How mega dam will increase Ethiopia's prominence in Kenya's power sector

Ethiopia's role in stabilising Kenya's power supply is set to expand following the completion of its Grand Ethiopian Renaissance Dam (GERD), launched Tuesday this week. 

Kenya has in recent years increasingly relied on Ethiopia to plug power generation gaps in its energy sector, supplying nearly 10 per cent of the power consumed in the country. President William Ruto indicated that Kenya could be increasing this with new planned agreements, and to secure the trade, he has offered to mediate talks between Ethiopia and Egypt, with the latter rattled that GERD might affect water flows on the Nile, its key source of fresh water.

Kenya, which already has a Power Purchase Agreement (PPA) with Ethiopia Electricity Power (EEP), has been importing 200MW of electricity, with plans to increase this to 400MW later this year. These imports have enabled Kenya’s electricity sector to cope with a fast-growing demand that has threatened to outstrip the country's available generation capacity, especially during peak hours.

President Ruto said this might be enhanced to help Kenya increase the reliability of its power supply.

In a statement on Tuesday, the State House said Kenya is ready to sign another PPA with Ethiopia “to uptake reserve power from the 6,450MW Grand Ethiopian Renaissance Dam”. It added that “additional capacity would strengthen the country’s reserve margin and reduce supply deficits”.

“Reliability is especially critical for special economic zones, industrial parks, ICT hubs, and agro-processing facilities, all of which require consistent and affordable power to drive Kenya’s development agenda,” said Ruto, when he spoke in Ethiopia during the launch of the Grand Dam.

The supply from Ethiopia has proved key for Kenya, where demand has been growing while the country has not increased its power production capacity to cope with demand on account of a freeze in negotiations and signing of new PPAs with power producers.

Kenya has an installed generation capacity of 3,235.5MW, which looks adequate against the current peak demand of about 2,416MW. Yet the system’s effective interconnected capacity — the power that can realistically be dispatched — is only 3,056MW. Of the effective capacity, about 635MW is from variable renewable sources such as wind and solar, which cannot always be relied on during peak hours.

In its data on installed capacity, Kenya includes the 200MW from Ethiopia, indicating the level of reliance on imports from its northern neighbour. 

Over the six months to June this year, Kenya imported 635.79 Gigawatt hours (GWh) from Ethiopia, translating to about nine per cent of the electricity that Kenya Power bought from different consumers at 7,301.39GWh.

Recent data by the Energy and Petroleum Regulatory Authority (Epra) shows that the share of imports has risen to command the second largest market share, when compared to power producers in Kenya. This was after Kengen, which accounted for about 60 per cent of electricity consumed locally. 

The heavy and growing reliance on Ethiopia to plug gaps in local production is seeing Kenya become more invested in the relations between Ethiopia on the one hand and Egypt and Sudan on the other. The two countries rely heavily on the Nile for fresh water supply and have protested that the Ethiopian Grand Dam might restrict flows downstream, especially during dry spells.

Ruto urged the three countries to dialogue to find a lasting solution while adding that “Kenya stands ready to help bridge gaps and foster lasting consensus”.

“While the Grand Ethiopian Renaissance Dam continues to evoke differing perspectives among Nile Basin states, Kenya acknowledges the legitimate concerns of all parties, upstream and downstream, and supports the ongoing trilateral negotiations between Ethiopia, Egypt and Sudan,” said President Ruto.

“We believe these negotiations provide the most viable path to a mutually acceptable agreement, one that respects sovereign rights and developmental aspirations, while ensuring equitable use of the Nile waters. We commend the progress achieved so far and urge continued dialogue rooted in compromise, good faith, and adherence to international norms.”

The mega dam, the largest in Africa, will have the capacity to generate 5,100MW, which is expected to be adequate to enable it to export to its neighbours. Other than Kenya, Tanzania has also shown interest in importing power from Ethiopia.