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KenGen and Renewable Energy Partnership in Electro-Technical Innovation to Generate Sustainable Power

David MuthikeStrategy Director, KenGen2 November 2015, Nairobi

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CONTENTS

Renewables in Africa1

Power Sector Overview2

KenGen’s Renewable Strategy3

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Africa is taking Economic Growth Leadership…Production Growing

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Growth in Productivity Driving Economic

Development.

1. Universal access to electricity is the backbone of production.

2. The continent is endowed with sufficient renewable natural resources.

3. Renewable power generation enhances production competitiveness.

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HYDRO POWER POTENTIAL

1. Africa has over 60GW of hydropower capacity feasible but not yet developed.

1. However, on the other hand, Africa is still the world’s region which has exploited less than 7% of its technical and economical feasible hydropower potential .

2. Hydropower is clean and emission free electricity generation technology and therefore it represents an environment friendly energy option, suitable to contrast climate change.

Source: http://moproblems.files.wordpress.com/2011/04/arton58711.gif

6Source: TMO; Internet Sources; Argeo

>15,000MW potential

Comoros

DRC

Djibouti

Eritrea

Ethiopia – 7.2MWKenya – 609MWZambia – 0.2MW?

Malawi

Mozambique

Rwanda

Tanzania

Uganda

Burundi

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2

3

4

567

8

9

10

11

12

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Kenya – >10,000MWEthiopia – >5,000MW

GEOTHERMAL POTENTIAL - LESS THAN 10% DEVELOPED

RINGS OF FIRE

The Continent has highly trained and experienced technical capacity to develop renewable power.

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1. Much of Africa is well exposed to sunlight.

2. Similar opportunities exist for Wind Power Generation

3. A regional approach to overcoming barriers to renewable energy required.

4. Kenya partnering with regional countries to develop renewable power.

http://www.geni.org/globalenergy/library/renewable-energy-resources/world/africa/solar-africa/index.shtml

SOLAR POWER POTENTIAL - Africa Has Highest Potential in the World.

Most Prominent Solar Power Producers Globally -MW

World Solar Irradiation Map – kWh/m2/day

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1. Africa has significant wind potential in the Northern, Eastern and Southern regions.

2. Wind power generation in Africa at 2,600 Megawatts in 2014

3. Kenya targets 1,600 Megawatts on Wind by year 2030http://www.geni.org/globalenergy/library/renewable-energy-resources/world/africa/solar-africa/index.shtml

WIND POWER POTENTIAL - Significant Wind Potential

World Wind Map Potential – W/m2/day

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1. More than 50% of the vast continent of Africa may support biofuel crops.

2. Adoption of biofuels taking shape.

3. Kenya has planned investments in cogeneration and biofuels.

• Co-generation 26MWMumias

• Planned 18MW Biofuel in Kilifi

BIOENERGY POTENTIAL - Biofuels remain largely under explored in Africa

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CONTENTS

Renewables in Africa1

Power Sector Overview2

KenGen’s Renewable Strategy3

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KENYA POWER SECTOR SETUP

Source: KenGen, SBP Office

Ministry of Energy & Petroleum

Energy Tribunal

ERC (regulator)Electricity

Value Chain

Geothermal Primary Energy

Generation Transmission Distribution Customers

GDC

KenGen

IPPs KenGen

IPPs

Imports

REA

KeT

raC

o

Ken

ya P

ower

A Single Buyer Market

70% Market Share

KNEB

Nuclear preparatory Phase

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Tx & Dx Line Length (60,297km)

Electricity Access (~48%)

Annual Sales –June ‘15

(7,130GWh)

Highest recorded Peak

Demand (1,570MW)

Number of Customers

(3.86 Million)

National Installed Capacity

(2,298MW)

KENYA POWER SECTOR OVERVIEW

Target Access by 2017 – 70%

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1,278 2,038

3,474

6,768

10,097

15,006

1,482

3,141

4,659

8,226

12,141

17,764

2009/10 2014/15 2018/19 2023/24 2026/27 2029/30

Peak Demand (MW) Total Capacity (MW)

5,000

4,491

4,200

2,200

1,600

263

1

Geothermal

Fossil

Nuclear

Hydro Imports

WindHydro

17,754MW TOTAL CAPACITY MIX

Today’s Peak = 1,570MWInstalled Capacity 2,298MWDemand is 30%-40% lag

PROJECTED NATIONAL POWER DEMAND

National Plan to add 50% of Renewables

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Wind Logging Sites1. Malindi,

2. Marsabit (Bubisa1)

3. Marsabit (Bubisa2)

4. Marsabit Hill

5. Isiolo (KenGen)

6. Kerio Valley

7. Kisumu

8. Maseno

9. Kisii (Gucha)

10. Kinangop

11. Loitoktok

12. Narok

13. Ngong (KenGen)

25.6MW

WIND – KENYA WIND ATLAS – POTENTIAL OVER 10,000 MW

Red indicates very good potential power plant sites

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SOLAR – KENYA SOLAR MAP

40km Solar PV (kWh/m2/day)

Kenya has potential for solar PV and CSP

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GEOTHERMAL POTENTIAL IN KENYA – 10,000 + MW

• Suswa,• Longonot,• Olkaria,• Eburru, • Menengai,• Arus-Bogoria,• Lake Baringo,• Korosi,• Paka,• Lake Magadi,• Badlands,• Silali,• Emuruangogolak,• Namarunu• Barrier• Mwananyamala• Homa Hills• Nyambene Ridges• Chyulu Hills

> 10,000MW in over 23 sites

Olkaria Block(1,200MW)(i) 605MW developed(ii) Drilling for >500MW

ongoingPrivate developers already licensed at Olkaria III, Akiira and Longonot fields

Source: SBP; GDD; Argeo;

509MW

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3,450

1,870

1,341

1,017 901 895 665 609 519

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Source: KenGen, http://www.geothermal-energy.org/electricity_generation.html

At 609MW Kenya ranks 8th Globally in Geothermal installed

capacity…of this, KenGenGenerates 509MW from Olkaria

Kenya a Geothermal Leader – Olkaria Cementing Kenya’s Geothermal Foot Print

509 MW

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CONTENTS

Renewables in Africa1

Power Sector Overview2

KenGen’s Renewable Strategy3

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Kenya Ready to do Business – KenGen Produces 73% of National Capacity

KenGen Installed Capacity

KenGen is Renewable

Capacity

1,611 MW 85%

• In our 61st Anniversary;

• Listed on Nairobi Securities Exchange

• 70% Government owned

• US$ 3.2 billion Asset Base;

• US$ 250 million Annual Turnover;

• An ISO 9001:2008 & ISO 14001:2004

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2010

2004

6552

28

22

16

18

13

31

49

5

90

50

100

80

70

60

40

30

20

10

0

Hydro

Fossil Fuel

Geothermal

Wind

20202015

2

2010

1

Generation Mix Movement

2020

2015

3,290 MW1,182MW

• A green KenGen with ~50% geothermalportfolio…

1,611 MW

OUR GOAL IS TO SHIFT TO GEOTHERMAL LED RENEWABLE STRATEGY

Source: SBP;

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… potential for future development but must be in tandem with environmental conservation efforts…

HYDRO – POTENTIAL DEVELOPMENT ALONG TANA CASCADE

Tana Cascade (~52% of our total capacity)

Hydro – 820MW

Source: KenGen

Hydro Potential for 500+MW

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KenGen GEOTHERMAL JOURNEY SINCE 1956

243240

220

172162

144

128114

1061031011009996949187

7967

595046413631272421

15119743

2013

2014

+129%

2012

2011

2010

2009

2008

2007

1999

1998

1997

1996

1994

1993

1992

1991

1990

1988

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1975

1974

1973

1956

2015

Little activity for ~15yrs. (no funding for geothermal)

1 2 3

1

2

3

1981-85: Olkaria I – 45MW commissioned

2003: Olkaria II – 70MW commissioned

2010: Olkaria II 3rd Unit – 35MW commissioned

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2014: Olkaria IV & I Unit 4&5 –280MW commissioned4

Source: SBP; GDD

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KenGen GEOTHERMAL GROWTH (MW)

45 115 150

508

70

358

45

150

2020

350

2015

508

2010

858

115

2003

35

1981/85

Planned capacity

Source: SBP; GDD

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1,611

75 70 140 140 80

2,116

2015 MW Wellheads Olkaria I U6 Olkaria V Olkaria VI Meru Wind Total 2018

ONGOING STRATEGY Planned Capacity Additions in the Medium Term

Medium Term Dominated with Geothermal Development

US$ 57 m US$ 314 m US$ 555 m US$ 571 m

Estimated Project Cost

US$ 148 m US$ 1.65 bn

Total Capex

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FUNDING OPTIONS KenGen HAS EXPLORED TO FINANCE RENEWABLES

KenGen Project Financing Mechanisms

Commercial Banks Capital Markets Joint Ventures &

PPPsBOT/BOOT/Concessions Government

Expensive Least expensive

DFIs ( World BankAfD, ADB,AfDB,JICA, EIB, KfW

• Commercial Banks

• Capital Markets (debt/equity)

• Public-Private-Partnerships

• Build-Own-Transfer

• DFIs (AfD, AfDB, JICA, KfW, EIB)

• Governments (Exim Loans)

Source: SBP;

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Pricing structure reflects

KenGen’s underlying

costs

Incentives to maximize the availability of

generation plants and

reduce operating

cost

Remunerates KenGen on a

plant by plant basis

Terms of each PPA

are different

and depends on

the technology.

Provides stability

and certainty over the project period

Reflects Costs

Maximises Generation

Plant by Plant Tailor MadeLong Term

Stability

OUR PPA STRUCTURE IS TAILOR MADE AND STABILIZES FINANCIAL OUTLOOK

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KenGen’s Partnership With Industry

Industry Partnership

We Welcome You to Be our Long-term Partner in achieving Kenya’s Vision 2030 Development Programmes through Standardization.

G2G Innovation

Seminar18th – 21st

May 2016

Areas of Participationo Innovative Productso Continuous Improvement Technologieso Cost Reduction methodologies

EnquiriesFor enquires and clarification, please reach me on:Email: dmuthike@kengen.co.keStrategy & Business Development Director

Thank You