Renewable energy policy spurs investor interest

• Several producers are keen on signing power agreements with the government

Mr Njenga said convergence of a favourable investment, public policy, awareness and acceptance are all key to creating a more favourable environment for growing the industry in Kenya specifically and Africa generally.

“This is critical because a stable, long-term policy is needed to not only attract, but also sustain investment for the industry’s growth,” says Mr Njenga.

It is also aimed at encouraging private investors to operate the power plants prudently and efficiently to maximise returns.

While they agree that initial investment and renewable energy generally is expensive, in the long term it is cheaper than fossil fuel.

“Renewable energy sources will enhance the country’s energy supply security, reduce its dependence on imported fuels and cope with the global scarcity of fossil fuels and its attendant price volatility,” Mr Magambo said.

In line with a position paper prepared by the ministry in the 2007/08 fiscal year, the policy seeks to reduce transaction and administrative costs by eliminating the conventional bidding process.

The Public Procurement Oversight Authority has approved the policy, which in essence is a non-competitive form of procurement and can be interpreted as single sourcing in the public procurement parlance.

“If the government were to use the open tender system, it could have forced it to provide the investors with data from carrying out costly feasibility studies,” explains the renewable energy consultant.

This, he says, could limit the speed and amount of investments needed if the country is to produce adequate, sustainable and stable power supply.

Just setting up a wind power plant the size of the 40 MW Kindaruma hydro-power station will cost Sh4.5 billion without the feasibility studies and logistics such as transportation of material and equipment. The tariff system is already in use in the US, Europe and Asia.

The policy allows the investor to finance his or her project through debt, equity or both and welcomes both joint ventures and partnerships.