Sub-Saharan Africa is no stranger to power cuts – the World Bank estimates that outages cost businesses in the region 20% of sales. Kenya is no exception to the rule, where businesses and manufacturers account for 60% of electricity demand. The Kenya Private Sector Alliance (KEPSA), an organisation that advocates for improvements to the business environment, estimates power outages reduce sales by 7% and cost 2% of GDP.
Power accounts for one-third of manufacturing costs, and when the lights go off, companies turn to expensive and polluting diesel-powered back-up generators. Worse still, some manufacturers take up to half a day to reboot production lines when the power fails. The Kenya Association of Manufacturers, a business organisation representing industrialists, estimates that power outages cause a 4% disruption in manufacturing schedules.
The national grid is already prone to instability. According to KEPSA, transmission losses cost the country $17m annually. Adding planned power sources such as wind may compound the challenge. Wind blows stronger at night, at a time when power consumption drops. The combination of increasing supply and falling demand will cause spikes in the system. With the government planning a massive 5000-MW generation capacity expansion by 2017, efforts are under way to ensure that the grid and its transmission infrastructure keep pace.
Software & Hardware
According to Benson Muriithi, chief manager of energy transmission at Kenya Power, Kenya’s approach to tackle system instability includes both software through smart grids and hardware through new transmission lines. Partners like the US government’s Power Africa programme are assisting with projects such as the Grid Management Support Programme, which will prevent intermittency, enable better grid management, and offer training and software. On the hardware side, the National Treasury allocated KSh23.8bn ($271.3m) for the fiscal year ending June 2014 for transmission infrastructure. The 200 largest industrial users will get dedicated power lines.
In Nairobi, Kenya Power is spending KSh1bn ($11.4m) on new power lines to help transformation and distribution capacity. Foreign companies have been playing a role in Kenya’s midstream upgrades as well. Spanish power giant Iberdrola has been contracted to build substations in Nairobi, at a total cost of KSh4.9bn ($55.9m). The project is being jointly financed by the Kenyan government and the French Agency for Development. Iberdrola aims to boost Nairobi’s transmission infrastructure by the end of 2014 through high-voltage equipment for substations, and has subcontracted a $15m share to Indian company Crompton Greaves, which will supply six high-voltage power transformers and other transmission instruments.
Back-Up & Off-Grid
Switching gears from mitigation to adaptation, some firms are turning to their own facilities to avoid downtime. Manufacturers like the East Africa Portland Cement Company have started using own their production process by-products to generate electricity. Critical Power, a provider of power back-ups, renewable energy and power solutions in East Africa, announced a KSh100m ($1.1m) investment in May 2014 to offer back-up solutions when outages occur. These solutions include uninterrupted power supply units, power inverter systems and generators.
Off-grid solutions are also being rolled out. The Power Africa Off-Grid Energy Challenge is a $2m, three-year initiative that offers grants of up to $100,000 for innovative renewable projects. In the first round of awards in late 2013 three out of six grants were awarded to Kenyan firms. The winners, Solar World, Afrisol Energy and Mibawa Suppliers, are constructing solar-powered water points in northern Kenya, generating power from biofuel in Nairobi slums and supplying lighting fixtures to replace kerosene lamps in low-income households, respectively. In June 2014 Power Africa announced a new framework – Beyond the Grid – that works with 36 private sector partners from Shell to Schneider to invest more than $1bn over five years to seed and scale off-grid energy solutions throughout sub-Saharan Africa.