Kenya leapfrogging ahead to a green energy economy!

Countries across the globe recognize the need to safeguard natural resources, productive capacity, and health and well-being, from pollution and climate change. The Paris Agreement on Climate Change seeks to bring the whole world together to address the climate threat. The challenge is in its implementation and regular ratcheting up of targets.

Taking into account the pressing need for new energy sources in Africa to support a growing economy as well as the vulnerability of Africa’s natural resources – soil and water in particular – to climate change, this blog explores the best energy strategy for countries like Kenya. 

I conclude that Kenya should not go down the route of coal-fired power stations but should leapfrog the West and Asia, and not invest in fossil fuel generation at all. In this way, it can approach climate negotiations with clean hands, it will be protected from many of the costs impact of regulatory and policy change such as carbon taxes, it will be able to avoid the air pollution causing health havoc in countries like China and India, last if not least it will help it secure the high-end tourism that it seeks to expand.

Plans for a Coal-fired Power Station on the Indian Ocean Coastline

This is an imminent issue as Kenya is soon to build its first coal-fired power station, with Chinese support, close to the beautiful coastal town of Lamu. http://www.climatechangenews.com/2017/05/23/kenya-signs-china-deal-coal-plant-beside-unesco-site/

I don’t much like dogma – and sometimes things aren’t always quite what they seem. Perhaps Kenya needs to go down this route and compromises need to be made? Current over-reliance on biomass i.e. cutting down trees for cooking fuel isn’t sustainable either. However, having explored this further, I’d stick to my instinctive response. Like the Pacific Islands going zero carbon, considering their vulnerability to sea level rise, like countries that are highly innovative like Japan and Denmark, and taking on board Asia leapfrogging others on green finance, Africa can and should leapfrog others on energy. The great news of course is that though black smoke, polluted waters etc may seem an inevitable part of progress, as Africa urbanises and industrialises it can go a different way!

lamu

 

Energy Needs

The basic position is that Africa needs more energy for lighting, cooking, transport and industry. Whilst Kenya uses 0.17 mWh electricity per capita, rich countries like the US use about 13 mWh electricity (100x more) and the Chinese about 4mWh per capita[1] (20x more). Government projections in Kenya are of an increase in capacity by 5x – from 3.4 GW in 2015 to 18GW in 2018[2].

Cutting down trees for cooking fuel is causing huge environmental degradation, and a better energy solution is needed. Clean, affordable, reliable power may also allow Kenya to diversify its economy, as in Kenya’s Vision 2030, and be less dependent on rainfed unpredictable agriculture – perhaps a place of high tech or at least textiles etc. It may allow diesel vehicles to be replaced by electric vehicles, cooking to be done on clean electric stoves instead. Surviving on lion-watching tourist mini-buses, Daily Mail reading sun –seeker tourists, plus growing coffee prone to disease and fluctuating prices is precarious.

Of course plentiful power is not an end in itself and there are energy efficient versions of modernity. Why swap a semi-outdoors style of design for high energy over-cooled, stuffy shopping malls, offices and restaurants? Moreover, energy on its own won’t kickstart the economy: a skilled workforce, a high calibre technical/scientific community, and good governance are all more important for progress. High “liveability” is critical –  helps retain and attract talent as well as maintain a healthy skilled population.

So what’s wrong with coal?

The pictures below from Beijing are a salutary reminder of the risks of following the same path. This is a situation which no-one wishes to be in! Prof Stephen Chu on a visit to Hong Kong described it as a 40 cigarette a day habit from the day of birth. Its not a happy place to be with air quality levels (PM 2.5s) about 50x above WHO limits, a lot of this due to coal fired power stations.  Perhaps even more importantly the climate impacts of burning coal are huge, as coal has the highest GHG emissions. If we don’t make drastic cuts globally, the commitment to achieve a net zero carbon world and stabliise the world’s climate will not succeed.

beijing poor AQcongstion and pollution

 

Kenya currently largely relies on renewables – hydro and geothermal make up 70% of its energy capacity.  It is already building scale wind farms (in Turkana) and using small scale solar.  In many ways its ahead of the game on climate friendly technology. It could avoid ever facing situations like what we see above.

Why say no to coal?

My argument for saying no to coal (and other fossil fuels) is 5-fold:

  • Kenya needs to make the Paris Agreement work – and it helps to approach the agreement with clean hands not as a big polluter;
  • It will reduce risk to business in Kenya arising from a likely new regulatory framework for a global low carbon economy – which Kenya needs to push for;
  • Solar power is entirely affordable and a good clean option for the country;
  • A weak transmission network makes local off-grid systems cost-competitive compared with centralised fossil fuel generation; and
  • In the absence of a strong regulatory system, competitive prices could be better achieved through avoiding excessive reliance on just a few power producers.

As to making the Paris Agreement work, the plan for a coal-fired power station in Lamu could be a step in an unravelling climate change agreement Developing countries across the world may pick up the last generation coal power stations whilst other countries like China keep to their Paris Agreement and move on: a one step forward and a one step backward approach, on a global scale. This needs to be avoided if we can.

Reducing Risk from a Changing policy framework  

Kenya as one of the losers in terms of climate change could do with coming to negotiations with clean hands – it doesn’t need to get into bed with the polluters. If it keeps its hands clean, it can push for border tariffs and carbon prices. If locked into a system too, it will not be able to push for those mechanisms that disincentivise carbon emissions. Or it will be hit by policy measures that penalise the use of his carbon energy. It may be that one day we begin to see “border carbon tariffs”.

The renewable energy route will also reduce the otherwise adverse impact of the policy changes that Kenya needs eg carbon prices on its own businesses. It minimises the so-called “regulatory risk” on its own economy. Its hard to push for the right policies if you end up facing the squeeze.

But is renewable energy really a practicable and affordable option?

Put another way, is the proposed 1.05 GW capacity power station on 395 ha about 21 kilometres north of Lamu replaceable by an affordable cleaner low carbon system? Can Kenya’s power generation be met through RE rather than gas or coal?

As IRENA’s Africa 2030: Roadmap for Renewable Energy[3] states there are several ways to increase generation through RE with plentiful potential – from solar, on-shore wind, and geothermal. Globally, the weighted average Levelised Cost of Energy (“LCOE”) for newly installed utility-scale solar PV in 2015 was USD 0.13/kWh. This compares with USD 0.05-0.10/kWh from coal and natural gas[4]. However, the most competitive utility-scale projects in 2015 were regularly delivering electricity for USD 0.08/kWh without financial support[5].  In terms of costs in Africa, some forms of RE utility scale solar are now not far off coal: $0.13 – 0.26 LCOE per kWh. The lowest cost of utility scale solar is even lower, at $0.075 mWh, in South Africa.

And that’s just solar PV. Development is occurring in Concentrated Solar Power (see Africa Roadmap 2030) – which has the advantage of the power generated increasing with temperatures unlike solar PV. Also wind energy and geothermal offer much potential. Year by year capital and installation costs are falling.

As a reminder the comparative emissions are as follows: coal emits roughly 740-910 gCO2/kWh; gas about 410 -650 gCO2/kWh, and solar 18-180 g/kWh; and wind 7-56 g/kWh (IRENA 2017).

“Renewables are now the first-choice option for expanding, upgrading and modernising power systems around the world. Wind and solar power, which commanded about 90% of 2015 investments in renewable power, are now competitive with conventional sources of electricity, as their costs have plunged in recent years. The cost of wind turbines has fallen by nearly a third since 2009 and that of solar photovoltaic (PV) modules by 80%”. [10].

What about the other problems  re RE? 

 Land supply – is there enough space for all of this?

This isn’t a major problem in Kenya – though what we are looking at is large scale solar not rooftop PV as in Europe. Solar on large buildings – around 1MW or utility scale beyond – is one option.  The largest (as of 2012) was a 392MW capacity ground mounted site in California (Ivanpah) spread over 5 square miles of federal land. Just over 3 such sites would provide the equivalent electricity from the Lamu power station with almost zero emissions and no air pollution. 50 such sites would give you the level of electricity that Kenya needs. Northern, Western and the Kenyan coast have high levels of sunshine year round, is well-suited to PV panels – some of the best parts of the world for solar energy lie here. Also the land use is ideal for PV once you get into the desert. PV panels can work alongside scrub and goats. They may even have other benefits in reducing evaporation and reducing wind and water erosion.

 Viability in the face of Variability?

The other question is viability – can an electricity grid be run on 100% renewable energy? A lot of the countries powering ahead like South Africa and Mexico aim to draw 5-10% of their share of electricity from solar and wind by 2020 (just 3 years away). But still that’s just a proportion. What we’re looking at here is a scenario where RE makes up almost all of energy needs. Even Germany hasn’t got that far! It has about 33% renewable power.

Can Kenya run its grid on 50% solar considering its variability over the day? That might be a challenge. However, Kenya is well-positioned for a mixture of solar, wind, hydro and geothermal. Battery storage is also improving with California an exemplar of change and Tesla’s new battery storage plant in California is at the forefront of that change. As to successful integration into the grid, there is plenty of evidence to show this is possible. As much as 70% of a regional German grid is now RE, and without the use of storage[7].

 Raising the capital?

The relative costs of finance are also an argument in favour of PV. Increasingly investors are looking for greener projects to finance. I mentioned at the outset Asian investors taking on board ESG considerations, as are EU and American investors. New guidance from the G20’s Financial Stability Taskforce will strengthen this move and a price on carbon amongst other things is widely anticipated. So in terms of accessing finance, RE has its benefits[8].

Job creation – job losses?

But how about the poor farmers in Lamu that sees selling the family land to the power company as a way out of poverty?  Well, they can be offered the opportunity to diversify and install some PV on their rooftop or to sell up to the PV plant.

Taking on board the positives: Making Money from Storing Carbon

Considering its land and reforestation potential, Kenya can get close to zero carbon and also generate revenue absorbing other country’s carbon as it is already beginning to do (See this IFC forest bond project http://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/first-forests-bond-on-the-lse). Getting as close to zero GHG emissions is possible and worthwhile. That way it can use its land to generate returns. If it expands coal-fired generation it will simply have to offset its own emission.

 Conclusions: why Kenya can and should leapfrog Asia?

Kenya is one of the big losers in what at worst is beginning to look like a 100x worse version of the Grapes of Wrath[11]. Climate change is expected to mean more extreme and regular drought, causing conflict and migration. There are not many Kenyans who don’t know what drought means – forcing people to the towns, children going hungry to school, and national parks full of bleached bones.  This rather cruel situation is already playing out as climate refugees[12] flee  to look for a better life elsewhere.

Considering its extreme vulnerability, Kenya has the most to gain by holding the Paris Agreement together, keeping the world on a trajectory to net zero emissions by 2050.  This means even Kenya playing its part and showing what is possible. No point just complaining that it’s the rich countries fault and they should pay. Just isn’t going to happen, as people vote for Donald J Trump!

By going down the renewables route, it can minimize the financial risks on its industries of fossil fuels. A 2°C world means new policy measures can be expected worldwide – including carbon prices and border tariffs so that those with high emissions are penalised for it. Kenya could be hit by these if it goes down the coal route.  Moreover, these are the sort of measures that Kenya will need to push for, and it is important that it doesn’t tie itself into a system that will tie its hands so that it cannot demand the policies that it needs to save its citizens.

Investing in renewable energy will also help save the pristine spaces on the coast, with its coral reef and marine parks, critical to Kenya’s Vision 2030 tourism plans, from air pollution. Kenya’s attraction is in its natural environment.  A more distributed form of energy generation will also reduce the need for a vast and expensive transmission network, and help provide electricity at a competitive price to all those parts of the country that need it.

 

ENDNOTES

[1] http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC  https://www.usaid.gov/sites/default/files/documents/1860/Kenya%20_IG_2015_05_03.pdf

[2] http://www.vision2030.go.ke/projects/?pj=2

[3] IRENA 2015

[4] A Roadmap for a Renewable Energy Future, IRENA, 2016

http://www.irena.org/DocumentDownloads/Publications/IRENA_REmap_2016_edition_report.pdf

[5] IRENA 2016

[6] IRENA 2016

[7] Irena – Rethinking Energy 2017 http://www.irena.org/DocumentDownloads/Publications/IRENA_REthinking_Energy_2017.pdf

p11 and p.21

[8] Irena 2017 p. 22 and p.38

[9] http://dspace.africaportal.org/jspui/bitstream/123456789/34928/1/Situational-Analysis-of-Energy-Industry-Policy-and–Strategy-for-Kenya%20(1).pdf?1

[10] Irena 2017, p.9

[11] 5th Assessment Report (IPCC)

[12] https://www.theguardian.com/environment/2016/dec/01/climate-change-trigger-unimaginable-refugee-crisis-senior-military