VERD Q.I. CEO Sabine Christiaens went to Kenya and Tanzania to develop further the renewable energy business in East Africa. A challenging market full of interesting experiences. See below her experiences and findings : 

I just have come back from my 2,5 months trip to Kenya, mainly spent in Nairobi. I had already spent 6 weeks in the summer last year. That trip had served me to give me a good idea what is going on in the renewable energy market in Kenya and East Africa and I was quiet enthusiastic when I got back, so now I felt that I needed to do a following up trip.

This time I decided to even spend some more time over there to see how I could further develop the renewable energy business. I talked to the different stakeholders: ERC, IPPs, investors, developers, EPC contractors, module manufacturers, debt financers, etc.

Last time I already came to the conclusion that a lot is going on in the market, which is still the case, however I have also noticed that many IPPs or developers are struggling to realize their projects, and especially solar and wind projects and more specifically the large projects. This is caused by different factors: There is a lack of experienced developers and commitment. Developers just don’t know how to manage the project and to make sure that the projects that they are developing are bankable. Due to the lack of knowledge and the lack of funds, they are trying to get the projects permitted with the minimum investment. However when a professional investor then comes in, all these studies need to be redone in order to make them bankable.

On the other hand the Kenyan government is not really focusing on solar and wind projects. I have the impression that different signals are given towards the market. I have been informed that they were stating that solar and wind would only take up 10% to 15% of the whole capacity of the grid in the future. Solar and wind is definitely not a main focus of the Kenyan government. I have talked to different IPPs, who are well advanced with their projects, and they are struggling to get the PPA signed, because they are put on a waiting list, which seems to take forever. Until now no PPA has been signed, except then for the 600kW project in Strathmore University. Fighting against the corruption is definitely another challenge to be overcome.

On the other hand, the promising Kinandop 60 MW wind project has been cancelled and obviously what has happened here definitely does not help the sector or the confidence of investing in Kenya. 

http://www.constructionkenya.com/2341/kinangop-wind-park-power-project/

I can only hope that Kenya refocuses the sector. They are now talking about revising the FIT policy or even introducing a tendering process like in South Africa. This is definitely not going to help the sector, as at this moment no (solar) large projects have been signed yet. I have seen quiet some promising announcements in the market from different developers, IPPs, stating that they are going to realize big solar farms, but honestly I have become very skeptic about it, because a lot is promised, and nothing is realized.

On the other hand I still think that there is a good market for off-grid solar power and there seems to be quiet some interest from the government to go for geothermal power projects and hydro projects. Centum Investment Company (together with other foreign investors) is still working on their 70 MW geothermal project.

Overall I still think that the renewable energy market in Kenya is definitely gaining importance; there is still a long way to go and we still need to surpass the different challenges, but it is definitely worth following the market.

Regarding other East African countries, Uganda starts to see the results of the Get-FIT program. Recently the construction of a 10 MW solar plant has started and other projects will follow.

I have heard also promising news for renewable energy in Tanzania. It seems that the new president would like to focus more on renewable energy projects and the financial situation of the local utility seems to be improving.

It has been a great experience again spending time in Kenya and Tanzania. I have strengthened my contacts over there and I would like to thank all my business partners for their time and dedication.

I am looking forward to talk to new developers and investors or other strategic partners who are active in the market (not only limited to Africa).