The Expansion of Renewable Energy in Kenya

Alternative Energy

Arden Cohen

What are the key factors influencing the expected trajectory of energy production and consumption in Kenya and what are the related implications for the global investment community?

The consumption and production of renewable energy in Kenya continues to grow as a result of Kenya’s growing population, further improvements to renewable energy infrastructure and technologies, as well as increased funding from domestic and international investors. Since 2003, global new investment in renewable energy has been growing at a CAGR of 18%. Kenya produces 70% of their electricity from renewable energy sources making them one of the leading countries in renewable deployment. However, a large portion of the Kenyan population is not connected to the power grid. Over 22 million people in Kenya are not connected to electricity, representing about 44% of the population.

As Kenya continues to develop in response to the current trends of urbanization and industrialization, the demand for energy is expected to increase. This trend, however, prompts a decision for Kenya, whether to power this progress with renewable energy, for the first time bypassing the “black to green” process that most of the developed world has been through, or to generate their energy with consideration of the environment a priority the first time. Kenya has made the pledge to rely on 100% renewable energy for their energy needs by 2020 but the ongoing COVID-19 crisis as well as pre-existing headwinds have prevented this goal from being achieved. Specific headwinds currently include the lack of renewable infrastructure and the longstanding dependence on fossil fuels that has made conversion to greener energy sources costly and inconvenient.

However, while this year's acute pandemic may temporarily delay the completion of renewable energy projects, green energy source spending has been less affected than oil and gas global investments. According to the market research team at UBS, renewable energy investment is anticipated to account for half of total investment within the entire global energy sector during 2020. It appears that while projects may have been delayed, on a global scale, the crisis has actually encouraged governments to increase their budgets for renewable technologies and other green investments such as carbon capture infrastructure and hydrogen. I would like to explore this case study to consider why this may be the case, and what lessons it may offer other countries.