Kenya –Ethiopia to trade in electricity

KENYA AND ETHIOPIA will soon launch a power trade deal that will earn the latter an estimated US$400 million a year.  Kenya for her part will not only eliminate the US$500 million in thermal power costs, she will also enjoy cheaper power tariffs. This is perhaps the first electricity trade deal in Africa.

 To enable the trade deal, a 1068KM high Voltage direct current (HVDC) electricity highway between Ethiopia and Kenya. The project to cost an estimated US$1.26 billion will commence next and will last four years, being completed in 2017.

The project is co-financed by the World Bank, The African development Bank, the French Development agency and the governments of Kenya and Ethiopia. AfDB last week approved a US$337.5 million loan for the project. The World Bank is yet to approve the lion’s share of US$ 684 million. Analysts, however expect the Bank to move soon. AFD will cough some US$118.5 million while the governments of Kenya and Ethiopia will contribute US$88.5 million and US$31.5 million respectively.

The deal will see Ethiopia supply Kenya with 2,000MW of electricity at US$0.0065 per KWh. This will earn Ethiopia some US$400 million a year from 2018 onwards.  The Ethiopian Electricity generator EEPP has signed a 25-year PPA with Kenya power and lighting.

Ethiopia has the potential to produce 45,000MW of hydro – electricity- the largest in Africa. Currently she generates only 2000MW but is already expanding capacity to generate 11,000MW by 2017. The link will make Kenya an electricity trading hub in East Africa.

 Kenya, Tanzania, Rwanda, Burundi and DRC are members of the East African Power Pool (EAPP) and this link brings the dream of a regional trade in electric power closer. This would make Kenya an electricity power trade hub in the region.

 Apart from imports from Ethiopia, Kenya is also working hard to generate some 1800Mw of electricity by 2016 from other clean sources including: geothermal power and wind energy.  Kenya, the leader in geothermal power generation in Africa boasts of an estimated 10,000MW of geothermal power and another 3000MW of wind power.