KenGen targets startups at Olkaria green industrial park

Prime Cabinet Secretary Musalia Mudavadi during the groundbreaking of the Olkaria Eco-cloud data center at Kengen Industrial Park in Naivasha, on August 31, 2023. [File, Standard] Kenya Electricity Generating Company (KenGen) has said startups will be the main focus for its Green Energy Park set up in Olkaria, Naivasha, which has just been declared a special economic zone (SEZ). The focus on startups, said KenGen's acting general manager for commercial services Rono Kibet, is because they will find it easy to set up businesses at the park. Established enterprises, he said, may find it a challenge to move all their operations to another location. This is despite some of the benefits that come with establishing a base at the park. "Initially, we were targeting the big industries but we realised some of them are already established so they cannot move all their operations to the green energy park," he said. "That is why we are now targeting startups." Additionally, KenGen also lessened some of the requirements like a very strong balance sheet which they had in place that were also a challenge to startups. Instead, a major requirement that the electricity generating company has is the consumption of electricity. Any business that seeks to have its base should consume at least 80 per cent of the units they request from KenGen. "We do not want industries to just come and sit there. We want them to create more products because that will employ more people and improve our trade balance through exports," said Kibet during a familiarisation tour at Olkaria. Firms that set up shop at the park will be able to buy electricity from KenGen at a cost of $0.07 (Sh9.10) per kWh. KenGen's ability to sell power directly to consumers has been made possible through the Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024, taking effect this year. These regulations decapitate Kenya Power's monopoly as the sole electricity distributor in the country and allow other independent power producers, among them KenGen, to sell electricity directly to consumers within a specified radius. However, KenGen said it will not be selling raw steam to businesses that set up at the energy park. This locks out independent power producers who might have the intention of setting up a shop at the industrial park with the hope of selling it to the grid or directly to consumers. Kibet said the park was conceptualised that industries which are steam-intensive could be the target for the green energy park. The idea was to sell steam to them at a cost of a tonne per hour. However, he said, most of the industries that want to set up at the centre are actually data centres and computer-driven initiatives. "Yes, we had a few companies that wanted to do steam but when we aggregated the portfolio, we thought it was best for us to first provide green electricity because it has a magical benefit way better than just selling raw steam," said Kibet. He said just by doing green electricity, industries set up will be able to access green financing which attracts lower interest rates and hence attract more investors. "The products you produce will also get to the market with a green tag. But that does not apply to some of the industries that use steam. We evaluated these economic gains when we gave power," he said. Konza Technopolis Development Authority is one of the entities setting up shop at the Green Energy Park. This week, the government through the Ministry of Investments, Trade, and Industry, officially declared the Olkaria area in Naivasha, a SEZ. This milestone is set to position Kenya as a regional hub for industrialisation while leveraging the country's geothermal resources for sustainable economic growth. The Olkaria SEZ spans 8,292 acres and will serve as a key driver for industrial investment, clean energy manufacturing, and export-oriented production. Apart from accessing cheap green electricity from KenGen, businesses will also benefit from incentives such as tax exemptions due to the SEZ status. Speaking on the development, KenGen Managing Director Peter Njenga emphasised the strategic importance of the Olkaria SEZ in Kenya's economic transformation agenda and transition to clean energy. "This declaration cements Kenya's commitment to industrialisation, job creation, and sustainability. Olkaria's abundant geothermal energy makes it an ideal location for industries looking for reliable, low-cost, and green power, aligning with Kenya's vision of becoming a global leader in renewable energy-driven industrialisation," said Njenga. According to the NSE-listed energy generator, the Olkaria SEZ will support industries in green manufacturing, agro-processing, electric mobility, and data centres, among others. The move, said KenGen in a statement, aligns with the government's Bottom-Up Economic Transformation Agenda and the country's commitment to net-zero industrialisation. With its strategic location along key transport corridors, including the Standard Gauge Railway and the Nairobi-Mombasa Highway, the Olkaria SEZ is expected to provide investors with seamless access to both local and global markets. The statement noted that the Olkaria SEZ is part of Kenya's broader strategy to enhance industrial competitiveness by offering a conducive business environment with world-class infrastructure, reliable green energy, and investor-friendly policies. It aims to attract manufacturers, technology firms, and energy-intensive industries looking to capitalise on Kenya's geothermal potential. Njenga said the green energy park represents a transformative shift in Kenya's approach to industrial development. "By integrating clean energy solutions into manufacturing and industrial operations, we are not only reducing carbon emissions but also ensuring long-term sustainability and cost efficiency for businesses. "This initiative aligns with our vision of making Kenya a top destination for investors seeking green energy-powered industrial operations," he said. According to KenGen, the park is expected to attract industries such as agro-processing and companies seeking sustainable and cost-effective power for food processing and value addition and textile and apparel manufacturing. Other activities will include electric mobility production, data centres and ICT firms, all looking to transform their businesses into fully sustainable, green-powered enterprises. "With industries globally transitioning to net-zero operations, the Olkaria SEZ offers an ideal platform for businesses looking to integrate renewable energy into their production processes. "By directly connecting industries to geothermal energy, we are not only lowering operational costs but also reinforcing Kenya's leadership in green industrialisation," the KenGen MD said.

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