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Kenya

Kenya

Kenya extends wind energy tariff payment period

KENYA: Kenya, East Africa's feed-in tariff pioneer, has increased the minimum period for payments to investors in the wind energy sector from 15 to 20 years.

The extension, which also applies to the geothermal, biogas and solar energy sectors, is likely to make renewables more attractive to investors keen to recoup their investments in wind power.

Other provisions in the feed-in tariff for wind energy, which has been adjusted once since 2008, remain the same. These include the fixed tariff of $0.09/kWh for electrical power supplied to Kenya Power and Lighting Company (KPLC), the country's sole power distributor and signatory to all power purchase agreements.

First implemented in March 2008, the feed-in tariff applies to individual wind power plants with a capacity of less than 150MW. Tariffs are differentiated by technology, irrespective of whether the project is on a windy or non-windy site.

Although Kenya's feed-in tariff rate is lower than South Africa's $0.14/kWh, permanent secretary at the Kenyan Ministry of Energy Patrick Nyoike says there will be a continuous review of feed-in-tariffs to encourage growth of the sources of energy qualifying under the policy. The government has said it wants to increase competition among wind energy developers in a bid to make electricity cheaper to consumers.

Public protests have in the past focused on what many regard as exorbitant domestic electricity charges levied by the country's independent power producers, where the current installed power capacity has reached 1.48GW, including temporary emergency power of 290MW.

The tariff is also designed to reduce transaction and administrative costs by eliminating the conventional bidding process previously required of private investors in renewable energy.

Prime minister Raila Odinga told a recent public-private partnership round-table forum that Kenya, with an estimated wind power potential of 30GW, would make every effort to make wind energy as attractive as possible to investors. A task force set up to help achieve this goal is due to submit a report focusing on existing barriers in the wind industry, including the feed-in-tariff policy. It is understood the report will look at how best Kenya can mobilise technical and financial resources for the implementation of renewable energy generation programmes and projects under public-private partnerships.

Kenya's feed-in tariff policy has attracted the attention of companies such as Lake Turkana Wind Power (LTWP), a consortium of Dutch and African companies and individuals. Financial closure for this project is expected in October.

The LTWP wind farm intends to use the latest turbine technology to generate clean power equivalent to 30% of Kenya's current installed capacity of 1GW. The country generates 60% of its power generation from hydropower.

Situated in Loiyangalani in the remote northern district of Marsabit, the wind farm will consist of 353 850kW turbines over 2,428 hectares. Power generation is expected to begin in June 2011 and reach full production of 300MW by July 2012.

Another company, Gitson Energy, has also sought approval from the Kenyan authorities to set up a 300MW wind farm in Bubia, also in Marsabit (see page 28).

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