Discussion Paper No. 74 of 2007 on Strategies for Securing Energy Supply in Kenya

Abstract

Energy fuels virtually all the systems supporting mankind, and is essential in both rural and urban areas. Lack of adequate and reliable energy supply reduces the potential/or achieving major structural changes in rural and urban economies. There is a close correlation between economic growth and quality of life and demand for energy. A country cannot expect higher levels of economic growth if energy supplies are constrained. Given the central role of energy in the economy and its potential for poverty reduction and wealth creation, it is critical to assess how Kenya can secure energy supply for now and in the future. The challenges of energy supply in Kenya include low access to modern energy services, high cost of energy, irregular supply and high cost of energy investments, among others. This study uses a Strengths, Weakness, Opportunities, Threats (SWOT) analysis framework to assess Kenya's energy supply using data from primary and secondary sources. The study also utilizes case study method to draw from the strategies used to ensure sustainable energy supply in the US, UK, Brazil, China, Malaysia, South Korea, South Africa and Ghana. The strategies used by these countries include diversification of importing sources of oil, increased oil and gas exploration with in their countries and abroad, use of cheaper sources of electricity such as coal and natural gas, and conducive policy, legal and regulatory framework to attract private sector participation. Special incentives such as subsidies and tax reductions have been used to encourage the uptake of renewable sources of energy and also energy efficient end-use hardware. Besides, governments support R&D programmes in the energy sector and in some countries use legislation to promote the use of biofuel. Regional co-operation with neighbouring countries has also been pursued to ensure energy security.