Amu Power Managing Director Francis Njogu says the $2 billion (Sh200 billion) coal plant will be the cheapest and most reliable energy option for Kenya’s future energy needs, particularly serving manufacturing’s demands.
“One of the pillars of the Big Four we know is manufacturing and we have heard from the Kenya Association of Manufacturers and you have written about it yourselves that the cost of power is an impediment to industrialisation,” he said.
“We believe that Amu Power is going to provide the lowest reliable and cost-effective power that will be an enabler for the industrial take-off of this country.”
This is not true. On the one hand, energy costs constitute a major cost component in manufacturing varying between industries with some energy-intensive sectors using up to 60 per cent of production budgets on energy costs.
The World Bank’s Ease of Doing Business Report for 2017 ranked Kenya 71st globally in the ease of getting electricity, 12 points higher than 2016.
Businesses in Kenya require three procedures before they can receive connections; much lower than the sub-Saharan average of 5.3 and better than 4.7 recorded for the OECD high-income countries and just a day extra compared to the United Arab Emirate’s global best.
Kenya’s reliability and transparency of tariffs have also been ranked at four on a scale of one to eight with eight being the global best. This is higher than sub-Saharan Africa’s average of 0.9. There is also strong evidence indicating that electricity consumers will pay Sh38 billion annually in fixed tariffs even as the coal power plant operates way below capacity.
Analysis from international energy consultants Lahmeyer International from Germany and France’s Innovation Energie Développement (IED) found that coal has little role to play in Kenya’s energy mix. “Already today, geothermal power contributes significantly to the Kenyan generation mix,” explains the report in part.
“Considering the tremendous potential of 8,000 to 12,000MW along the Kenyan Rift Valley, it can be expected that geothermal power will play an essential role in the future Kenyan power system.”
“In the long-term, nearly 85 per cent of the electricity demand will be covered by renewable energy sources,” says the report in part. “60 per cent is generated by geothermal power plants, followed by hydropower with 15 per cent and wind power with 11 per cent.”
This means the coal plant will only achieve 15 per cent operational capacity meaning Kenyans will be paying billions of shillings annually for idle capacity while underutilising the cleaner geothermal at a time when the world is stepping up renewables.