Foreign investors continue to flock to Kenya as the government opens up the renewable energy sector for expansion and prepares radical changes to the project allocation policy.
Radiant Energy, Eldosol Energy and Alten Energy Solarfarms have announced plans to set up three projects of 40 MW capacity each in the Uasin Gishu county, eastern Kenya. All projects are expected to come up under the feed-in tariff scheme that allows developers to earn a highly attractive rate of US$12.0/kWh, nearly six times the current lowest solar PV bid globally.
Funding for projects by Radiant Energy, Eldosol Energy have been approved by the European Investment Bank for funding and a final agreement for loan disbursal is expected to be signed soon.
All three companies are expected to be among the last beneficiaries of the feed-in tariff program.
According to media reports, the government will soon replace the existing feed-in tariff program with competitive auctions. The Energy Regulatory Commission (ERC) is currently working on a regulation to enable this change which should be ready for implementation within 3 months.
ERC believes that competitive auctions will force project developers to reduce tariffs, which would ultimately benefit the end consumers. At present, the feed-in tariff program awards projects to developers at fixed rates with built-in profit margin. Competitive auctions will force the developers to give away some of that margin.