Kenya – Lake Turkana wind energy plant

Energy Regulatory Commission Director of Renewable Energy Bernard Osawa told Capital Business that this would eliminate the need for independent power producers to demand payment guarantees to mitigate risks from such projects, requests that have often delayed the development of geothermal capacity.

The project, which has been billed as the biggest wind farm in Kenya, has been delayed for months due to the demands for support guarantees, which Mr Osawa said are unreasonable.

"I believe that they (investors) were asking for too much because with their Power Purchase Agreements that’s as good as guarantee which is what everybody has. I believe that once one person comes through, the wind projects will kick off," he said.

The producers’ requests for irrevocable standby letters of credit to cover debt service including recurrent fuel and non-fuel related operating costs, an application that the government, through firms such as the Kenya Power and Lighting Company and KenGen’s balance sheet is largely unable to meet.

In total, there has been a delay in the generation of 604 MW of wind and geothermal capacity in the country that has in turn caused the government to ask for assistance from development partners.

In October last year, Energy Permanent Secretary Patrick Nyoike appealed to the World Bank to provide payment securities to five power producers so as to pave way for power generation.

With such instruments, the bank would be able to protect repayment of loans in case of non- performance by Kenya’s contractual obligations such as termination payments.

As the government continues to grapple with this challenge of securities in wind power generation however, the lack of precedence seems to have been overcome in geothermal development.

This fact coupled with for example the establishment of the Geothermal Development Company (GDC), means that the country can now begin to unlock the massive potential in this renewable energy front.

"GDC now has all the resources to do all the prospecting and drilling. We also have the know-how thanks to KenGen having been there for a long time and so everything is in place and we are on track," the director said of the process that is expected to help Kenya harness its 7000 MW geothermal energy capacity.

Despite this progress however, there is still need for the government to develop the resources in these areas as well as formulate policies that open up the national grid and allows all renewable energy generated from all over the country to be fed into it.

These projects are geared towards ensuring that the country reduces it’s over reliance on hydropower and is therefore able to ensure the provision of reliable and affordable power to its consumers and private sector.

Mr Osawa was speaking on the sidelines of a workshop organised by USAID to encourage renewable energy development in Africa. Participants were drawn from various electricity regulators across the continent and sought to investigate whether the regulatory framework is adequate to support such development.