The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.Kenya
- Kenyas power sector continues to introduce a more diversified energy-generation capability. Although hydropower generation remains vulnerable to drought and variations in rainfall, additional hydro facilities are being developed in order to reduce the countrys dependence on costly oil-fired capacity. Over the longer-term, the favoured form of renewable energy is geothermal, where potential is believed to be considerable. Meanwhile, coal-based generating schemes should provide medium-term electricity supply.
In the five years from 2011 to 2016, Kenyas overall power generation is expected to increase by an annual average of 7.23% to reach 10.76TWh. Driving this growth will be a 5.04% annual average increase in hydropower and a 9.85% annual average rise in the supply of renewables-based electricity. Meanwhile, oil-fired generation is expected to fall by over 18% per annum as hydro increases in availability. We expect coal-fired power to become commercially available in the latter part of our forecast.
In addition to investments in oil and gas exploration, and the development of new coal-fired and hydroelectric power stations, Kenya plans to significantly increase the amount of energy generated by geothermal facilities. The country is already Africas largest producer of geothermal power thanks to its strategic position over shifting tectonic plates. Over the next two to three years, the government plans to invest US$1.4bn in the construction of several new geothermal power plants with a total installed generation capacity of 280MW. By 2030, Kenya hopes to be generating 5GW of power from geothermal power; that would put Kenya among world leaders in geothermal terms. Electricity feed-in tariffs (FiTs) in Kenya have increased interest in renewable energy sources in the country. Kenyas FiTs guarantee the price paid for electricity from renewable sources, ensuring these technologies are cost competitive with more conventional power plants, and therefore encouraging the development of renewable facilities in the country.
Due to the expected rise in net energy generation over the next few years, Kenyas power supply shortfall should eventually fall. This trend has potential to provide the country with a net export capability later in the decade. A gradual decline in the percentage of transmission and distribution losses from around 15% will help balance the market. By 2017, we predict that Kenyas power sector will develop a net export potential of 0.02TWh, with potential for this to rise to 0.55TWh by 2021.
Considering this key themes, major trend and changes for Kenyas power sector this quarter include:
• Kenyan renewable energy company Kinangop Wind Park is planning to construct a 60.8MW wind power plant in Kinangop Plateau, Nyandarua County. The company aims to supply more power to the national grid through the plant.
• Kenyas state-owned power operator Kenya Electricity Generation Company (KenGen) has generated US$920mn for its Olkaria IV geothermal plant, which will receive joint funding from KenGen, the Kenyan government, the World Bank, Germanys KfW, the European Investment Bank, the Japan International Corporation Agency and the French Development Agency. The plant will have a capacity of 280MW, and is scheduled to become operational in 2014, with an investment of nearly US$1bn. Kenya has the potential geothermal capacity of 7,000MW, and is aiming production of at least 5,000MW by 2030.Sudan
Sudans power sector is benefiting from large-scale investment in new infrastructure. China has emerged as one of the biggest players in the sector, having already played a major role in developing Sudans hydroelectric power facilities. Hydropower currently accounts for almost 60% of Sudans total power generation output, with the remaining output largely comprising oil-fired facilities. Meanwhile, there is growing interest from foreign investors in the potential to develop thermal and solar power sources in Sudan. A diversified approach to power infrastructure development could help Sudan extend the availability of energy to rural and peripheral regions.
From 2011 to 2016, Sudans overall power generation is expected to increase at an annual average rate of 0.75% to reach 8.21TWh. Contributing to this growth will be a 0.36% annual average increase in oil-fired power generation. Meanwhile, hydropower generation is expected to increase by an average of 1.02% annually over our forecast. Sudan is becoming a place of considerable interest for companies looking to invest in underdeveloped infrastructure markets where there is much scope for growth. Most notably, the country has been one of the largest beneficiaries of Chinas Africa strategy. Between 2001 and 2007, Sudan received the second largest (after Nigeria) level of infrastructure financing commitments from China, totalling US$1.3bn. Much of this has been directed at the power sector and one of the most pertinent examples of this is the Merowe Dam, which was inaugurated in 2009 and has the largest capacity of any hydropower dam in Africa.
We envisage Sudans net power consumption increasing from 5.31TWh in 2011 to 6.58TWh by 2016; this reflects growth of almost 4.57% over the period. Underlying the rise in energy consumption will be a steady increase in GDP. In 2012, BMI predicts that Sudans economy will grow by just 2.4%. However, between 2012 and 2021 we forecast an average annual increase in real GDP of 4.6%. Recent years have seen the introduction of new energy transmission infrastructure alongside major power generation projects. In addition to extending its national electricity transmission and distribution capabilities, there is potential for Sudan to engage in cooperative electricity transmission projects with neighbours such as Ethiopia.
Despite our prediction that Sudan will steadily expand its power output over our forecast period, we expect all of this increased power generation to support rising domestic demand. We do not expect Sudan to export significant quantities of power and do not currently maintain a forecast for exports. However, we do predict that a gradual decline in the percentage of transmission and distribution losses from around 12.5% in 2011 will help balance the market.
Until 2010, South Sudan was not even connected to the Sudanese national grid. Since gaining political independence in January 2011, a key concern of South Sudan has been how to develop its power generation, transmission and distribution capabilities. Given Chinas interest in South Sudans oil resources, BMI expects China to become a major player in the development of South Sudans energy sector.Tanzania
Tanzanias power sector is suffering from chronic energy shortages, partly due to the impact of recurring drought on the countrys hydroelectric power facilities. Tanzania currently depends on hydroelectricity accounting for over half of its total power generation output. Meanwhile, the countrys thermal power infrastructure, which mainly utilises natural gas, operates at well below capacity, with local and international firms encouraged to participate in new power generation schemes.
BMI forecasts for this quarter see Tanzanias overall power generation expecting to grow by an annual average of 11.3% in the five years from 2011 to 2016, to reach 8.23TW h, which includes a 5.7% annual average increase in hydropower. Meanwhile, thermal power generation is expected to increase by an average of 19.0% annually over our the same period. Tanzania is highly dependent on hydropower, and is the primary source of power generation in the country. However, low water levels at the Mtera dam have hampered this source of power, following a widespread and prolonged drought in East Africa.
In 2011, Tanzania continued to be plagued by chronic energy shortages, owing to both recurring drought and the under-capacity of the existing natural gas supply infrastructure. In response to the countrys energy crisis, Tanzanias Parliament approved an emergency power rescue package, with the aim of adding 572MW to the national power grid by December 2012, against the current deficit of 260MW. Meanwhile, with the support of the World Bank and the African Development Bank (AfDB), the Tanzanian government has devised a 25-year Power Sector Master Plan (PSMP) to tackle the power shortage. They have pledged to increase generating capacity by 1,021MW in the short-term, with a view to reaching 1,718MW of installed capacity by 2015.
Although Tanzania liberalised its energy sector in 2008 with the passage of a new Electricity Act, the state-owned utility Tanesco continues to enjoy a dominant position within the market. Nevertheless, in recent years Tanzania has sought to encourage local and international firms to participate in power generation schemes. We envisage Tanzanias net power consumption increasing from 3.5TWh in 2011 to 5.0TWh by 2016, reflecting annual average growth of 7.1% over the period. Underlying the rise in energy consumption will be a steady increase in GDP, together with the continued expansion of Tanzanias population. Following an increase in 2011 real GDP of an estimated 6.18%, BMI forecasts average annual growth of 6.2% between 2011 and 2021. Meanwhile, Tanzanias population is expected to rise from the current level of 46.2mn in 2011 to 54.0mn in 2016.
Over the longer-term, increased power generation could improve the countrys capability to export greater quantities of electricity. By 2016, we predict that Tanzanias power sector will develop a net export potential of 1.79TWh, with the potential for this to reach 9.68TWh by 2021. Meanwhile, the gradual decline in transmission and distribution losses from around 19.9% in 2011 will help balance the market.Uganda
Ugandas power sector is suffering from a shortage of generating capacity due to years of underinvestment, which has resulted in power infrastructure falling into disrepair. The country currently depends on hydroelectricity for around 62.03% of its total power generation output (according to 2011 estimates from BMI); the remainder of Ugandas power generation comes from thermal power stations, using a mixture of bagasse and biodiesel fuel. In addition to introducing new hydro facilities, the sectors long-term development will be characterised by a move towards renewable energy sources.
In the five years from 2011 to 2016, Ugandas overall power generation is expected to increase by an annual average of 9.02%, to reach 4.28TWh. Driving this growth will be a 6.51% annual average increase in hydropower. Meanwhile, thermal power generation is expected to increase by an annual average of 14% over the period. In the short-term, Ugandas dependence on hydroelectricity for the bulk of its power generation means that the country is vulnerable to fluctuations in rainfall. This weakness became clear in 2011, when a widespread and prolonged drought in East Africa badly affected power output in the region, where most of the electricity is hydropowered. With drought-stricken countries forced to introduce emergency measures, the power crisis illustrates that major reforms and capacity expansion programmes are essential to sustain economic growth in the region. Nonetheless, we note that Uganda has several major hydroelectric projects currently underway.
These aim to improve the countrys power supply and increase access to electricity. One such project, the Bujagali hydropower project, is a 250MW hydroelectric power plant which is managed by South African power utility Eskom. According to Ugandas Electricity Regulatory Authority (ERA), full commissioning of the Bujagali project is due in April 2012.
We highlight that we see a downside risk to our forecasts, as electricity could fall beyond the affordability of a considerable group of consumers, following the decision taken by the Uganda government to abolish electricity subsidies paid to power generators to cushion consumers; a move that, according to Reuters, will see tariffs rise by an average of 42%.
Under its Renewable Energy Policy, the government aims to increase the use of renewable energy to 61% of total energy consumption by the year 2017. Ugandas new Renewable Energy Feed-In-Tariffs (REFIT) system, introduced in early 2011, appears to be one of the most sophisticated in Africa. Ugandan net power consumption looks set to increase from 2.16TWh in 2011 to 3.30TWh by 2016, rising further to 4.90TWh by 2021. Underpinning the increase will be a steady rise in GDP, as well as sustained population growth. Following an increase in 2011 real GDP of an estimated 6.2%, BMI forecasts average annual growth of 7.91% between 2011 and 2021. Meanwhile, Ugandas population is expected to rise from the current level of 34.5mn in 2011 to 40.3mn in 2016. During the period 2011-2016, the average annual growth rate for electricity demand is forecast at 8.61%, but is due to slow later in the decade to an average of 8.29% in 2016-2021.
Due to the expected rise in net energy generation over the next few years, Ugandas power supply shortfall should eventually decline. This trend has the potential to provide the country with a net export capability later in the decade, with a gradual decline in the percentage of transmission and distribution losses from around 6.8% (according to 2011 estimates from BMI) helping to balance the market.
Click for Report details:East Africa Power Report Q2 2012