Ministry of Energy GREEN MINI-GRID REGULATORY REFORM Africa Carbon Forum April 2018 | Gigiri, Nairobi | Kenya GREEN MINI-GRID REGULATORY REFORM Eng. Isaac N. Kiva Secretary, Renewable Energy Ministry of Energy

Core Objectives of Kenya’s Strategic Energy Plan 11/10/2018 6:43 AM Increase electricity generation capacity from cheaper, sustainable and reliable energy sources – lower cost of power ( To cost about 9 US cents for industries and 10 US cents for domestic tariff by 2020) Expand and upgrade the transmission and distribution network infrastructure – reduce power loss, lower cost of power, increased revenue generation, stable power network Increase electricity access country wide to increase the uptake of power and grid / off-grid network extension – socio-economic growth, increased and devolved industries To achieve access of 70% by 2017 and universal access by 2020 Key objectives:

Electricity Access Growth: Customer Numbers 11/10/2018 6:43 AM Electricity Access Growth: Customer Numbers Our Intention is to Deliver Universal Access to Energy in Kenya by 2020 2013: 2.33 m 31% 2014: 2.77 m 35% 2016: 4.85 m 58% 2017 70% Universal Access 2020 2015: 3.61 m 45% Year Population size “Million” 2013 41.8 2014 43.0 2015 44.2 2016 45.7 2017 46.3 2020 52.0 Average household size is taken as 5.5 Current connected: 6.5 million, > 72%

Electricity Access Strategies Last Mile Connectivity: Phase 1- Those near transformers Phase 2 – Increasing the transformers Phase 3 – Reaching off grid areas   Off-grid Solutions: - Mini-grids- with hybrid solar/wind - Solar Home Systems - Solar Lanterns Global Partnership Output Based Aid (GPOBA) Targeting highly populated settlements e.g Kibera 1.9 Million Kenyans to benefit across all 47 counties.

Off Grid Electrification Currently there are 21 public operational mini grids All are owned by REA and operated by KPLC All these are diesel based but nine have been retrofitted with Renewable Energy Total Installed Capacity is 24.86MW Thermal- 23.7 Solar- 0.610 MW Wind – 0.55 MW Seven mini-grids are under development thru REA

On-going Programmes REA developing 25No. solar mini-grids of about 60kWp each in 25No markets in off-grid areas. Works in procurement stage Development Partners funding mini grid development World Bank – $ 11 million- 10 mini grids under KEMP AFD- Eur 33 million- Retrofitting 23 off-grid stations KFW- Eur 15 million- 3 green field mini-grids DFID/GIZ- Eur 2.1 million- small mini grids DFID/AFD- £30 million Green Mini grid Facility for private sector NDF- Euro 4 million- Retrofitting of one off-grid station Various Partners- Technical Assistance, Grants, Loans etc World Bank Off-grid facility commenced- to facilitate private sector to deliver electrification thru mini grids and solar home systems(total funding $150million)

Scale-up of off-grid solutions is required to achieve GOK targets Transform Kenya into a newly industrializing, middle-income country providing a high quality of life to all its citizens. Access to competitively-priced, reliable, quality, safe, and sustainable energy is essential for achievement of the vision. National electrification rate of Kenya has increased from 23% in July 2009 to ~70% today Kenya has an ambitious target of achieving universal electricity access by 2020 Last Mile Connectivity Program aims to provide 75-80% of Kenyans with electricity Private sector has installed ~545,000 solar home systems primarily in Central Rift Valley and continues to expand service throughout Kenya. However, the interconnected electricity system covers only the central corridor of the country: Mombasa-Nairobi-Lake Victoria Scale-up of off-grid solutions is required

Kenya National Electrification Strategy Balance KPLC intensification/expansion with service beyond the grid: Rapidly densify grid connections through Last Mile program Intensify KPLC service coverage where possible (short MV extensions) Expand grid service to areas where expansion costs are below ~$1600/connection Scale up off-grid service to meet energy needs of consumers who cannot be reached with grid service Integrated planning: harmonize KPLC, REA & private sector planning; develop integrated annual investment plans; share results through the geospatial platform Ensure high grid quality in all KPLC areas Integrate low-cost grid expansion technology Establish productive use programs

Geospatial Framework Used to Evaluate Options Using Digitized Structures, KPLC & Other Data

Mini-Grid Analysis Mini-grids evaluated in area beyond KPLC grid expansion Clustering households to form mini-grids with more than 100 consumers Mini-grids with less than 500 consumers are LV, solar battery Larger than 500 use MV and solar-diesel hybrids

Connections from 2020 Investment Plan   Intervention Year 1 Year 2 Year 3 Total Grid Expansion 44,153 96,883 133,280 274,316 Grid densification 360,012 676,311 1,238,356 2,274,679 Grid intensification 69,953 274,571 205,781 550,305 Mini-grids 9,745 9,075 16,704 35,524 Solar home systems 688,876 2,066,628 Totals 1,172,739 1,745,715 2,282,996 5,201,405

2020 Full Access Investment Requirements   Intervention Year 1 Year 2 Year 3 Total Grid Expansion $36.42 $122.67 $218.69 $377.78 Grid densification 180.01 338.16 619.18 $1,137.34 Grid intensification 82.25 340.43 256.34 $679.01 Mini-grids 13.12 12.15 22.53 $47.81 Solar home systems 144.66 $433.99 Totals $456.46 $958.07 $1,261.40 $2,675.93

Funding Electricity Access Rural Electrification Fund: Establish in 1973 to fund Rural Electrification Levy charged on all electricity consumers For grid extension and rural electrification including mini grids Development Partners: Have been funding various initiatives World Bank AfDB EU AFD KFW EIB NDF DFID GIZ All these Initiatives have led to successful enhancement of electricity access to the current level of 70%

Funding Electricity Access….2 Equalization fund Fund supposed to bring the marginalized counties to same level with other counties Consolidated Energy Fund Proposed fund in the Energy Bill to fund among others, electricity access Private Sector Private sector has been constructing, owning and operating mini grids Much success in solar home systems, solar lanterns, using innovative mechanisms like PAYG, Private sector to play a key role in electrification, especially for off-grid areas

KOSAP: Overall Project Context Objectives To increase access to energy services in 14 underserved counties of Kenya $150 million allocation with FY17 delivery; funded by World Bank and carbon fund Targets Households, Communities, Enterprises, Water pumping Targets Capacity Building Components Mini-grids for Community Facilities, Enterprises, and Households ($40 million) Standalone Solar Systems and Clean Cooking Solutions for Households ($48 million) Standalone Solar Systems and Solar Water Pumps for Community Facilities ($40 million) Implementation Support and Capacity Building ($22 million) Consumer Education and Citizen Engagement Implementation Support and Strategic Planning and Program Management Unit Capacity Building of County Governments Implementation Arrangements K-OSAP Implementation arrangements MoEP, REA, KPLC and will be implementing agencies at the national level County Government Representatives will be part of steering and technical working group set up to oversee project design and implementation. Representation from concerned ministries (Ministry of Health, Ministry of Education, Ministry of Interior and Ministry of Water) is present both at the Steering Committee and Technical Working group levels Project Coordination Unit within MoEP

Facilitative Policies in Electricity Access Cross-subsidy Amongst electricity consumers Uniform consumer tariffs—those served by mini grids charged similar national consumer tariffs according to category Electricity connection Standardized at Ksh 15,000 for those under Last Mile Project Tax exemption on solar systems and equipment for power generation

Pathway to Facilitate Appropriate Policies Completed a study on Mini Grid Regulations and Business Model for Private Sector Areas covered by the study: Mini Grids Tariffs, What happens when the grid arrives and Technical Standards Policy on Private Sector Mini Grids and regulations under preparation Will also include an addendum on the National Transmission and Distribution Grid Code, dealing with mini-grids

11/10/2018 THANK YOU …