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Company Profile
The Group offers one of the most comprehensive product portfolios ranging from submegawatt on-shore turbines at 600 Kilowatts (KW), to the worlds largest commercial 6.15 MW offshore turbine built on a vertically integrated, low-cost, manufacturing base. Tata BP Solar has unmatched experience and an incredible track record in providing grid-based solar power solutions in India and abroad. Tata BP Solar is a fully vertically integrated solar solution provider. Tata BP Solar manufactures both solar photovoltaic and solar thermal products. Tata BP Solars products include solar home light, solar street light, solar sodium lamp, solar lantern, solar portable lamp, solar LED lantern, solar refrigerator, photovoltaic modules, solar indoor LED lantern, solar water pump, solar water heaters etc. The company mainly deals in providing services in the following areas: On & Off Shore Wind Energy Solution Solar PV Cells Solar Heating Solutions (Domestic & Industrial) Micro Hydro Energy Solutions Geothermal Energy Solutions LED Lighting Solutions Tidal Energy Generator

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Advantages of Renewable Energy

It is highly sustainable as it is derived from sources that are inexhaustible. It does not emit any greenhouse gases or toxic waste making the world a cleaner and safer place.

It is highly cost effective as fuel does not need to be brought to sustain the electricity plant. It is also cost effective as less labor is needed to operate a renewable energy station and they require less maintenance.

They may bring economical benefits to remote communities, as many renewable energy plants are situated away from large cities.

Renewable energy generators such as solar power can be applied to existing buildings making them more environmentally friendly and energy efficient.

Some forms of renewable energy such as geothermal steam plants take up less area than larger conventional power plants and can be run day and night.

Hydroelectrical power stations can be controlled to produce more power at peak times and be inactive during lulls in power usage.

Biomass energy helps cut down on the amount of rubbish that is transported to landfills. In most cases if an individual has a renewable energy source, such as solar power, attached to their home or business they can sell any excess power back to the grid reduce the overall amount of homes or businesses being powered by fossil fuel plants.

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Country Profile
Kenya, with an area of 582,646 sq. km, is located on the East Coast of Africa, the capital being Nairobi. Its strategic location makes it one of the continents regional hubs. It is also the gateway to the Eastern and Southern Africa. The population of the country was 38.6 million according to the 2009 Kenya Population and Housing Census, with an annual increment of one million. The countrys GDP was US $30 billion (2010) with a growth rate of about 5.6% (CBK). Area: 580,370 sq km (224,081 sq miles) Population: 39,002,772 (July 2009, CIA World Fact Book) Capital city: Nairobi People (approx.): Kikuyu 22%, Luhya 15%, Luo 12%, Kalenjin 12%, Kamba 11%, Kisii 6%, Meru 6%, Other African 10%, Other (Asian, Arab, European) 1% Language(s): English, Kiswahili, various indigenous languages Religion(s): Protestant 45%, Roman Catholic 33%, Muslim 12%, indigenous beliefs 10%, Currency: Kenyan Shilling (KSH) President: Emilio MwaiKibaki (sworn in 30th December 2007) Vice President (and Minister for Home Affairs): Stephen KalonzoMusyoka Prime Minister: RailaOdinga (sworn-in 17 April 2008) Foreign Minister: Sam Ongeri (appointed 26 March 2012) Major Political parties: Parties at the last election included the Party of National Unity (PNU) and Orange Democratic Movement (ODM), and the smaller Orange Democratic MovementKenya (ODM-K). Membership of international groupings/organisations: UN, Commonwealth, African Union, WTO, East African Community (EAC), Inter-Governmental Authority on Development (IGAD).

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Economy overview
Although the regional hub for trade and finance in East Africa, Kenya has been hampered by corruption and by reliance upon several primary goods whose prices have remained low. Low infrastructure investment threatens Kenya's long-term position as the largest East African economy. The IMF halted lending in 2001 when the government failed to institute several anticorruption measures. In the key December 2002 elections, Daniel Arap MOI's 24-year-old reign ended, and a new opposition government took on the formidable economic problems facing the nation. After some early progress in rooting out corruption and encouraging donor support, the KIBAKI government was rocked by high-level graft scandals in 2005 and 2006. In 2006, the World Bank and IMF delayed loans pending action by the government on corruption. The international financial institutions and donors have since resumed lending, despite little action on the government's part to deal with corruption. Post-election violence in early 2008, coupled with the effects of the global financial crisis on remittance and exports, reduced GDP growth to 1.7 in 2008, but the economy rebounded in 2009-10. GDP growth in 2011 was only 4.3% due to inflationary pressures and sharp currency depreciation - as a result of high food and fuel import prices, a severe drought, and reduced tourism. In accordance with IMF prescriptions, Kenya raised interest rates and increased the cash reserve in November 2011.

Political Aspects of Kenya.

The country has had three Presidents since independence. Upon Jomo Kenyattas death on 22nd August 1978, Daniel arap Moi took over the leadership. He retired on 30th December 2002 in line with a constitutional Provision which limits the Presidential term to a maximum 10 years of 5 years each. This provision took effect in 1991 following the re-introduction of multipartism. Previously kenya was a single party state. Mwai Kibaki the current president of Kenya took over from Moi on 30th December 2002 to become Kenya's third President. Kibaki and his National Rainbow Coalition (NARC) won with a landslide in the December 27 2002 general elections, thus ending KANU's forty year stranglehold.

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Kenya has played a leading role in the quest for peace and stability in the turbulent East African region, because of her stability and general neutrality. The country has held regular elections every five years since independence. The last election held in December 2002 and which was largely hailed as peaceful paved the way for a smooth transfer of power. Again kibaki won the election in the year 2007 and the government is still in power. Today we can say that Kenya has a stable current government as the growth rate of the people of Kenya is tremendous and the country has the highest rate of urbanization in the world. Prior to this government the country was under a single party rule. The single party rule ended 1991 because after that year the country made some political reforms but still till the year 1997 the country was under the kanu party rule , this was because of kanus unfair ways of winning the election. But after that due to the mass political revolution movement there were just and fair election in Kenya in the year 2002 and the NARC was formed under the guidance of Kibaki which is the current ruling party of Kenya.

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Market Survey
Kenya aim to be a nation living in a clean, secure, and sustainable Environment By 2030. The current electricity demand is 1,191 MW while the effective installed capacity under normal hydrology is 1,429 MW. Generation capacities from Hydro, Geothermal, bagasse (cogeneration) and wind are 52.1%, 13.2%, 1.8% and 0.4% respectively while fossil based thermal contributes at 32.5%%. The peak load is projected to grow to about 2,500MW by 2015 and 15,000 MW by 2030. To meet this demand, the projected installed capacity should increase gradually to 19,200 MW by 2030 It is estimated that in Kenya 77% people do not have electricity connections. Over 85 % of the population rely on traditional fuels such as wood, charcoal, dung, and agricultural residues for cooking and heating. Many urban and rural poor are not reached by grid-based electrical power nor is there adequate distribution of gas or other cooking and heating fuels.

Kenya has a long-term development strategy, The Vision 2030, whose aim is to drive the country into a globally competitive and prosperous economy with high quality of life. Covering the period 2008 to 2030, the countrys new development blueprint aims to transform Kenya into a newly industrializing, middle-income country providing a high quality life to all its citizens by the year 2030. The Medium-Term Plan (MTP - 2008 to 2012) was prepared to implement the first phase of the strategy. It calls for rehabilitating the road network, upgrading the railways, improving urban public transport, and expanding access to electricity and safe water

Through Sessional Paper No. 4 of 2004, Energy Act of 2006 and the Feed-in-Tariff (FiT) policy, the Government is committed to promoting electricity generation from Renewable Energy Sources (RES). The Government further intends to set up a Green Energy Fund Facility under the National Task Force on Accelerated Development of Green Energy and whose purpose is to lend funds to viable Renewable Energy projects at concessional rates.

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Foreign direct investment in Kenya .

Kenya is a member of the East African Community (EAC) of 93 million people, where trade is envisaged to flow freely across Uganda, Tanzania and Kenya by 2013. Add to this Kenyas membership in the Common Market for Eastern and Southern Africa (COMESA), with nearly 385 million people, and it is easy to see why a number of international companies have chosen the country as a regional business hub. Kenya is one of the economic leaders in sub -Saharan Africa. Like many African countries, it is dependent on Foreign Direct Investment (FDI) for capital and employment. Kenya also serves as the East African business hub for many international companies. General Motors, Proctor & Gamble, Microsoft, Ogilvy and Mather, Coca-Cola and Citibank are a few examples of international companies with a presence in Kenya. A third of Kenyan banks are foreign owned, controlling 51% of total banking assets in the country. Safaricom for example, is 40 percent owned by Vodafone of the U.K. and Celtel Kenya is 60 percent owned by Celtel of Netherlands. A liberalized economy without exchange or price controls, and no restrictions on domestic and foreign borrowing by residents and non-residents. Kenya has a number of tax treaties and investment promotion and protection Agreements to encourage foreign direct investment. Exporters from Kenya enjoy preferential access to world markets under a number of special access and duty reduction programs. Kenya is a signatory to and member of the Multilateral Investment Guarantee Agency (MIGA), an affiliate of the World Bank, which guarantees investors against loss of Investment to political problems in host countries. Additionally, Kenya is signatory to International Centre for Settlement of Investment Disputes, which is a channel for settling disputes between foreign investors and host governments.

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Political support to Renewable Energy Systems.

As we introduced in our last post on this topic, Kenya is using several policy tools to stimulate renewable energy development and grow its national energy supply. With rapidly growing demand, the government has clearly identified renewable energy, such as solar, wind, and geothermal, as a reliable and sustainable way to increase energy supply.

Policy Tools
The six policy papers (outlined in our previous post) focus on three main policy tools: feed-in tariffs, 0% import duties, and VAT exemption. The Scaling-Up Renewable Energy Program introduced a zero-rated (0%) import duty on renewable energy equipment and accessories in 2011. This is unusual: all goods in Kenya have an import duty unless explicitly exempted by an act of parliament. The same program removes VAT (value-added tax) on renewable energy materials, equipment, and accessories. Prior to 2011, there had been a 16% VAT on renewable energy materials.

While the VAT exemption and 0% import duty will ease the financial burden for active renewable energy companies, the feed-in tariff will have the biggest impact on overall installed renewable capacity. In 2008, the Ministry of Energy introduced a feed-in tariff for renewable energy sources, including wind, small hydropower, and bioenergy. The government later updated the feed-in tariff to include geothermal, solar, and biogas sources in 2010. The policy in its entirety is available here.

A feed-in tariff is a policy tool that governments use to increase the renewable energy supply on the grid by stimulating investment. Utility companies responsible for supplying the national grid are required to purchase electricity from renewable energy providers at a predetermined price under a Power Purchase Agreement (PPA). The price is set at a level that is purposely designed to attract and stimulate new investment in the renewable sector. The tariffs apply to gridconnected plants and are valid for a 20-year period from the beginning of the PPA. Kenyas tariff schedule is below.

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Take a booming economy that has a growing appetite for energy and add to it a crippled energy supply line that is forever at the mercy of the elements and frequent power cuts and you will get a need for more renewable energy. Faced with a myriad of energy problems and challenges that risk the economic expansion of this East African nation, renewable energy is the buzzword that has electrified the energy sector in Kenya. Kenya currently has an installed energy capacity of about 1,300 MW against a demand of about 1,100 MW with more than 60 percent of energy generated coming from hydro. This has over the last few years proved unreliable as the pangs of climate change hit closer home and the rain patterns have turned erratic. Being a regional economic powerhouse, Kenya has been racing against time to seek out new sources of energy to power its growing economic might in the region. Renewable energy is quickly proving to be one of the better options due to its lower costs and the availability of the natural resources needed for renewable power. As a result of this, the Kenyan government has recently re-evaluated its power policies and is now encouraging the use of renewable energy for both industrial and domestic use. And to help spur its development, the Kenyan government is not only offering incentives to companies to invest in renewable energy production, but it is also leading the way in a planned $8 billion capital injection into renewable energy generation.

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Current Energy Scenario

Geothermal Power According to Eddie Njoroge, the CEO of the Kenya Electricity Generating Company (KenGen), Kenya has the potential to install more than 2,000 MW of renewable electricity over the next three years under the green energy initiative championed by the government. According to Njoroge, Kenya has the potential to install about 800 MW of wind power and 500 MW of geothermal power over the next two to three years. Other identified renewable energy sources include biomass, hydro and municipal solid waste. The government, says the Ministry of Energy Permanent Secretary Patrick Nyoike has already singled out locations in Olkaria (about 100km west of Nairobi) and Menengai, (outside the city of Nakuru) as suitable areas for the development of geothermal power. Olkaria currently hosts three geothermal power plants. Once new geothermal power plants at Olkaria and Menengai are commissioned, notes Nyoike, geothermal power capacity will increase by 490 MW. Kenya is one of the few African countries that have successfully tapped geothermal energy. Says Nyoike: Geothermal power shows great promise in Kenya, yet it has not been fully exploited as we are only producing about 200 MW against a potential of 7,000 MW [over the long term]. According to Dr. Silas Simiyu, the CEO of government-founded Geothermal Development Company (GDC); there are at least 14 high potential sites in the expansive Rift Valley Province that have been identified for geothermal power production. This, he says, will push down the cost of power as the GDC will sell power to the Kenya Power and Lighting Company (KPLC), the firm that retails power to consumers, at a reduced price of between US $0.04 or 0.05 per kWh. To get the ball rolling, the Kenyan government has allocated about Kenya Shillings (Kes.) 11 billion [about US $137.5 million] in fiscal year 2010/2011 towards the development of geothermal power in the country so as to boost installed capacity to 500 MW in three years time.
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Wind Power The government is also betting big on wind power. Already KenGen has set up a 5.1-MW wind farm in Ngong on the southern outskirts of Nairobi, which was commissioned last September. The company has plans to erect a second 10-MW wind farm in the area, estimated to cost (Kes) 2 billion [about US $25 million]. The government is also encouraging private companies to set up wind farms. The African Development Bank pumped more than $400 million into what is set to be the biggest wind farm in Africa. The 300-MW wind farm will be constructed in the northern frontier district of Turkana under the Lake Turkana Wind Power Company (LTWP) and is set to go online by July 2012. According to Carlo van Wageningen the LTWP Chairman, the company intends to erect 360 wind turbines in northern Kenya each with a capacity of 850 kW. Kenya, notes van Wageningen, possesses a huge potential to generate even more wind power. LTWP is a Dutch consortium that has leased about 70,000 hectares in Turkana to develop the wind farm. According to van Wageningen, the Lake Turkana region has consistent strong winds that blow year round between the Kenyan and Ethiopian Highlands at speeds exceeding 11 meters per second, something akin to proven reserves in the oil industry. Says he: We have reason to believe that this region is the best for wind power generation in the world. Once commissioned, LTWP will construct a 300-mile transmission line to connect the wind farm to the national grid. There are plans to expand the wind farm to increase generation capacity by 2,700 MW. According to the Nairobi-based United Nations Environment Program (UNEP), Kenya has the potential for up to 3,000 MW of wind, especially in the wind-rich northern frontier districts. Besides Kenya, only Morocco and Egypt have successfully tapped wind energy in Africa.

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Other Sources of Green Energy The government is also looking at other technologies to help turn Kenyas energy sector fully green. One of these technologies includes transforming the millions of tones of solid waste generated in the country into energy. While speaking at the recent Green Energy Conference held in Nairobi, KiraituMurungi, Minister of Energy said that the massive solid waste generated every day in the four major metro cities of Nairobi, Mombasa, Kisumu and Nakuru could power a 100-MW plant. Private companies are also being encouraged by the Kenyan government to turn to green energy production for their industrial productions. Mumias Sugar Company (MSC), the largest sugar milling company in Kenya, is perhaps the best example of industrial green energy production in Kenya. The company has installed a 34-MW electricity plant that is fueled with byproducts from its sugar milling processes. It uses a portion of the energy it generates in its industrial operations and sells the rest to the national grid. According to Evans Kidero, the CEO of MSC, the company produces electricity from the sugarcane byproduct bagasse. The sugar-belt region in western Kenya, says Kidero, possesses a huge potential of co-generation as 100 tonnes of crushed sugarcane produces more than 17 tonnes of bagasse. Moreover, notes Kidero, the cost of co-generation from sugarcane milling is less than half the cost of generating electricity from imported petroleum and natural gas. Energy experts agree that the rapid expansion of the Kenyan economy will require more energy to power its growth. The Ministry of Energy estimates that Kenya will need an installed capacity of about 2000 MW to meet peak demand in the next four years. This is expected to more than double to 4,000 MW by the 2020. And by 2030 this East African economy seeks to be a middleincome economic giant that is powered by green energy.

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Favorable Environmental Condition

With average altitudes ranging from 1500m to 1700m, Kenya is rich in wind and solar energy resources.

Solar energy

Kenya receives daily insolation of 4-6kWh/m2. Solar utilization is mainly for photovoltaic systems (PVS), drying and water heating. The Solar PV systems are mainly for telecommunication, cathodic protection of pipelines, lighting and water pumping. Current installed capacity is approximately 4 MW. There are also approximately 140,000 Solar water heating systems currently installed in the country. Kenya has 320 days of direct sun light.

In the Nairobi suburb Kibera, young Kenyans are producing small solar panels. These can generate enough electricity to operate a radio, and charge batteries or a mobile phones. They sell them for $US5, while the average income in Nairobi is around $US1 a day. An estimated 100,000 solar home systems have been installed in Kenyan houses. The majority of these consist of a small 12-14 watt photovoltaic panel.

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Wind energy

Kenya has average estimated wind speeds of 3-10m/s. Estimated installed capacity from wind generated power is 0.55 MW. It is estimated that about 300-350 wind pumps have been installed in the country. The major advantage to Kenya for wind energy is its vast coastline. Kenyas wind installed capacity is 5.1 MW operated by KenGen at the Ngong site. T he low exploitation level of the resource prompted the Government to develop the Feed-in Tariffs (FiT) Policy which provides for a fixed tariff not exceeding USD 12.0 cents per Kilowatt-hour of electrical energy supplied in bulk to the grid for wind generated electricity. High capital cost and lack of sufficient wind regime data are some of the barriers affecting the exploitation of wind energy resource. Moreover, potential areas for wind energy generation are far away from the grid and load centres will require high capital investment for the transmission lines.

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Biomass energy

Biomass contribution to Kenyas final energy demand is 70% and provides for more than 90% of rural household energy needs. The main sources of biomass for Kenya include charcoal, woodfuel and agricultural waste.

The Government has identified substantial potential for power generation using forestry and agro-industry residues including bagasse. The total potential for cogeneration using sugarcane bagasse is 193MW. Mumias Sugar Company, aPrivate entity, generates 35MW out of which 26MW is dispatched to the grid. However, opportunities by other sugar factories have not been exploited.

The FiT policy provides for biomass generated electricity with a power fixed tariff not exceeding 8.0 US Cents per Kilowatt-hour of electrical energy supplied in bulk to the grid. Under this policy, a 18MW cogeneration project using cane bagasse at the coastal region of Kenya has been approved.

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Geothermal energy

Geothermal resources in Kenya are located within the Rift Valley with an estimated potential of between 7,000 MWe to 10,000 MWe spread over 14 prospective sites. Geothermal has numerous advantages over other sources of power: it is not affected by drought and climatic variability; has the highest availability at over 95%; is green energy with no adverse effects on the environment and is readily available in Kenya, unlike thermal energy that relies on imported fuel. This makes geothermal the most suitable source for base load electricity generation in the country.

The current installed capacity in the country is 198 MW with 150 MW operated by KenGen and 48 MW by OrPower 4, both in the Olkaria Block. An additional 280 MW, scheduled for commissioning in 2013, is also under development in the same block. Drilling is ongoing in the Menengai Field for Phase I of 400 MW, whilst initial project development activities have commenced for the development of 800 MW in the Bogoria Silali Block. These are geared towards meeting the Vision 2030 Medium Term target of 1,600 MW by 2016 and eventually 5,000 MW by 2030.

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Hydropower

Kenyas drainage system consists of five major basins: Lake Victoria, Rift Valley, Athi/Sabaki River, Tana River and Ewaso Ngiro North River. These basins contain the bulk of the countrys hydro resources for power generation. Kenyas total installed large hydropower capacity is 764.5 MW. The potential for small, mini and micro-hydro system, with capacities of less than 10MW each, is estimated at 3,000MW nationwide. However, the installed grid connected small-scale hydro-electric projects contribute about 15.3 MW, though there are several other small hydro schemes under private and community generation especially in the tea

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Challenges to renewable energy system.

Insufficient data on renewable energy (RE) resource availability, potential and utilization;

Lack of coordination among RE stakeholders and regulatory authorities; Lack of specific RE Policy, regulations and technical standards; Limited trained and qualified personnel to implement and support RE initiatives and technologies.

Lack of appropriate and affordable financing option or knowledge thereof; Maintaining competitive, efficient and equitable tariffs energy projects; especially for green

Attractive incentives to mobilize investments in energy infrastructure projects; Delivering committed projects on time and within budget.

Competition in Kenya There is some level of competition in electricity generation. KenGen generates over 70% of the countrys power output, and is in direct competition with six independent power producers, who between them produce about 30 percent of the countrys electric power. KPLC has monopoly in the distribution and transmission of electricity in the country. Despite the liberalization of the oil industry, there are only a few companies actively trading due to tariff and non-tariff barriers to entry.

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Recommendation and Conclusion

The rate of urbanisation in Kenya is one of the highest in the world, with an estimated annual growth rate of 3.9% for the period 2005-2010 (Central Bureau of Statistics, 2007). The average growth rate for most African cities is 3.31% as compared to 1.98% in the rest of the world. It is estimated that about 22 % of Kenyas population lives in urban areas, while 78 % live in rural areas. The urban population is expected to increase exponentially by 2015, hence, narrowing the current gap. This migration is mainly due to higher pull factors existing in the urban areas as opposed to those in the rural areas. Thus the recommendation for the company is that the investment in the above project can be very much profitable and it should continue with the project.

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References

http://www.statehousekenya.go.ke/index.htm http://republicofkenya.org/economy/foreign-direct-investment/ http://www.reegle.info/countries/kenya-energy-profile/KE

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