East African country Kenya, which is currently home to 53.7 million people, has set a target of delivering universal access to energy to its population by 2022. Furthermore, the demand for electricity is slated to double over the decade. Hence, to meet the increasing demand and achieve universal electricity access, Kenya plans to add around 3.8 GW of new generation, of which 2.27 GW will be renewable-based.
To help achieve these targets as well as to safely transmit adequate and reliable high voltage power from the upcoming generation capacity and facilitate power trade, state-owned transmission utility Kenya Electricity Transmission Company (KETRACO) plans to invest USD5.7 billion for the construction of 8,500 km of high voltage transmission lines by 2030.
Even though the power transmission projects are backed by various multilateral funding agencies, KETRACO is still facing a financing gap of USD3 billion for funding its transmission infrastructure projects. Therefore, the transmission utility wants to increase the role of the private sector in the power transmission sector, piggybacking on the country’s experience in promoting private investments in the power generation segment.
The genesis of universal access to electricity, increasing the share of cleaner energy resources and encouraging private investment is in Kenya’s Vision 2030, which aims to transform the country into a newly industrialised, middle-income country and provide a high quality of life in a clean and secure environment. Electricity is one of the eight key sectors highlighted by the Vision to achieve these objectives.
Sector reforms and players
The restructuring of the electricity sector in 1997 resulted in the separation of electricity generation from transmission and distribution (T&D). However, the sector continues to be dominated and owned by state-owned companies. Energy Regulatory Commission (ERC) is the sector regulator and the Ministry of Energy and Petroleum (MoEP) oversees policymaking.
Kenya Electricity Generating Company (KenGen) accounts for about 70 per cent of the country’s installed capacity. It is responsible for all public power generation activities except those related to geothermal resources. Geothermal Development Company (GDC) is responsible for all public geothermal generation activities. There are also around 10 independent power producers (IPPs) and one emergency power producer (EPP).
Kenya Power owns and operates the existing T&D network and holds a monopoly in the distribution sector. Kenya Power is also executing the government’s Rural Electrification Scheme (RES) under the Rural Electrification Programme (REP) launched in 1973.
The government established the Rural Electrification Authority (REA) in 2007 to fast-track the electrification of rural areas. While REA owns these rural grid assets, Kenya Power continues to operate and maintain the whole network along with implementing projects for the REA on a contract basis. In return, Kenya Power retains revenues generated from RES customers to cover its maintenance costs.
KETRACO was formed in 2008 with the mandate to plan, design, construct, operate and maintain new transmission lines and associated substations.
Existing power infrastructure
As of June 2019, Kenya had an installed generation capacity of 2,789 MW of which 30 per cent (836.7 MW) was under the private sector. Of the total installed capacity, almost 45 per cent was renewable-based, 30 per cent was hydro-based and 25 per cent was thermal-based.
In 2017, Kenya launched Africa’s largest wind power farm, the 310 Lake Turkana Wind Project (LTWP). During 2019, a 50 MW solar power plant in Garissa was completed and added to the national grid capacity. Over the past few years, the country has also started to retire thermal plants; the 56 MW Iberafrica power plant was decommissioned in 2019.
| Source | 2015 | 2016 | 2017E | 2018E | 2019 |
| Hydro | 821 | 821 | 824 | 824 | 826 |
| Thermal | 854 | 862 | 831 | 838 | 720 |
| Renewable | 625 | 659 | 979 | 990 | 1,243 |
| Total | 2,300 | 2,342 | 2,634 | 2,651 | 2,789 |
Note: Data is as of June 30 for every year
Source: Kenya Power; KETRACO; Global Transmission Research
By the end of 2019, Kenya’s transmission network spanned 10,225 circuit km and comprised around 7,600 MVA of transformer capacity at the 132 kV and above voltage levels. The majority (43 per cent) of the country’s line length operates at 132 kV. Since 2015, Kenya’s high voltage line network has increased at a compound annual growth rate (CAGR) of 20 per cent.
The two state-owned companies — Kenya Power and KETRACO — own power transmission assets in the country. As of June 2018, Kenya Power owned 63 per cent or 6,252 circuit km of the country’s transmission network, while the remaining share of 37 per cent or 3,699 circuit km was owned by KETRACO.
During FY2016-17, Kenya commissioned its first 400 kV lines — the 102-km-long, 400 kV Suswa–Isinya line and the 400/220 kV Mombasa–Nairobi line. In 2018, KETRACO also completed the long stalled 428-km, 400 kV power line running from Loiyangalani to Suswa, which will evacuate power from the 300 MW Lake Turkana wind plant.
Note: Data is as of June 30 for every year and is estimated by summing data of Kenya Power and KETRACO. The 220 kV Rabai–Malindi–Garsen–Lamu line, developed between June 2014 and November 2015, has been included in FY16. The 400 kV Suswa–Isinya and Mombasa–Nairoi lines, which were commissioned in July 2017, have been included in FY17. For 2019, Kenya Power’s data at the 132 kV and 220 kV levels has been estimated based on CAGR between 2014 and 2018. 2019 data for KETRACO has been estimated to be the same as 2018 as no major project was reported to have been commissioned.
Source: Kenya Power and KETRACO; Global Transmission Research
Currently, the country’s grid network is connected to Uganda via a 132 kV transmission line. The country is also executing a link to connect its grid with that of Ethiopia. Also known as the Eastern Electricity Highway, the high voltage direct current (HVDC) Ethiopia–Kenya link is near completion. The USD1.26 billion project entails the construction of a 1,045-km, ±500 kV HVDC bipole overhead transmission line, which will run from the Wolaita Sodo substation in Ethiopia to the Suswa substation in Kenya. Of the total line length, 612 km lie in Kenya and 433 km in Ethiopia. The project also includes the construction of two 2,000 MW, ±500 kV, HVDC bipolar converter stations, one at Wolaita Sodo in Ethiopia and the other at Suswa in Kenya.
Note: Data is as of June 30, 2018.
Source: Kenya Power and KETRACO; Global Transmission Research
Future plans and investments
Generation
The electricity demand in the country is expected to increase from 2,103 MW in 2020 to 4,244 MW in 2030, representing a CAGR of 7.27 per cent. Further, the government aims to achieve universal access to electricity by 2022 to help Kenya achieve its Big 4 National Development Objectives.
To meet this target and upcoming electricity demand, the country will add around 3.8 GW of new generation capacity over the next decade. In addition, around 300 MW of thermal and 45 MW of geothermal plants will be decommissioned by 2030. Around 2.27 GW (59 per cent) of the total planned capacity is renewable energy-based, of which 1 GW (28 per cent) is geothermal and 651 MW (17 per cent) is solar-based. The projects will be implemented by KenGen, IPPs and the Government of Kenya.
Total Addition: 3.8 GW
Note: The generation capacity has been estimated based on the project list (as per reference expansion scenario) under Kenya’s Least Cost Power Development Plan 2017-2037.
Source: Least Cost Power Development Plan 2017-2037; Global Transmission Research
| Power plant | Source | Capacity (MW) | Expected year of completion |
| Menengai 1 Phase I, Stage 1 | Geothermal | 103 | 2020 |
| Kipeto Phase I and II | Wind | 100 | 2020 |
| Alten, Malindi | Solar PV | 120 | 2020 |
| Aperture | Wind | 50 | 2021 |
| Gitaru | Solar PV | 40 | 2021 |
| Olkaria 6 PPP | Geothermal | 140 | 2022 |
| Karura | Hydro | 89 | 2023 |
| Belgen, Tarita Green Energy Elgeyo | Solar PV | 80 | 2023 |
| Lamu Unit 1, 2 and 3 | Coal | 987 (3×327) | 2024 |
| AGIL Longonot Stage 1 | Geothermal | 70 | 2025 |
| High Grand Falls Stage 1 | Hydro | 495 | 2030 |
Note: PPP – public-private partnership; PV – photovoltaic
Source: Least Cost Power Development Plan 2017-2037; Global Transmission Research
Transmission
In order to evacuate power from the upcoming generation capacity, connect the existing and new load centres and establish power corridors with neighbouring countries it is essential to expand, upgrade and reinforce the Kenyan grid network to increase power capacity and reliability and provide redundancy.
To this end, the power transmission utility plans to invest around USD5.7 billion to build 8,500 km of new transmission lines and around 53 new substations over the next decade. The country’s focus is on building a 400 kV system to strengthen the existing 220 kV and 132 kV grid network.
Some of the key ongoing projects are the 220/400 kV Olkaria–Lessos–Kisumu transmission line project; 400 kV substations at Kimuka, Gilgil and Makindu; and the 220 kV and 132 kV Kenya Electricity System Improvement Project (KESIP).
Further, KETRACO is actively investing in the development of interconnector projects with fellow African nations to promote power interconnection across the continent and facilitate the creation of a pan-African power market. The import of surplus power from neighbouring countries will help meet the country’s ever-increasing demand for electricity.
One such interconnector is with Tanzania, known as the Kenya–Tanzania Power Interconnector Project (KTPIP), which is part of the larger Zambia–Tanzania–Kenya (ZTK) interconnection project linking the Eastern Africa Power Pool (EAPP) and the Southern African Power Pool (SAPP). KTPIP involves the construction of approximately 510 km of 400 kV lines, which will be constructed in both countries. On Kenya’s side, it involves the construction of 96 km of 400 kV transmission lines from the Isinya substation to the Namanga border, and extension of the 400/220 kV Isinya substation. The USD259 million interconnector is being funded by the African Development Bank (AfDB) and Japan International Cooperation Agency (JICA). Currently, KETRACO is facing increasing community rejections of power line routes for the project. The 131-km-long, 220 kV Lessos (Kenya)–Tororo (Uganda) line is 85 per cent complete and is expected to be finished by 2020.
| Project Name | Voltage (kV) | Line length (km) | Cost (USD million) | Scheduled Completion |
| Thika–HG Falls line | 400 | 200 | 180 | 2026 |
| Malindi–Garsen line | 220 | 104 | 40 | 2025 |
| Bomet–Olenguruone–Rongai line | 132 | 165 | 78 | 2025 |
| Isiolo–Marsabit line | 220 | 240 | 121 | 2025 |
| Baringo–Rongai line | 400 | 150 | 26 | 2023 |
| Baringo–Lokichar line | 220 | 245 | 80 | 2023 |
| 12 substation reinforcement works | NA | Not applicable | 59 | 2022 |
| Rumuruti–Kabarnet line | 132 | 111 | 42 | 2022 |
| Voi substation | 400/132 | Not applicable | 32 | 2021 |
| Makindu substation | 400/132 | Not applicable | 32 | 2021 |
Note: NA – not available
Source: Least Cost Power Development Plan 2017-2037; Global Transmission Research
Increasing role of private sector
Of the required investment of USD5.7 billion, around USD2.6 billion has been secured with the help of development agencies such as the AfDB, JICA, Agence Française de Développement (AFD) and World Bank. However, this still leaves the utility with a financial gap of USD3.1 billion. The lack of adequate financial resources is the biggest challenge hampering the utility’s expansion plans.
Some of the financing strategies being explored by KETRACO to address this issue include mobilising funds from the National Treasury, enhancing internal revenue generation and involving the private sector through various models such as engineering, procurement and construction (EPC), public-private partnerships (PPP) and privately initiated investment proposals (PIIPs).
Kenya has also set up a PPP governance structure to encourage private participation to support the delivery of the country’s PPP agenda under the country’s PPP Act of 2013. The governance structure includes the PPP Committee (which is charged with implementing the Act and acts as the main regulator), the PPP Unit (within the National Treasury, which serves as the secretariat and technical arm of the committee), PPP Nodes (within the ministries, government agencies and county governments, responsible for identifying, developing, implementing and monitoring the projects), and the Project Appraisal Team (which is the technical team in the contracting authority).
Further, the Government of Kenya received a grant from AfDB for seeking technical assistance to develop guidelines for the review of PIIPs for power transmission infrastructure projects in the country.
Currently, KETRACO is evaluating two models—independent power transmission (IPT) and build, own, operate, transfer (BOOT)—for awarding projects under the PPP mode.
The utility has identified two 220 kV lines, Malindi/Weru–Galana and Rongai–Keringet, cumulatively valued at USD62.34 million, to be awarded through competitive PPP bidding on a pilot basis. In June 2020, KETRACO invited a tender seeking transaction advisory services for both the transmission lines.
Further, three lines, namely, the 400 kV Loosuk–Lessos, the 132 kV Eldoret–Kapsowar and the 132 kV Kisumu (Kibos)–Bondo lines, will be developed through the PIIP mode, with support from Africa50, an investment bank for infrastructure in Africa that focuses on high-impact national and regional projects in the energy, transport, information and communications technology (ICT) and water sectors.
Challenges and way forward
Kenya is working to strengthen its grid network to evacuate power from the upcoming generation capacity and to meet the national goal of universal access to electricity by 2022.
However, there are challenges that need to be addressed including the way leave acquisition/right of way (RoW), which leads to long delays in project execution, vandalism of the existing transmission infrastructure, and weak financial viability of the power sector.
Given the USD3 billion financial gap, it is inevitable that the role of the private sector will increase significantly in the development of the Kenyan transmission sector going forward. Kenya’s positive experience in gaining private investments in the power generation segment will help create an attractive investment proposition in the transmission sector as well. Further, the country has support from development financial institutions for developing a PPP/PIIPs framework for transmission.
Notwithstanding these challenges, the Kenyan power sector is poised for exciting times ahead with the expected entry of new players in the transmission segment in the coming years to fast-track the development of the ambitious targets.
The article has been sourced from Global Transmission
