Selections from the 2020–2040 Least Cost Power Development Plan

Relevant sections of the official updated report released in January 2021

For reference and comparison, previous LCPDP 2017–2037 here.

Least Cost Power Development Plan, study period 2020–2040

Selected points:

• Integrated National Energy Plans (INEPs) will be developed and an Energy Policy updated every 5 years from now on, following Section 4–8 of the Energy Act 2019, once the INEP framework and draft regulation are approved.
• This plan “in particular… attempts to restructure the generation sequence of power plants in a manner that matches the demand forecast closely. This is to ensure that the demand-supply balance is not skewed too heavily towards supply as to leave the sector with stranded generation investments and the attendant high system costs.”
• Energy demand in Kenya grew at 4.5% over the past six years, while GDP grew at an average of 5.4% (prior to Covid). Demand fell by 9.1% at the onset of Covid 19 but bounced back within six months.
• Demand Forecasting Methodology is explained in detail in Section 3.6.

ABOUT THE REPORT

• “This report is a product of joint effort between all sector utilities within the Kenyan power sector. Oversight and quality assurance is provided by a Committee chaired by the Director General, Energy and Petroleum Regulatory Authority (EPRA) as well as senior management of sector utilities.”
• “The technical team of the LCPDP undertakes all relevant simulations, analysis and draft the report for consideration by the Oversight committee.”
• “The Ministry of Energy (MOE) continues to provide policy guidance that informed and steered the technical team towards the Government intended focus on provision of adequate, reliable and affordable power in the country.”

EXECUTIVE SUMMARY

• “In accordance with Part 2 section 4–8 of the Energy Act of 2019, the Cabinet Secretary, in collaboration with other stakeholders is mandated to develop an Integrated National Energy Plan (INEP) in respect of coal, renewable energy and electricity so as to ensure delivery of reliable energy services at least cost.”
• “In the 2019/20 Financial year, the sector embarked on updating the 2017–2037 LCPDP Long term plan as a transitional process to INEP.” (The 2019–2039 plan was not released: “the report would not be truly reflective of circumstances in the sector owing to the emergence of Covid 19.”)
• “This report is an update of the the [sic] report presented then but also integrated reccomendations [sic] from the following sector reports:
  i. Revised IPP/PPA taskforce report 2020
  ii. Sustainability report for KPLC by joint EPRA/KPLC/Treasury team
  iii. Post Covid 19 sector report
  iv. Revised planting sequence of generation projects arising from Force
  Majeure reccomendations [sic] by sector players
  v. Views from Mott Macdonald on areas of improvement to the plan” [UK engineering consulting firm]

Current Situation of in [sic] the Power Sector

“As at December 2020, Kenya had a total installed generation capacity of 2,753MW. The peak demand has grown from 1,512MW recorded in FY 2014/15 to 1,976MW recorded in December 2020. Energy purchased declined to 11,462GWh in the FY 2019/20 from 11,493GWh in the previous financial year. Actual sales increased by 0.05% from 8,769 GWh in FY 2018/19 to 8,773GWh in FY 2019/20.”

“Network losses remain a significant issue within the sector as they stood at 23.5% as at June 2020.”

“A comparison of the current forecast results in all scenarios indicate a reduction from the previous forecast. The energy consumption shows a 0.02%, 0.44% and 0.58% reduction in the low, reference and vision scenarios respectively.” [Previous LCPDP 2017–2037 available here for reference.]

Demand Forecast (2020–2040)

• Reference scenario: average of 5.28%, peak 5.38% (1,972 to 5,526MW) (based on historical data trends)
• Vision scenario: average of 8.20%, peak 8.35% (1,972 to 9,635MW) (“highly driven by Vision2030” and flagship projects)
• Low scenario: average rate of 4.89%, peak demand increases to 5,028MW (where most of the government plans are not implemented as planned)

Vision 2030 Flagship projects listed include electrified mass rapid transit system in Nairobi; Standard Gauge Railway between Mombasa and Nairobi; and six Special Economic Zones across the country, including in Lamu.

“Under all scenarios, losses reduce from the initial 23.5% in 2020 to 16.7% at the end of the planning period.”

Generation Expansion Planning

• The LCPDP recommends adoption of the optimised case. In this model, coal is added into the mix in the year 2040. Coal would generate 981 mW, or 12% of total electricity, as listed in the Optimised Reference Expansion Plan-Generation Capacity Summary Table.
• “However, the level of vented steam remains high at an average of 18% of the possible maximum geothermal generation over the planning period.”
• “Under the fixed case with candidates reference demand scenario… The LEC [levelised cost of electricity] rises from US Cents 8.31/KWh in 2020 to peak at US Cents 10.23/KWh in 2033, before decreasing to an average of US Cents 9.82 /KWh in the period 2034–2040.”

2.5. Electricity supply

• “The installed generation capacity has increased considerably over the past five years, rising from 2,299MW in FY 2014/15 to 2,712MW in FY 2018/19, representing an annual average growth rate of 4.52%. As at FY 2019/20, the installed capacity stood at 2,753 MW inclusive of off grid power. The peak demand also grew from 1,512MW recorded in FY 2014/15 to 1,882MW recorded in FY 2018/19, an annual average growth of 4.89%. A peak demand of 1,976MW was recorded in December 2020.”
• “The effective capacity mix comprises of 30.2% of hydro, 24.7% thermal (medium speed diesel, MSD), 2.1% Thermal (gas turbine, GT), 28.8% geothermal, 12.2% from wind and 1.96% from solar.”
• “Kenya’s current effective installed (grid and off-grid) electricity capacity is 2,668 MW.”

2.6 Energy Sources in Kenya

“The power generation mix comprises of 45.6% of geothermal, 36.2% hydro, 6.7% fossil fuels, 9.6% wind and 0.8% from solar for the financial year ending June 2020.”

“The FiT policy acceptance by IPPs and deliberate government policy to advance renewable energy generation has led to continous decline in energy purchased from Thermal generation. Energy purchased from thermals reduced from 1,298GWh in FY 2018/19 to 882 GWh in FY 2019/20. Energy purchases from Wind and Solar increased in FY 2019/20 with 1,284GWh and 91GWh of energy purchased respectively.”

2.8. Electricity Consumption

“The demand for electricity has shown an upward trend in the last 5 years. While the demand was 7,655 GWh in the 2014/15 financial year, it increased to 8,773 GWh in the 2019/20 financial year. This is largely attributed to the increased efforts in attaining universal access to electricity by 2022.”

2.11 Electricity demand [peak]

The number of customers connected to the grid [almost doubled] from 3,611,904 (2014/15) to 7,576,145 (2019/20). Rural connections constituted 1,502,943 (20% of total connections). This is an annual average growth rate of 19.14% and is a result of the accelerated electrification programs across the country.”

3. ELECTRICITY DEMAND FORECAST

3.4. Performance of the Power Sector

“Electricity peak demand has been growing gradually over the last 6yrs with an annual growth of approximately 4.6% per annum. The energy consumption increased from 9,280GWh in 2014/15 to 11,462GWh in 2019/20 representing an average growth of 4.5% over the last six years as shown in figure 7.”

“The specific consumption has also shown a decline over the last five years due to increased connections of low consuming customers and use of energy and equipment efficiency.”

3.9.4. Demand Forecasting Conclussion and Reccomendation. [sic]

“It has been noted that flagship projects are not being implemented within the timelines as envisaged, therefore slowing down both the economic and demand growth. It has also been noted that specific consumption has declined due to low consumption by newly connected customers.”

Recommendations: Create demand, incentivize electricity use. Improve system management, supply reliability, efficiency; reduce system losses.

4.1 CURRENT AND FUTURE ENERGY SOURCES:

• Crude oil is in development for export. About 25% of the installed power generating capacity of the electricity sector relies on imported petroleum products, but htis is declining due to the increase in installed capacity of renewable energy sources.
• Heavy fuel oil not recommended due to environmental impact
• Gasoil and kerosene recommended for backup and peaking capacity plans
• Natural gas assumed not to be a potential energy source for generation due to early stage of exploration
• Liquefied natural gas (LNG) supply is restricted mainly by available transportation infrastructure, is recommended to contribute to diversification of fuels in power generation. “Environmental advantage” — less harmful than other fossil fuels.

4.2. Fossil energy sources

“At present, crude oil and coal are the only domestic fossil energy resources available for extraction and potential use in power generation. Exploration activities on natural gas deposits are underway.”

“About 25% of the installed power generating capacity of Kenya’s electricity sector relies on imported petroleum products. The dependence on petroleum products has been declining over time. This is due to the increase in the installed capacity from renewable energy sources such as geothermal, wind and solar.”

Coal sections of Least Cost Power Development Plan 2017–2037

4.5.1. Geothermal energy

• Geothermal resource potential in Kenya is 10,000 MW over 14 sites.
• “Currently, geothermal capacity provides nearly 50% of total power generation with an installed capacity of 828 MW.”
• “Geothermal power provides reliable base load power at low operating cost.”
• “It is expected that an overall capacity of 603 MW of geothermal power could be implemented during the medium-term period since they are already at advanced stage of construction or planning.”
• “It is expected that geothermal power will play an essential role in the future Kenyan power system.”
• “It is recommended that the opportunity to use binary technology is explored and deployed.”

4.5. Renewable energy sources

“Kenya has promising potential for power generation from renewable energy sources. Availability of solar, hydro, wind, biomass and geothermal resources has necessitated the government to seek expansion of renewable energy generation in the country. Through least cost approach, the government has prioritized the development of geothermal, wind and solar energy plants as well as solar-fed mini-grids for rural electrification.”

Conventional hydropower

• Kenya has a considerable hydropower potential estimated in the range of 3,000- 6,000 MW. Over 800MW is already exploited.
• The existing hydropower plants contribute about 30% of national annual electricity generation.
• At least half of the overall potential originates from smaller rivers.
• There is a growing consciousness of the possibilities that small hydropower might offer vast generation options.
• The economic risk in hydropower projects can be enormous, because they are capital intensive.
• A hydropower-dominated system is vulnerable to large variations in hydrological conditions. This has proved to be a big challenge in the recent past with the failure of adequate rainfall resulting in power and energy shortfalls.
• Beyond the existing schemes, Kenya still has substantial hydropower potential.
• Current plans for large hydropower projects could “lead to additional hydropower capacity of over 800 MW in the long term.”

4.5.2.2. Pumped Storage Hydropower

More coming…