Boston, MA -- (ReleaseWire) -- 08/31/2012 -- BMI View: BMI's power service focuses chiefly on thermal sources, hydropower and nuclear electricity, while developments pertinent to the green segment are discussed in depth in our renewables service. 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.
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BMI anticipates that Kenya's overall power generation will grow by an annual average of 8.7% between 2012 to 2021, to reach 16.7TWh. Driving this growth will be a 23.6% annual average increase in nonhydropower renewables. Thermal and hydropower power generation are expected to decline by an annual average of 1.92% and 1.76% respectively over the period. Oil-fired generation is expected to fall by an annual average of 9.2% as hydro increases in availability. We expect coal-fired power to become commercially available from 2015 and beyond.
The key trends and developments in the country's power sector are:
- The World Bank has approved a US$684mn loan for Kenya and Ethiopia. The loan will be used to build a cross border power line. This is the first phase of a US$1.3bn project that covers the development of a regional power grid in East Africa.
- Kenya and Ethiopia have concluded a Power Purchase Agreement (PPA), under which Kenya will import up to 400 megawatts (MW) annually from Ethiopia. The agreement is part of a series of arrangements - including a special status trade pact - aimed at strengthening the socioeconomic ties between the two countries and appears to be underpinned mainly by political motivations. With both countries heavily reliant on hydropower and lacking sufficient capacity to cater for the needs of their populations, Ethiopian imports are unlikely to make a significant difference in times of need.
- 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 16.3% in 2011 will help balance the market.
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