Boston, MA -- (ReleaseWire) -- 02/28/2013 -- BMI View: Kenya's power sector continues to diversify its energy generation capability. Although hydropower generation remains vulnerable to drought and variations in rainfall, additional hydro facilities are being developed in order to reduce the country's dependence on costly oil-fired capacity. Over the longer term, non-hydrorenewables are to play a much bigger role in the country's energy mix. Most notably, we see geothermal as the favoured form of renewable energy, as its potential is considerable. Coal-based generating schemes are to provide electricity supply over the medium term.
BMI anticipates that Kenya's overall power generation will grow by an annual average of 12.72% between 2013 to 2017, to reach 14.92TWh. Driving this growth will be a 36.14% annual average increase in non-hydropower renewables. Thermal is also expected to increase by an annual average of 3.49%, while hydropower power generation is expected to decline by an annual average of 2.50% respectively over the period. Oil-fired generation is expected to fall by an annual average of 17.54% as hydro increases in availability. We expect coal-fired power to become commercially available from 2015 and beyond.
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The key trends and developments in the country's power sector are:
- Due to the expected rise in net energy generation over the next few years, Kenya's power supply shortfall will eventually ease, with the potential to give the country a net export capability. A gradual decline in the percentage of transmission and distribution losses from an estimated 16.19% in 2012 will help balance the market.
- In September 2012, a first major discovery of gas offshore Kenya was realised, underlining East Africa's potential to be one of the next great hydrocarbons producing regions and hinting to significant upside risks for our gas generation forecasts for the country. That said, we highlight that the development of the regional Oil & Gas industry is still in its infancy and that lack of physical infrastructure and regularity risks are set to limit potential in the short to medium term.
- Kenyan Prime Minister Raila Odinga is expected to sign a deal between Daewoo International and the Kenyan Electricity Generating Company (KenGen) for the construction of a new coal-fired power station in Kilifi County. The power station will cost US$1.3bn and its two turbines will generate 300 megawatts, making it one of the largest power station in East Africa.
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