Renewable Energy
  • Overview
  • Kenya

Renewable Energy

Overview

Renewable Energy (RE) covers a large spectrum of technologies and energy services. Generally, RE can be classified in two main categories, depending on cost of production : those below EUR 10 c/kWh (wind, hydropower, geothermal and some bio-mass related technologies) and those above EUR 15 c/kWh : solar (concentrated solar power – CSP or photovoltaic), small biomass power generation, as well as other technologies still under research and development such as ocean energy. Public support to the development of RE needs to be tailored to the degree of maturity and the economy of each technology, as well as the scale and grid or off-grid nature of the projects.

The massive development of RE is key both to energy security and to reduce greenhouse gas emissions. Some studies point out the sector could be a major driver of green jobs. In order to scale up RE investment in a competitive environment where fossil energy remains largely underpriced, RE technologies require not only financial incentives but also public policies, regulations and mechanisms (feed in tariffs, support to project development, awareness raising, etc…) which are not always easy to design and implement particularly in developing country contexts.

As a club of major development financial institutions, IDFC has strong expertise and financial capacity to work on the promotion of RE. According to the report on “Mapping of Green Finance Delivered by IDFC Members in 2015”, IDFC committed in 2014 more than USD 19 bn to support RE programs, i.e. about 20% of the club’s total commitments in the area of green finance.

Contact

Contact

IDFC Secretariat
 
KfW, Palmengartenstraße 5-9, 60325 Frankfurt, Germany

Case Study Renewable Energy:

Supporting geothermal energy development in Kenya

Kenya is experiencing difficulties today to meet its peak electricity demand and has to resort to the use of emergency production capacity at prohibitive costs. While being entirely dependent on imports for fossil fuels, the country has renewable energy resources more than sufficient to cover its electricity needs, particularly in the field of geothermal energy with a potential estimated at 7,000 MW.

Supporting geothermal energy development in Kenya

Geothermal power in Kenya, despite its considerable potential, the availability of technology and its environment-friendliness, remains nonetheless limited because of its substantial investment costs and the very high risks associated with the early stages of development during exploration and drilling. In order to encourage this development, the Kenyan Government restructured geothermal activities in Kenya to fully take care of the risks related with exploration and created in 2008 the Geothermal Development Company (GDC) to be specifically in charge of steam field development.

AFD fully supports the Government of Kenya in this respect, to promote a low carbon content economic growth for Kenya by developing renewable energy, namely geothermal energy, and reducing the greenhouse gas emissions. This can be illustrated through three examples:

  1. GDC’s core mandate is to develop steam fields and sell the steam to power producers. AFD granted a sovereign loan of 56 million EUR to the Ministry of Energy to:
    1. allow the GDC to purchase two drilling rigs and improve GDC’s prospective capacity;
    2. create a National Energy Master Plan enabling a better identification of the potential of renewable energies and planning their development, and developing Kenya’s geothermal potential by means of support to the GDC.
  2. A Reservoir Optimization Study showed that the underground steam resources in the geothermal fields of Olkaria, located in the Rift Valley near Lake Naivasha, are greater than initially estimated. KenGen, the biggest national power producer, developed a project which aims at expanding the available energy supply by 280 MW in the Olkaria I and Olkaria IV power plants. To achieve this, AFD granted a sovereign loan of 150 million EUR to the Government of Kenya, to be on-lent to KenGen for the financing of two additional 70 MW units at Olkaria IV. The total project cost is about 1 billion EUR; the project is funded with co-financing from JICA, the World Bank, KfW and EIB.
  3. AFD granted a loan of 20 million EUR to KenGen to develop the 3rd unit at the Olkaria II power plant (+35 MW).

Further Information

Sustainable Infrastructure

Sustainable Infrastructure

Identification of impacts & best practice procedures

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Energy Efficiency

Energy Efficiency

Best practices and facilitation of Members’ collaboration

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Social & Economic Inclusion

Social and Economic Inclusion

Enhancement of poverty mitigation mechanisms

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Green Finance Mapping

Green Finance Mapping

Transparent and comprehensive overview of green financing

Find out more