Wind power play a minor role contributing less than 1%. However, hydropower has ranged from 38-76% of the generation mix due to poor rainfall. Thermal energy sources have been used to make up for these shortfalls, varying between 16-33% of the mix<ref name="Energy resource">GTZ (2007): Eastern Africa Resource Base: GTZ Online Regional Energy Resource Base: Regional and Country Specific Energy Resource Database: II - Energy Resource. </ref>
-Kenya’s current effective installed (grid connected) electricity capacity is 1,429 MW. Electricity supply is predominantly sourced from hydro and fossil fuel (thermal) sources. This generation energy mix comprises 52.1% from hydro, 32.5% from fossil fuels, 13.2% from geothermal, 1.8% from biogas cogeneration and 0.4% from wind, respectively. Current electricity demand is 1,600 MW and is projected to grow to 2,600-3600 MW by 2020.
+Kenya’s current effective installed (grid connected) electricity capacity is 1,429 MW. Electricity supply is predominantly sourced from hydro and fossil fuel (thermal) sources. This generation energy mix comprises 52.1% from hydro, 32.5% from fossil fuels, 13.2% from geothermal, 1.8% from biogas cogeneration and 0.4% from wind, respectively. Current electricity demand is 1,600 MW and is projected to grow to 2,600-3600 MW by 2020. As of 2018, 6.9 million people in Kenya have been connected to the grid i.e three quarters of the total population<ref>Kenya’s 2022 universal electrification goal bets on off-grid solar. Dec 2018
 <u>Households in Kenya use the following source for lighting:</u>
-*Electricity - about 15% of the national populace.
+*Electricity - about 15% of the national population.
 *Use of electricity in urban areas as the source of lighting - 42%; although kerosene lamps still remain the main source of lighting for 55% of households.
 *Kerosene for lighting in rural households - 87%
-As of 2007, the contribution of the energy sector to the overall tax revenue was about 20%, equivalent to 4% of GDP. The sector provides direct and indirect employment to an estimated 16,000 persons<ref name="Energy policy">GTZ (2007): Eastern Africa Resource Base: GTZ Online Regional Energy Resource Base: Regional and Country Specific Energy Resource Database: IV - Energy Policy. </ref>.
+As of 2007, the contribution of the energy sector to the overall tax revenue was about 20%, equivalent to 4% of GDP. The sector provides direct and indirect employment to an estimated 16,000 persons<ref name="Energy policy">GTZ (2007): Eastern Africa Resource Base: GTZ Online Regional Energy Resource Base: Regional and Country Specific Energy Resource Database: IV - Energy Policy. </ref>. According to the 2019 Kenya Population and Housing Census, 50.4% total household depend on grid electricity followed by 19.3% on solar for lighting <ref>2019 Kenya Population and Housing Census.https://www.knbs.or.ke/?wpdmpro=2019-kenya-population-and-housing-census-volume-iv-distribution-of-population-by-socio-economic-characteristics</ref>
-It costs approximately Ksh 35,000 (EUR 318.18) to connect to the national grid and about 0.1145 EUR equivalent per kWh of electricity service. These are relatively high costs that pose a major obstacle to the expansion of electricity connections to low-income households and small businesses, which can therefore benefit from decentralized alternative sources of energy, such as solar.
+It costs approximately Ksh 35,000 (EUR 318.18) to connect to the national grid and about 0.1145 EUR equivalent per kWh of electricity service. These are relatively high costs that pose a major obstacle to the expansion of electricity connections to low-income households and small businesses, which can therefore benefit from decentralized alternative sources of energy, such as solar. Also according ot the Kenya National Electrificaiton Strategy 2018, out of the 10.8 million households to be electrified, 9.7 are within the 15km of existing grid network while 1.1 milion are 15km or further from the main grid and are best served by off-grid energy<ref>Kenya National Electrification Strategy 2018. http://pubdocs.worldbank.org/en/413001554284496731/Kenya-National-Electrification-Strategy-KNES-Key-Highlights-2018.pdf</ref>.
 [[Kenya Energy Situation#toc|►Go to Top]]
 <br/>
 = Renewable Energy<br/> =

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 [[Kenya Energy Situation#toc|►Go to Top]]
 == Biomass<br/> ==
-Due to increased poverty, there is a significant shift to non-traded traditional biomass fuels. The proportion of households consuming biomass has risen to 83% from 73% in 1980. As of 2007,[[Biomass Energy Resources in Kenya|Biomass Energy Resources in Kenya]], i.e. firewood, charcoal and agricultural wastes contributed approx. up to 70% of Kenya’s final energy demand and provided for almost 90% of rural household energy needs, about one third in the form of charcoal and the rest from firewood.
+Due to increased poverty, there is a significant shift to non-traded traditional biomass fuels. The proportion of households consuming biomass has risen to 83% from 73% in 1980. As of 2007,[[Biomass Energy Resources in Kenya|Biomass Energy Resources in Kenya]], i.e. firewood, charcoal and agricultural wastes contributed approx. up to 70% of Kenya’s final energy demand and provided for almost 90% of rural household energy needs, about one third in the form of charcoal and the rest from firewood. According to the 2019 Kenya Population and Housing Census, 55.1%&nbsp; of Kenyan Houshold use firewood for cooking followed by 23.9% using LPG<ref>2019 Kenya Population and Housing Census.https://www.knbs.or.ke/?wpdmpro=2019-kenya-population-and-housing-census-volume-iv-distribution-of-population-by-socio-economic-characteristics</ref>.
 Charcoal is produced inefficiently using tradition earth kilns whose efficiency range between 10–13% yet higher recoveries of between 30-40% have been achieved using brick kilns. Biomass comes from various forest formations such as [[Biomass Energy Resources in Kenya#Closed Forest|closed forest]], [[Biomass Energy Resources in Kenya#Woodlands|woodlands]],[[Biomass Energy Resources in Kenya#Bushland|bushlands]], [[Biomass Energy Resources in Kenya#Wooded Grasslands|wooded grasslands]],[[Biomass Energy Resources in Kenya#Wood Supply from Farms|farms]] with natural vegetation and mixtures of native and exotic trees, industrial and fuel wood [[Biomass Energy Resources in Kenya#Forest Plantations|plantations]], and residues from agricultural crops and wood-based industries. However, although there are apparently large wood volumes available from the various vegetation types, not all of it is accessible for energy.[[Biomass Energy Resources in Kenya#Accessibility|Accessible wood]] depends on a number of factors such as legal issues, environmental issues, ownership, objectives of management, distance, and infrastructure <ref name="Energy resource">GTZ (2007): Eastern Africa Resource Base: GTZ Online Regional Energy Resource Base: Regional and Country Specific Energy Resource Database: II - Energy Resource.</ref>. Additionally, most of the population are engaged in production, transformation, transportation and sale of wood and charcoal, making it one of the most important sources of paid livelihood. As a result woody biomass is diminishing due to poor management and utilization in unsustainable ways. Government ministries are supporting in one way or the other the sustainable production of energy crops, trade of charcoal and the dissemination of improved cooking stoves.
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 [[Kenya Energy Situation#toc|►Go to Top]]
 == Hydropower<br/> ==

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 #Lack of clear off-grid regulatory framework
+In 2020, Sustainable Energy for All (SEforALL), ODI, Catholic Agency for Overseas Development (CAFOD) identified the following issues with current&nbsp;social assistance mechanisms:<ref>Energy Safety Nets: Kenya Case Study 2020, https://www.seforall.org/publications/esn/kenya</ref> (see also [[Publication - Energy Safety Nets: Kenya Case Study|Publication - Energy Safety Nets: Kenya Case Study]])
 *Promoting energy access (connections) is in-herently different from promoting energy use(consumption). Programs supporting the formermainly involve a one-off investment, while thosesupporting the latter mainly provide recurringsupport.
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 <br/>
-[[Kenya Energy Situation#toc|►Go to Top]]
+[[Kenya Energy Situation#toc|►Go to Top]]<br/><br/>
 [[Kenya Energy Situation#toc|►Go to Top]]
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 [[Kenya Energy Situation#toc|►Go to Top]]
+<br/>
 == Activities of Donors:<br/> ==
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 === EnDev's Result-based Financing (RBF) Support<br/> ===
-Endev's RBF intervention was targeted in the north of Kenya and concluded in March 2020. The programme delivered 1845 connections and 10 mini-grids. [https://minigrids.org/wp-content/uploads/2019/07/RBF_Mini-grids_Implementation_Kenya-Rwanda.pdf Click here to read EnDev's lessons learnt from the mini-grid programme in Kenya and Rwanda].
+Endev's RBF intervention was targeted in the north of Kenya and concluded in March 2020. The programme delivered 1845 connections and 10 mini-grids<ref>5 years on from the launch of Green Mini-Grids Africa – what’s been achieved, and what have we learned? May 2002. https://minigrids.org/5-years-on-from-the-launch-of-green-mini-grids-africa-whats-been-achieved-and-what-have-we-learned/</ref>. [https://minigrids.org/wp-content/uploads/2019/07/RBF_Mini-grids_Implementation_Kenya-Rwanda.pdf Click here to read EnDev's lessons learnt from the mini-grid programme in Kenya and Rwanda].
 = Further Information<br/> =
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 *USAID Power Africa [https://www.usaid.gov/powerafrica/kenya Kenya Factsheet]
 *[https://www.afdb.org/en/news-and-events/kenya-goes-all-out-for-renewable-energy-18559/ Kenya goes all out for renewable energy]
-*[[Publication_-_Energy_Safety_Nets:_Kenya_Case_Study|Publication - Energy Safety Nets: Kenya Case Study]] (2020) and the [https://www.seforall.org/sites/default/files/2020-02/ESN_Kenya_Policy-SEforALL.pdf policy brief]
+*[[Publication - Energy Safety Nets: Kenya Case Study|Publication - Energy Safety Nets: Kenya Case Study]] (2020) and the [https://www.seforall.org/sites/default/files/2020-02/ESN_Kenya_Policy-SEforALL.pdf policy brief]
 <br/>[[Kenya Energy Situation#toc|►Go to Top]]

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 *Support to the Geothermal development company and funding of a national master plan
 *Credit line to commercial banks to promote renewable energy and energy efficiency projects in the agri-business and hostelry sectors
 === Kenya Green Mini-grids Facility<br/> ===
@@ Line 535: / Line 533: @@
 [[Kenya Energy Situation#toc|►Go to Top]]<br/>
-=== <span style="font-size:12.0pt; font-family:&quot;Calibri",sans-serif;
+=== <span>Kenya Off-Grid Solar Access Programme (KOSAP)</span> ===
 This World Bank's program is focused on customers that are dispersed and hard to reach in the dry areas in northern and eastern part of Kenya. It is aiming at 151 sites in 14 counties and the call fro proposals is expected to be out by mid 2020<ref>5 years on from the launch of Green Mini-Grids Africa – what’s been achieved, and what have we learned? May 2002. https://minigrids.org/5-years-on-from-the-launch-of-green-mini-grids-africa-whats-been-achieved-and-what-have-we-learned/</ref>.
-<br/>
+=== EnDev's Result-based Financing (RBF) Support<br/> ===

@@ Line 508: / Line 508: @@
 <br/>
-This DFID funded programme started in 2014 and ended in march 2020. It then continued in the second phase as part of the Africa Clean Energy (ACE) program. This facility is suporrting three developers (Powerhive, RVE.Sol and PowerGen) and expects to deliver 13000 connections in 4 Kenyan Counties. <br/>
+=== Kenya Green Mini-grids Facility<br/> ===
-In 2019, the following new connections were added:
+This DFID funded programme started in 2014 and ended in march 2020. It then continued in the second phase as part of the Africa Clean Energy (ACE) program. This facility is suporting three developers (Powerhive, RVE.Sol and PowerGen) and expects to deliver 13000 connections in 4 Kenyan Counties<ref>5 years on from the launch of Green Mini-Grids Africa – what’s been achieved, and what have we learned? May 2002. https://minigrids.org/5-years-on-from-the-launch-of-green-mini-grids-africa-whats-been-achieved-and-what-have-we-learned/</ref>.<br/>
 {| style="width:100%" cellspacing="0" cellpadding="0" border="0"
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 | style="width: 663px" |
-connection in existing and 4 new sites
+connection in existing and 4 new sites Promotive PUE including testing new approaches for electric vehicles on mini-grid<br/>
 Promotive PUE including testing new approaches for electric vehicles on mini-grid<br/>
 |-
-| style="width: 89px" | <span style="font-size:12.0pt; font-family:&quot;Calibri",sans-serif;
+| style="width: 89px" | RVE.Sol
 | style="width: 663px" | 1850 connections and 10 sites<br/>
 |-
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 |}
-<br/>[[Kenya Energy Situation#toc|►Go to Top]]<br/>
+'''All three developers have agreed on tariffs with the regulators wihc are viable and higher than the grid tariff'''<ref>5 years on from the launch of Green Mini-Grids Africa – what’s been achieved, and what have we learned? May 2002. https://minigrids.org/5-years-on-from-the-launch-of-green-mini-grids-africa-whats-been-achieved-and-what-have-we-learned/</ref>'''.'''<br/>
-<br/>
+This World Bank's program is focused on customers that are dispersed and hard to reach in the dry areas in northern and eastern part of Kenya. It is aiming at 151 sites in 14 counties and the call fro proposals is expected to be out by mid 2020<ref>5 years on from the launch of Green Mini-Grids Africa – what’s been achieved, and what have we learned? May 2002. https://minigrids.org/5-years-on-from-the-launch-of-green-mini-grids-africa-whats-been-achieved-and-what-have-we-learned/</ref>.
 <br/>