KENYA’S Energy Ministry and Canadian solar energy firm SkyPower Global are on course to sign an agreement Sunday that paves the way for the Toronto-based company to develop 1-gigawatt of solar power in East Africa’s biggest economy.
The developments will take place over five years in a deal that SkyPower values at $2.2 billion, the company said Friday in a statement.
Kenya currently gets about two-thirds of its electricity from renewable sources, chiefly hydropower and geothermal wells that account for 38% and 25% of supplies respectively, according to Bloomberg News Energy Finance data. It has no solar developments of that scale to date.
While the outlines of the agreement aren’t set, “We have an overwhelming interest from our investor base as well as from numerous banks, NGOs and development banks,” SkyPower Chief Executive Officer Kerry Adler said by phone Friday. “In this particular case, there are many avenues for financing these projects that are being reviewed by our finance team.”
Analysts at Bloomberg New Energy Finance (BNEF) were cautious about the lack of details.
“The developers still need to find project sites, and others have struggled with land rights and grid capacity for much smaller solar projects in Kenya for years,” Nico Tyabji, an associate at BNEF, said by e-mail.
It’s the latest big announcement for renewables in Africa, which is increasingly getting big attention from investors. Africa is notoriously energy scarce, but he continent has the largest potential for renewable energy globally; most of it has yet to be exploited.
Kenya is making a big push in green energy – the country recently unveiled a $900 million, 310-megawatt wind farm in Lake Turkana, and received a $109 million loan from German development bank KfW to the Geothermal Development Company for the drilling of 20 wells at the Bogoria-Silali site.
More broadly, Africa attracted more than $8 billion in renewables investment in 2014, a record for the continent. South Africa accounted for the bulk of that at $5.5 billion; the biggest deal was the 100-megawatt Xina Solar One project under development by Abengoa Solar at $1 billion, making it the second-most expensive solar project globally in 2014.
Algeria and Egypt similarly attracted $428 million and $226 million of renewable energy investment in 2014.
The potential gains that green energy offers in driving African economies are huge. Under green investment scenarios, the national real GDP in fast-growing Kenya would increase by an estimated 12% by 2030. This would lead to an additional 3.1 million people being lifted out of poverty.
One small solar LED lamp could for example save a Kenyan family more than $1 a week, in a country where an average 13% of income is spent on kerosene.
Investments in expanding solar and wind capacity in Senegal would by 2035 create up to 30,000 additional jobs. This would cut greenhouse gas emissions by 9%, or about 27 million tonnes, helping the country realise its undoubted potential.
In power-choked but quick-growing Rwanda, expanding its grid-connected renewable energy supply could replace its emergency diesel generators, in place since 2004.
According to SkyPower’s website, the company has a pipeline of more than 25 gigawatts worldwide. Adler said that 300 megawatts of this are operational.
Founded in 2003, the company is majority-owned by CIM Group, a Los Angeles-based real estate and infrastructure investment business. CIM purchased the group as one of the branches of the company sold off a year after Lehman Brothers Inc., a former major shareholder, collapsed, Adler said.