infrastructure and its reliance on relatively relatively on reliance and its infrastructure of ’s energy insecurity the illustrated neatly event This capacity. generating of of 180 loss megawatts atemporary to led that of reactions achain triggering plant, hydropower region’s largest of the fell atransformer on that monkey trespassing a by caused was it that discovered later was It for hours. electricity without businesses and millions of households left in Kenya blackout power amajor year In June this and green growth development, security energy national links between The the country’s rapid development during during development rapid country’s the considering surprising not is which areas, urban large supply to sources energy few sector in development. development. energy in renewable sector private the incorporate to need and for the choices investment for green support domestic more generate to improved be should electricity to access that emphasises It energy. for renewable full potential its realise to is Kenya if overcome be to need that hurdles and the growth for green opportunities addresses brief policy This granted. for taken be easily too not should frontrunner energy arenewable into development Kenya’s access; electricity and low and oil reserves, found coal newly capacity, government of suboptimal abackground against placed be should developments However, these growth. green boost to for Kenya of opportunities framework a new of 2013 of 2010, 2016 elections and the provide peaceful Act the Change Climate constitution new of the approval the Furthermore, align. projects energy renewable concerning priorities and donor government where aunique case provides and Kenya decarbonise to economies for national support international strong is there potential; energy green its realise to for Kenya right seems timing The objectives. change climate concerning (EAC) Community African East of the forerunner the become to policies ambitious formulated has government central The development. national country’s for the sources of energy supply and affordable of asecure importance overall the recognises state Kenyan the blueprint, development long-term national its With Kenya: A green growth utopia? Kenya: growth green A NOVEMBER 2016 1 climate to vulnerable highly country the making tourism, and agriculture resources, natural on GDP half of its for nearly depends in 2015. US$63.4 to annually percent 3–9 by grown has GDP country’s the sectors, export in agricultural and growth sector ICT of the development fast in infrastructure, higher investment by Driven climate. political stable a relatively and policies market-friendlysector, economic private astrong base, human capital a strong by facilitated growth economic substantial experienced has Kenya decade. past the (accessed October 2016). 2016). October (accessed indicator/NY.GDP.MKTP.KD.ZG?locations=KE 2016,Indicators, %) (annual growth GDP Kenya http://data.worldbank.org/ 1 Still the economy economy the Still , World Bank Bank , World

Tom Oduol Owino, Ernst Kuneman & Ries Kamphof Policy Brief Clingendael Policy Brief

change effects. Economic growth has Kenya has abundant exploitable renewable coincided with socioeconomic developments energy sources such as hydro, geothermal, such as population growth (population size wind and solar.4 According to the National is projected to double to 88 million by 2050), Energy Policy, fossil fuels are expected increasing urbanisation (already 82 percent to play a larger role in the country’s of the population resides in 7 per cent of electricity supply; domestic coal production Kenya’s land area)2 and a rising middle is rising and a 1,050 MW coal plant has class. These developments exert pressure been contracted in spite of legal and civil on Kenya’s energy system and will lead to opposition. With the discoveries of coal and higher peak demand centres. In order to oil fields and new recent drilling activities, keep up with the country’s development, the potential for green energy growth and a secure and affordable supply of energy is a low-carbon economy is under pressure. one of the main priorities for the government. This can be partially offset when foreign Green energy growth can play a crucial income from commercial oil exploitation is role in this regard while simultaneously diverted to support green growth initiatives, reducing reliance on imports and for instance via sovereign wealth funds. contributing to climate change ambitions. Yet, the infrastructural investments needed Kenya’s goal is to reduce greenhouse gas to initiate large-scale exploitation of (GHG) emissions with 30 percent by 2030 domestic fossil resources would reflect a compared to its business-as-usual scenario. long-term commitment towards high-carbon Considerable gains can be made in the industry, which is difficult to reconcile with energy sector, which is one of the country’s Kenya’s ambitious ‘green’ policies. largest sectoral GHG emitters.3

Low access to electricity Kenya’s energy sector Despite Kenya’s relatively low-carbon Primary energy supply in Kenya is currently capacity, the electricity dominated by biomass sources, accounting sector accounts for only 9 percent of national for roughly two-thirds of total supply and energy consumption. Access to electricity used for cooking and heating by rural and has doubled in the past years, but is still urban middle- and low-income communities. low with just 55 percent of the population Given the relatively low prices of biomass (mostly urban-centred) having access to the energy, it has the potential to significantly grid electricity. The government has set the contribute to green energy growth in Kenya ambitious target of universal access by 2020, provided it can be produced sustainably which is an important step towards more — for instance, by using agricultural economic inclusion and could very well be by-products of the tea, coffee and flower aligned with green growth objectives. One industries. Besides biomass, domestic of the major obstacles to realise this goal is energy use is dominated by fossil fuels and the country’s weak and inefficient energy electricity. Imported fossil fuel products transmission and distribution infrastructure, complement the and made up resulting not only in irregular supply but roughly 18 percent of the total import bill also high energy prices. Kenya Power, the in 2013. Kenya’s power sector is dominated country’s semi-public energy utility company by renewable energy sources such as that has a monopoly on energy distribution geothermal and hydropower (Figure 1). and transmission, is frequently blamed for

2 Newell, P., Phillips, J., Pueyo, A., Kirumba, E., Ozor, 4 For example, solar energy has one of the N. Urama, K. 2014. ‘The political economy of low highest insulation rates in Kenya with carbon energy in Kenya.’ IDS Working Papers (445), 4-6 kilowatt hours per m2. Renewable Energy 2014, p. 13. Sources, Energy Regulatory Commission, 3 Kenya: Country GHG emissions, CAIT Climate Data http://www.erc.go.ke/index.php?option=com_ Explorer, 2013, http://cait.wri.org/profile/Kenya fsf&view=faq&catid=2&Itemid=649 (accessed 14 October, 2016). (accessed October 21, 2016).

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Figure 1 Installed generation capacity in Kenya by end 2015

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Source: Kenya Power, Annual Report, 2015.

these issues. However, a failing energy grid considering the country’s current electricity with limited national coverage has also supply situation, which is characterised by created opportunities for (decentralised) moderate overcapacity of geothermal, wind green energy growth in the country. Besides and hydropower sources in the face of rising a growing market for stand-alone distributed peak demand centres, national economic solar home systems, renewable energy firms growth and low overall energy access. are increasingly opting to generate, supply Existing laws give Kenya Power the and distribute electricity in densely populated monopoly of grid electricity distribution in areas by means of solar energy micro-grids.5 the country and so far the Energy Regulatory These have the additional advantages of Commission (ERC) has approved mini- being capable of sustaining larger appliances grids only on a case-by-case basis. As its and offering a low-carbon solution to the major shareholder, the government has problem of bringing reliable electricity to off- been protective of KP for a long time. This is grid areas. For many Kenyans, access to the changing with the Energy Bill 2015,6 which national grid is too expensive, in some cases aims to liberalise both power distribution and even with subsidised prices. Solar decentral retail, is sponsored by the government and micro-grids can be a more affordable option, the ERC, and is currently awaiting approval as they only require (significant) upfront from Parliament. If the Bill is passed into law, investments in small-scale infrastructure and Kenya Power will lose its stranglehold on energy technology (which can be shared the end-use electricity sector and decentral by the local community) while marginal renewable energy initiatives will face less production costs are nearly zero. At the same barriers to implementation.7 time, by increasing access to electricity, decentral energy solutions can transform Kenya’s high latent demand into effective energy demand. This is highly important 6 The Energy Bill 2015, http://www.erc.go.ke/images/ docs/Energy_Bill_Final_3rd_August_2015.pdf (accessed November 2016). 5 ‘Solar firm seeks nod to challenge Kenya Power 7 ‘Proposed law seeks to end Kenya Power market monopoly’, , May 2016, http://www. monopoly’, Business Daily, May 2015, http://www. nation.co.ke/business/Solar-firm-seeks-nod-to- businessdailyafrica.com/end-Kenya-Power-market- challenge-Kenya-Power-monopoly-/996-3219468- monopoly/539546-2702638-1442vstz/index.html bgyds9z/index.html (accessed October, 2016). (accessed November 2016).

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Kenya’s new framework for thereby empowering local communities who green growth want to protect their environment. Local community groups in Lamu have already successfully exercised these rights by going Political developments in recent years have to court and stopping the construction of a given rise to optimism for the realisation 1,050 MW coal plant. As the Act does not of Kenya’s green growth potential. First require anyone to demonstrate (physical) of all, awareness among the public and harm by the infringement, numerous parties government on the need to address climate and (civil society) organisations are able to change is high, especially from an adaptation step up for the poor and the environment. and renewable energy development perspective. The alignment of government and donor priorities in funding (large-scale) Kenya’s political climate projects has been a major boost to the and the contested issue of country’s renewable energy growth. At the same time, this has increased the need to landownership divert resources to more small-scale energy projects while involving the private sector Not all these developments are straight­ and reducing donor dependency. Currently, forward, however. As constitutional reform the financial sector is working on issuing and devolution can generally be seen as an green bonds in Kenya, which may speed up opportunity for green growth and energy this process. Since 2013, a new government security as elected representatives become structure based on the new constitution has more accountable and people feel more come into effect following a referendum in represented, that opportunity has also been 2010 in which the majority of Kenyan citizens taken up by landowners or pastoralists who voted in favour of constitutional reform. want more compensation and are supported Improved democratic governance, communal by local elected leaders and civil society rights, enhanced checks and balances, and organisations. A number of projects have devolution of political authority have created been delayed or even cancelled as a result a new framework in which green (energy) of claims from landowners, manifested growth can be promoted. recently in projects such as the Kinangop In this way, the 2016 Climate Change Act Wind Park project, which would have has provided the legal foundations for the provided electricity to 150,000 households National Climate Change Council, which is to with a 61 MW generation capacity.9 Since coordinate implementation of the country’s land is becoming scarcer in Kenya, the costs climate change objectives. It aims to of land are expected to take up a larger stimulate low-carbon development through proportion of project costs, especially for various actions including incentivising large-scale renewable energy projects. the private sector, promoting low-carbon The National Land Commission, created and technologies and mobilising financial authorised to oversee land compensation resources through the Climate Change Fund and dispute settlement issues, is becoming while overseeing climate change efforts. an important stakeholder in Kenya’s green The new law also permits individuals to growth trajectory. Also, while there is much appeal to the Environment and Land Court popular support for devolution measures, it is when someone’s actions adversely affect not clear that implementation has sufficient adaptation and mitigation objectives,8 champions and funding. The political class does not always support effective implementation, as many MPs either are 8 See Article 23 of Climate Change Act. No. 11 not familiar with many issues in the new of 2016, The Republic of Kenya, 2016, http:// www.kenyalaw.org/lex/rest//db/kenyalex/ Kenya/Legislation/English/Acts%20and%20 Regulations/C/Climate%20Change%20 9 Kenyan wind power project cancelled due to Act%20-%20No.%2011%20of%202016/docs/ land disputes, Reuters, February 2016, http:// ClimateChangeAct11of2016.pdf (accessed www.reuters.com/article/kenya-electricity- October 27, 2016). idUSL8N1620QG (accessed October 2016).

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constitution or deliberately misinterpret Opportunities for green growth some clauses to serve their political and related partisan or sectarian interests. If Despite some of the political-economic, implemented correctly, constitutional reform institutional and socio-technical impediments and devolution open up the decision-making to green growth outlined above, Kenya process to a more bottom-up approach. presents a relatively rare case in which Hence the need arises to incorporate local national energy security goals align with grievances and combine green growth renewable energy development and green with socioeconomic inclusion and poverty energy growth. Historically, the Kenyan reduction, thereby stimulating local support economy has been highly exposed to and mitigating resistance. international energy prices, and plans to develop a domestic fossil fuel industry could make the country more vulnerable Intermingling of interests and an to geopolitical tensions in the region. Even over established energy sector though coal, oil and gas are likely to play a larger role in Kenya’s energy mix in the future, the same is true for renewables as Another major issue in Kenya’s political the Kenyan government strives to meet climate affecting green energy growth is its goal of universal electricity access by the intermingling of political and business 2020. Several alliances are expected as interests. Kenya has experienced unlimited Kenya moves towards the implementation ownership and indulgence by public servants of green energy growth policies. Among in private property and business without any the most promising are the so-called ‘multi- due consideration for conflicts of interest stakeholder’ meetings as reflected in or commitment to public duty. This practice Kenya’s National Climate Change Action has fuelled corruption at various government Plan development process and materialised levels and has led to inflated project costs, in the Kenya Climate Change Working incompetent appointments and a general Group. Powerful ministries such as Energy lack of accountability. To certain degree, and and the National Treasury it has thereby hampered the ability of the seem aligned, and the President’s Office state to regulate and control the energy is also committed to (large) renewable sector, which is crucial for green growth energy projects. Developed-country funding policies to succeed. In addition, Kenya’s partners have been very active in Kenya’s energy sector seems to be over-established green energy growth and have, in line with with (semi-)public actors lacking a clear de government priorities, invested mostly in facto delineation of responsibilities. Poor large renewable generation projects. Taking performance of state-owned companies the above considerations into account, the and reliance on funding partners has , funding partners, created strong support for private sector non-governmental and public organisations, involvement, with the share of independent as well as the private sector, should take power producers more than doubling since the recommendations below as guiding 2008 (to currently 24 percent of the country’s principles in future energy policies in order to installed capacity). The challenge for the unleash Kenya’s green energy potential. Kenyan government here lies in attracting private capital to finance its electrification • Mobilisation of resources. As Kenya is a programme while ensuring a stable leading investment destination in Africa investment climate in a potentially rapidly with a business-friendly environment, its growing market. This means increasing private sector needs to be incorporated knowledge among local financial institutions into the country’s energy development about green energy options and finding a in order to increase and diversify balance between investment returns and the capital currently provided largely by ability of citizens in newly connected areas to donor agencies. This means adequately benefit from clean energy on their doorstep. incentivising private actors to invest in

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green energy projects by increasing the the end-use energy sector. Meanwhile, rate of return from green investments, Kenya Power could use its resources on for instance with tax incentives and upgrading the existing infrastructure to Green Economic Zones. Also, continuous improve efficient and reliable supply in donor commitment should be ensured areas connected to the national energy by safeguarding domestic stability, grid. More competition in the end-use addressing corruption and implementing sector could also lead to the entrance of constitutional reforms. At the least, new distributors in national grid areas. a proportion of potential fossil-fuel This may improve efficiency and result in extraction revenues could be redirected lower energy prices, making electricity towards green investments via sovereign more affordable for poorer sections wealth funds. of the population living in connected regions. • Prioritisation of investment in energy infrastructure. As well as increasing • Devolution as a solution. With a well- production, investment in energy educated population and high awareness infrastructure and adequate distribution of climate change, constitutional reform and transmission should be prioritised so and devolution in Kenya could provide as to increase overall energy access and important opportunities for green growth a reliable supply of electricity. This should and energy security by increasing public coincide with realistic and depoliticised participation, accountability of elected planning in the sector in order to match representatives and representation of demand, supply and required distribution citizens. Public and civil society need infrastructure. to be more involved, not just in the discourse for approval but also in the • Linking economic inclusion and green design, development and implementation growth: incorporating micro-grid and of green growth initiatives and energy distributed home solutions in national security programmes at county level. energy goals. In order to meet the 2020 This could increase support on the target of universal energy access, ground, improve implementation and renewable-based micro-grids and create a more balanced view on energy distributed solar home systems might solutions, promoting more equitable be a quicker and more efficient low- economic and social programmes that carbon way to bring electricity to both can overcome public protest against populated and isolated off-grid areas (renewable) energy projects. At the same than large investments in expansion and time, stakeholders should be cautious refurbishing of the national energy grid. about potential additional political risk For this to succeed, however, the Energy of rent-seeking, conflicting interests and Regulatory Commission and Parliament project delays as a result of devolution need to approve these initiatives and measures in combination with low open up the market for competition in government capacity to regulate.

6 About the Clingendael Institute

The Netherlands Institute of International Relations ‘Clingendael’ aims to enhance and deepen knowledge and opinion shaping on issues related to international affairs. The Institute realizes this objective through its research, training and consultancy for national and international parties. The Institute publishes reports and policy briefs, holds numerous conferences and publishes the digital magazine Internationale Spectator. Every year Clingendael offers a wide spectrum of courses and programmes, training hundreds of diplomats, civil servants, and other professionals from all over the world. For further info, please view: www.clingendael.nl

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About the authors

Tom Oduol Owino is Senior Researcher / ClimateCare.

Ernst Kuneman is Research and Project Assistant / Clingendael Institute.

Ries Kamphof is Visiting Research Fellow / Clingendael Institute.