Kenya's hybrid renewable plant gets green light

From the newsletter

Construction of Africa's first hybrid renewable energy project, combining wind, solar, and battery storage, is expected to commence this year in Meru County, Kenya. This follows the issuance of title deeds to landowners, paving the way for the investor to now lease the land. The project was expected to start in 2021.

• Kenya leads Africa in renewable energy grids. With 940 MW of installed geothermal capacity, it ranks among the top seven globally, though this is four times less than the leading country, the US. Overall, 90% of its grid power comes from renewable sources.

• The country has several rivers suitable for hydropower generation, and wind speeds average 7 m/s in most areas. Being situated at the equator, the country enjoys plenty of sunshine, averaging 6.5 hours per day. All these have provided it with a strong footing in renewables.

More details

• The project will have a capacity of 220 MW, comprising 200 MW from wind and 20 MW from solar. The capacity of the battery energy storage system is not mentioned. The project will be implemented at a cost of $250 million by Hewani Energy, a subsidiary of Japan’s Eurus Energy and South Africa’s Seriti Green, along with the Meru Investment and Development Corporation.

• Speaking at the issuing of the title deeds, President Ruto committed to ensuring the project's success. “One of the impediments to the renewable energy project was the lack of title deeds. The investor will now sign lease agreements with 2,500 landowners to generate clean energy. I assure the investor that the government will approve the power purchasing agreement (PPA) to pave the way for development,” he said.

• However, Kenya has had a moratorium on the signing of new PPAs with independent power producers (IPPs) since 2021. This was implemented following public outcry over high electricity costs, which compelled the government to review all existing agreements and develop a more sustainable and cost-effective framework for future power procurement. But this has never progressed.

• The ongoing PPA moratorium has raised concerns about grid security and the ability to meet growing electricity demand. Since 2021, the peak demand has increased by 362 MW, while only 208 MW of new electricity generation capacity has been added, predominantly from renewable sources. This reliance on intermittent renewables exacerbates the challenge of meeting peak demand, which requires a consistent baseload power supply. In 2024, the country suffered four national-level blackouts as a result of insufficient power supply. To mitigate potential supply deficits, electricity imports from Ethiopia have been increased from around 100 MW to approximately 200 MW.

• At the same time commercial and industrial customers have been switching to self-power generation, and currently, the installed capacity of captive solar power systems exceeds the total installed grid-connected solar capacity. This has offset some demand, giving the grid breathing space.

• Kenya, however, has many projects in the planning phase, including the Grand Falls hydropower dam with a capacity of over 600 MW. Progressing in development, especially in land acquisition, has proven challenging for several projects. This is due to communities either completely rejecting the project, demanding heavy compensation, or lacking land documents, with the majority of land being communally owned.

Our take

• Kenyan government policy needs clarity and consistency to build investor confidence in the renewable energy sector. The current PPA moratorium has created uncertainty and stalled projects. Politics and corruption should be kept far from energy projects, and the government should lift the PPA moratorium now.

• The government must actively facilitate land acquisition for energy projects and other infrastructure projects. Complexities with communal land ownership and community concerns must be handled carefully to avoid court cases, which will further delay the process.

• Given Kenya plans to prioritise only renewable energy projects with a battery storage component, this project is forward-thinking and gives the government hope that it can be done. However, much more is needed in terms of incentives to ensure the electricity cost is comparatively cheaper than other sources.