A global consulting firm, Deloitte East Africa on Wednesday lauded Kenya’s reforms in the energy sector, which, it said, are likely to attract foreign investors and spur economic growth.
The firm said in its latest report that Kenya is among a handful of African countries at the forefront of deploying innovative energy technologies that are expected to significantly transform the power sector in Sub-Saharan Africa (SSA).
“Low levels of infrastructure and power supply are a deterrent for many investors looking to invest across various sectors in Africa,” said Mark A. Smith, Deloitte East Africa’s Head of Infrastructure and Capital Projects.
Smith said increased regional collaboration will be crucial to address some of the longer-term issues of energy security.
“More affordable tariffs and an optimal generation capacity could be developed in the power sector through infrastructure linkages of power utilities and the regional power pools,” he said.
The report says the East African nation has decentralised its power generation systems and models while strengthening structure reforms through vertical unbundling.
It notes that vertical unbundling — the process of “unpacking” integrated utilities into separate generation, transmission and distribution companies — has also been noted in other countries, including Ghana, Namibia, South Africa, Uganda and Zimbabwe.
Power projects make up a large share of infrastructure and construction sector investments at the regional level, accounting for 44 percent in South Africa and 37 percent in East Africa.
According to Deloitte, notable power projects in Kenya include Iberafrica, Orpower4, Tsavo and Westmont Power projects.
“It is paramount that large investments into infrastructure and sustainable power supply are prioritized, in order to support the forecasted combined economic growth of 5 percent in Sub-Sahara Africa,” Smith said.
In light of the main challenges facing SSA power industry, such as inadequate generation capacity, poor transmission infrastructure, unskilled or low numbers in the skilled workforce, poor maintenance of existing power stations, as well as poor metering and billing systems resulting in unreliable supply, countries will need to innovate to achieve financially viable growth in the sector.
“These challenges, coupled with a changing landscape in terms of technologies and investment costs, have inspired a shift from traditional generation practices and mixes, modes of business, methods of operations and systems, funding channels and models, as well as the crop of players,” said Smith.
“The focus is now towards application of new innovative technologies and dynamics in Africa’s power infrastructure,” he added.
The report projects that increased strain on power supply will influence government and public sector stakeholders to establish real solutions that will address the persistent supply deficit.
And the improved access to electricity will be driven by electrification programs, better pricing and increased generation from renewable energy.
“In spite of skills and capital challenges in East Africa, the integration of technology and intelligent solutions in the power sector, will translate to more efficiency, cost saving and intelligent infrastructure,” says the report.
The report notes that East Africa’s power sector is adapting global trends with solutions emerging in other parts of the world expected to be replicated.
“As more opportunities, such as entrepreneurship and innovation gain impetus, players in the sector need to change their approach and identify solutions that will help them navigate the challenges in the East Africa power sector,” it says. Enditem