Quality Energy for Quality Life

ENERGY NEWS MARCH

QUARTERLY NEWSLETTER 2016

PROMOTING GREEN
ENERGY PRODUCTS
AT THE GRASSROOTS
ERC pilot project kicks off
Construction of New Larger Mombasa - Nairobi Pipeline to serve till 2044.
 CONTENTS
02 Editorial
03 Director generals message

Features
04 Promoting Green Energy Products at the Grass Roots
11 construction of New Larger mombasa-Mombasa pipeline

Company news
7 Commissioners Visit Energy Sector Licensees
13 ERC Meets Nakuru Energy Sector Stackholders
The Energy News Team 15 New Grid Code For interconnected Electricity Grid
Editorial Director
Antoinette Kamau
Revise Editor
Immaculate Mwende
Editorial Committee
EDITORIAL
Engineer Joseph Oketch
Edward Kinyua
Kimani Muhoro
Greetings and a warm welcome to the Energy Regulatory
Antoinette Kamau
Commission Newsletter. It is a great pleasure to welcome
Godfrey Mwaloma
you to this edition of our quarterly publication that is
Immaculate Mwende
meant to update stakeholders and the public on our
Contributors work as the Energy Sector regulator
Godfrey Mwaloma
Fenwicks Musonye At ERC, we believe that public awareness is key in
Immaculate Mwende increasing the rate of citizen participation in the energy
Layout and Design sector. This quarter, we engaged various stakeholders
Express DDB Kenya from the electricity, renewable energy and petroleum
subsectors in Nakuru County . In addition, we held
The opinions expressed consultative meetings discussing matters of interest to
in the Energy News are By Antoinette Kamau
energy consumers with colleagues from the security
those of the authors and do agencies , national and county governments.
not necessarily reflect the
official position of the Energy
The Commission is always eager to consult with
Regulatory Commission.
stakeholders on ongoing and emerging initiatives and
Contacts we encourage the public to report malpractices in the
Energy Regulatory energy sector. If you know of an illegal fuel depot in your
Commission
area, urgently file your report with the Commission. This
Eagle Africa Centre, Longonot
Road, Upperhill
is a key part of the Commissions role and we hope that
P. O. Box 42681-00100, you will embrace it because its success is directly related
Nairobi. to your support and contribution.
Tel: +254 20
2847000/200/229 We at ERC appreciate your support and are happy to
Cell: 0722 200 947 / have you as a reader of this Newsletter edition. I wish
0734414333 you a pleasant reading.
Fax: +254 20 2717603
Email: info@erc.go.ke

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 ENERGY NEWS MARCH 2016

DIRECTOR GENERALS MESSAGE

The primary role of the Commission is to regulate
electrical energy, downstream petroleum, renewable
energy and other forms of energy in Kenya. Our
challenge is to balance the conflicting interests
of various stakeholders: consumers, investors and
government. We aspire to create a vibrant energy sector
providing safe, quality, yet affordable energy products
for national development, as we live up to our rallying
call: Quality Energy for Quality Life.

ERC is involved in drafting regulations and codes in

response to external and internal stimuli and especially
Eng. Joseph Nganga from technological changes. In March 2016, we hosted
electricity sector stakeholders to discuss the draft
of a new grid code developed in collaboration with
an international consultant. From the discussions,
we look forward to having an electricity distribution
and transmission system that is more adaptable
and responsive to investments in renewable energy
technologies.

There is immense investment work going on in the

energy sector with expansion of electricity grids,
construction of new pipelines and expansion of storage
facilities. These developments require skilled staff
with appropriate training. The Commission licenses
electrical technicians and contractors, as well as solar
PV and solar water heating technicians/contractors
plus energy auditors. There is an ongoing discussion
over a new training curriculum that provides aspiring
professionals with the skills they need. The curriculum
will also help us to assess in a more holistic manner the
requisite skills and keep our licensing regime relevant
to the industry.

On a different subject, the global oil prices were stable

during the January March 2016 quarter and the
Commission strives to continuously pass any accruing
benefits to consumers as reflected in the monthly retail
price reviews. The lower oil prices benefit oil importing
countries, of which Kenya is one.

Many thanks to all our partners in the public and private

sectors for their efforts and input as we move the energy
sector forward.

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 PROMOTING GREEN ENERGY
PRODUCTS AT THE GRASSROOTS
The Energy Regulatory Commissions Renewable Energy department began an
awareness campaign in February 2016 in Makueni and Kilifi counties to promote
sustainable, energy efficient technologies for use at home.

The awareness campaign was part of a pilot project that began in 2015 through
consultative meetings with officials of both county governments. The sustainable,
energy efficient technologies promoted during the awareness campaign were
improved biomass cook stoves, ethanol fueled cook stoves and solar lanterns.

The workshops were also graced by county administrators who helped in

introductions, mobilization of people and organization of the workshop venues.

Improved biomass cook stoves, otherwise known as modern jikos, can help
families save an average Ksh.18,000 annually. In comparison with the traditional
jiko which emits a lot of smoke, the biomass cook stove uses 60% less charcoal,
produces more heat and with very little smoke. The jiko has insulators which
prevent the cook stove from losing too much heat. There are different models
from various companies and one can make a suitable model especially if you
own a hotel or a bakery. Such cook stoves can be found in supermarkets and
they retail price for them is around Ksh.2,500.

Additional technology demonstrated at the workshop was the ethanol fueled

stove; a very innovative cook stove. This type of cook stove has a small plate and
a tin that holds the bio-ethanol (technical grade alcohol). The denatured alcohol
can last up to 5 hours depending on the type of dish one is cooking. It produces
non-luminous flames(barely visible) which produce intense heat. On the flipside,
one may notice a pungent smell that can be irritating.
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The solar lantern can be used both as a lamp and a flashlight. It is powered
by Lithium ion batteries which are charged by a mini-solar panel on the lamp.
The batteries are long lasting when it comes to durability. This lantern is
environmentally friendly and does not harm nature in any way.

Select attendees at the workshop were rewarded with some of the products on
demonstration by the Commissions officers. Residents were impressed with the
energy saving technology presented to them.

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 ENERGY NEWS MARCH 2016

Below: Women in Kilifi County take a closer look at the ethanol fueled cook stove during the
engagement forum with ERC officials.

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 TALKS ONGOING ON NEW
TRAINING CURRICULUM
Electricity supply systems, solar photovoltaic systems and solar water heating systems
are important to reduction of energy poverty and enhancing economic growth.

As the regulator responsible for licensing and regulating these services, ERC wants to
ensure that licensing processes are objective, credible, predictable and with a high
level of integrity.

In January 2016, the Commissions staff met with technical training professionals
to discuss collaboration on licensing processes for persons in the electricity and
renewable energy subsectors. The professionals were from electricity utility
companies, the private sector and from the Ministry of Education, Science &
Technology.

A high quality supply of power requires that the country develops high quality
technical expertise, said ERC Director General Eng. Joe Nganga at the workshop.

Stakeholders who were in attendance agreed that a standard curriculum to examine

license applicants would enhance the quality of electrical and solar equipment
installation work. New guidelines for the licensing of electricians as proposed in the
Energy Bill 2015 were among the topics of discussion.

A participant speaks during a consultative forum on the proposed new curriculum for
electricty and solar contractors.

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 ENERGY NEWS MARCH 2016

PLENTY TO SEE AND LEARN AS

COMMISSIONERS VISIT ENERGY SECTOR
LICENSEES
Public and private sector players in Western Kenya are making big strides
towards adopting modern trends in electricity generation and energy efficiency.

Challenges however remain in meeting the diverse needs of customers while getting
the right balance between investment needs and profitability.

These, among others, were key lessons that ERC Commissioners took home during
the month of February after visiting four energy sector players in Kisumu, Kericho
and Kisii counties.

The energy sector players that the ERC team visited were Kenya Pipeline
Company (Kisumu depot), James Finlay tea factories in Kericho, Sondu Miriu
hydro-electric power station and Powerhive East Africa in Kisii County.

These companies were specifically selected in order to provide the commissioners

with an idea of the opportunities and challenges in the petroleum, electricity, and
renewable energy subsectors as well as energy efficiency measures implemented
by a large energy consumer.

In addition to interacting with the regulated entities, the trip was to

assist Commissioners and Senior Management appreciate the operating
environment faced by energy sector licensees.

ERC Commissioners and Senior Management team at James Finlay tea factories in Kericho
during the familiarization tour with licencees.

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 We are interested in knowing about the challenges faced by Kenya Pipeline
in Kisumu, said Director General Eng. Joe Nganga at the Kisumu oil depot. The
ERC team was received by the Acting Depot Manager Mr. Abdi Bashir Osman. He
pointed out that capacity constraints on the current pipeline are leading to delays
experienced by petroleum exporters at the depot.

On a brighter side, a new 10 inch pipeline (Line 6) is currently under

construction from Sinendet with an expected completion date of April 2016. Once
complete, the new pipeline will operate concurrently with the existing line and
therefore boost the flow of petroleum products to Kisumu depot.
At James Finlay, the ERC team was taken through the tea processing procedures
by the Managing Director Simeon Hutchinson. The company has implemented
extensive energy efficiency measures in order to cut energy costs and boost
profitability. This is understandable for a company that spends half a billion Kenya
shillings each year just on energy.

James Finlay has a long history of utilizing renewable energy. Our first hydro
plant was commissioned in 1932, Mr. Hutchinson said proudly. We also have a
biogas facility using waste organic matter to generate electrical power. Most of
the waste comes from tea processing and from the companys horticultural
division. Our processing plant for instant tea generates 70 tons of waste daily,
said Mr. Hutchinson illustrating the huge amount of organic waste they have to
deal with.
At Sondu Miriu hydro-electric power station, the ERC delegation was received by
Eng. Simon Ngure, KenGens Director for Regulatory Affair .
ERC plays a critical role in ensuring that activities in the energy sector are
coordinated, remarked Eng. Ngure. Kenya would be in a lot of trouble if ERC did not
function well.

We [KenGen] find the comments from ERC to be very important. We

would appreciate if ERC commissioners spent more time engaging with us and
meeting our board members, Eng. Ngure requested.
Commissioners had an opportunity to visit another electricity generating company
in the region, M/s Powerhive East Africa. The Company is generating electricity
using solar energy and distributing it to households in various parts of Kisii County
where the company has been running a pilot project since 2012.

ERC Commissioners and Senior Management team during a site at

visit Sangoro power station.

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 ENERGY NEWS MARCH 2016

Powerhive is a US-based company, but the local subsidiary is headed by Mr. Zachary
Ayieko, a former CEO of the Rural Electrification Authority (REA).

We are working to reduce the costs of household connectivity to electricity, said

Mr. Ayieko. Powerhive East Africa plans to connect more households in coming years
and has already secured funding from investors for this expansion.

ERC Commissioners raised concern over possible conflict between Powerhive East
Africa and Kenya Power whose distribution network is also expanding in the region.
Powerhive official however said that their company is not in competition, but rather
complements the efforts of Kenya Power.

There is a role for private sector investors in increasing household access to

electricity because one distribution utility cannot do it alone, said Mr. Ayieko.

A powerhive official addresses ERC

officials when the Commission Senior
Management team and Commission
visited the facility.

Zachary Ayieko with ERC Director-

General during the site visit in Feb 2016.

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 ENERGY NEWS MARCH 2016

NEW, LARGER MOMBASA

NAIROBI PIPELINE TO SERVE TILL 2044
Construction of a new 20 inch multi-product oil pipeline from Mombasa to
Nairobi is underway. Zakhem International Construction Co. is carrying out
the work on behalf for the Kenya Pipeline Company (KPC).

The new line will replace the current 37-year old 14-inch pipeline between
Mombasa Nairobi. According to KPC, the project will cost US$500 million,
of which US$350 million (70%) has been sourced from a consortium of
banks.

The 450km-pipeline is KPCs largest infrastructure project since inception,

says the company.

On completion, the new pipeline is expected to have a positive impact on

the economy. Product flow will be enhanced from the current 730,000 litres
per hour to 1 million litres per hour to meet local and regional demand for
petroleum products to the year 2044.

Four new pump stations will be built and fire fighting facilities upgraded.
The contractor will erect a high voltage power substation switchyards to
service the new equipment.

Zakhems Managing Director Mr. Ibrahim S. Zakhem said the companys

initial experience with the Mombasa - Nairobi oil pipeline gave them
comfort in undertaking the new project.

Being the company that constructed the initial Mombasa Nairobi multi-
product oil pipeline line in 1978, I am confident that we are equal to the task
and shall certainly deliver the project as expected, he assured.

Elsewhere, KPC is constructing a 10-inch, 122km pipeline that will run from
Sinendet in Nakuru County to the city of Kisumu. The new pipeline has been
necessitated by regular product shortage in Kisumu due to limitations of
the existing 6-inch diameter pipeline constructed in 1992.

On completion, the new Sinedet/Kisumu line will operate in parallel with

the existing one and is expected to increase the flow of products by an
additional 360,000 litres per hour to serve not only western Kenya, but also
Uganda, Rwanda, Burundi, Northern Tanzania and Eastern DRC.

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 Mombasa Nairobi pipeline construction.

ERC Commissioners in a briefing session at KPC (Kenya Pipeline Company)

Kisumu.

Safety briefing session with ERC Commissioners at KPC (Kenya Pipeline

Company) Kisumu.

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 ENERGY NEWS MARCH 2016

ERC MEETS NAKURU ENERGY SECTOR

STAKEHOLDERS
The Commission engaged over 130 people in Nakuru during an awareness
workshop that brought together electrical technicians, contractors, petroleum
dealers among other stakeholders.

The workshop was held just a week after a major fire destroyed an illegal fuel
depot at Nakurus Industrial Area, sparking further interest from stakeholders
eager to know what the Commission is doing about such incidents.

Director General Eng. Joe Nganga urged the public to be partners in this
regard. He urged them to report sites suspected of carrying out illegal fuel
business. You can make a report to the Commission in person, by telephone or
by email and our officers will make a follow up, said Eng. Nganga. The Director
General encouraged individuals worried about their own security to make
reports anonymously.

A visit to the site of the fire showed that the blaze was largely contained within
the premises of the illegal depot. It is by extreme luck that the fire did not
spread to the neighbouring buildings, said Eng. Nganga.

The site in Nakuru County where a fuel tanker burnt down in February 2016.

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 During the stakeholder workshop, ERC officers supported by resource persons from
state agencies and industry players emphasized self regulation through professional
conduct of business activities. Two established electrical contractors from the area
were invited to share their experiences for the benefit of ounger practitioners.

In turn, participants voiced their concerns over the presence of untrained persons
(quacks) in electrical installation work. Concern was also raised over the operations
of illegal/unlicensed petroleum depots and LPG refilling plants.

We came to Nakuru in response to requests from the public when we held workshops
at other towns, said Eng. Joseph Oketch, Director Electricity. We are glad we came
here.

ERC Technical Officer, Petroleum Silas Sanga speks to the media at the site of the fire
accident. With him is the Director General Eng. Joe Nganga.

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 ENERGY NEWS MARCH 2016

DRAFTED: A new code for

the interconnected electricity grid
The electricity subsector is currently discussing two draft documents that, when
approved, will guide the operations of the national grid for years to come.

The documents the Draft Kenya National Electricity Distribution Code and the Draft
Kenya National Electricity Transmission Code were tabled and discussed
before stakeholders at a consultative forum held in Nairobi in March 2016.

The forum drew participation from Independent Power Producers (IPPs), sector
organizations and utilities, including KenGen, Kenya Power, Rural
Electrification Authority, and KETRACO, among others.

The Grid Code is a document that contains the standard procedures necessary for a
reliable electricity supply network. The current Grid Code was prepared in 2008, but
technological changes and anticipated investment in renewable energy necessitated
the ongoing review. The review process is supported by the United States Agency for
International Development (USAID). Nexant, a consultancy fi m, was contracted in
2013 to guide the process. A Technical Review Working Group (TRWG) composed of
key technical and legal staff from all the energy sector organizations was formed to
work closely with the consultant.

Highlights of the Draft Grid Codes include:

Incorporating technological developments and improved industry best

practices.
Delinking technical requirements from commercial requirements.
Harmonizing the Kenya National Grid Code with the Eastern African Power Pool
(EAPP) Grid Code in order to foster trade in electricity across the various regional
grids.
Separating transmission and distribution requirements into separate codes
Incorporating the system expansions envisaged in Project 5000MW+.
Incorporating unique requirements for renewable energy power generator which
are not in the current Grid Code.

There is anxiety for the revised Kenya Electricity Grid Codes to be approved and
implemented as soon as practicable.

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 The revised grid code will Harmonize the Kenya National Grid Code with the
Eastern African Power Pool (EAPP) Grid Code in order to foster trade in
electricity across the various regional grids.

Dr John Mutua [left] of ERC with other participants at Grid Code workshop held in
Nairobi in March 2016
.

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 ENERGY NEWS MARCH 2016

Energy and petroleum cabinet

secretary lauds erc
Energy and Petroleum Cabinet Secretary Hon. Charles Keter lauded ERC for providing
a level playing ground in the energy sector. The Cabinet Secretary spoke during a
familiarization visit to ERC shortly after his appointment in January 2016.

ERC has done well, we encourage you to continue working for the benefit of all
Kenyans, said Hon. Keter.

During the visit, Hon. Keter was taken through the various aspects of ERCs mandate
and activities. The Cabinet Secretary was accompanied by the Principal Secretary
for Energy Dr. Eng. Joseph Njoroge and the Principal Secretary for Petroleum, Mr.
Andrew Kamau.

Eng. Njoroge urged ERC to strengthen its focus on consumer protection while Mr.
Kamau proposed a regulatory policy think tank to encourage adoption of best
practices in the energy sector.

The ERC Director General Eng. Joe Ng'ang'a confers with the Cabinet Secretary of energy and
Petroleum Hon. Charles Keter when the CS visited the Commission in January 2016.

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 CAN CLEAN DISTRIBUTED ENERGY
SOLUTIONS CLOSE AFRICAS ACCESS GAP?
Africa is home to some of the fastest-growing economies on the planet, with an
expected growth rate of 4.5 percent in 2015 and 5 percent in 2016. But the lack
of affordable, reliable energy could challenge continued economic and social
development.

Because Africas population and economic growth are outpacing electrification

efforts, the number of people without access to electricity is expected to grow from
585 million to 645 million by 2030; thats more than twice the current population of
the United States simply left behind.

The conventional approach to electrification on the continent mainly seeks to

expand access to the centralized grid, and that will not be enough. The International
Energy Agency estimates that in Africa, nearly half of the 315 million people who live
in rural areas will depend on off grid solutions, like mini-grids, to close the electricity
gap, while a quarter of those who live in the remote rural areas will rely on smaller,
stand-alone solutions like solar home systems for first -time energy access.

To achieve universal energy access by 2030, Africa needs an integrated approach

that expands the grid while massively scaling up distributed generation modular
systems that generate power close to where it is used. These include stand-alone
systems, as well as mini-grids, which may be off grid or grid connected.

Reaching Sustainable Development Goals

through Distributed Generation
The Sustainable Development Goals (SDGs), adopted at the United Nations,
acknowledge this growing energy gap in goal number 7, which sets a target of
universal access to affordable, reliable, modern energy services within the next 15
years. These new goals, which aim to eradicate extreme poverty in an environmentally
sustainable way, emphasize the role of energy access as a means to that end.

The SDGs also stress the importance of empowering and fully engaging civil society,
the private sector, and most importantly the energy users themselves in developing
energy access solutions.

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 ENERGY NEWS MARCH 2016

Distributed generation can play a role

With the cost of renewable energy technologies continuing to decline and with the
distributed generation market witnessing truly transformational innovations such
as mobile money-enabled pay-as-you-go business models the market opportunity
in Africa is tremendous. Yet, the use of distributed generation is still limited in Africa;
energy service providers are faced with significant challenges as they try to scale
their impact. How do service providers better tailor their services to the needs of the
households, businesses and communities that they are trying to serve? How do they
ensure the provision of high quality energy services at affordable prices? How does
the regulatory and planning environment impact the cost of energy services? How
does the regulatory and planning process allow for smooth integration of distributed
generation services into the grid?

The complexity of these challenges means that a wide network of actors must
be engaged to collectively define energy needs and manage cost-effective and
sustainable energy solutions. Decision-makers and planners, as well as civil society
groups, development partners and investors, must not only more fully appreciate the
contribution distributed generation can make towards achieving energy objectives,
but must also work together to create a supportive framework for its rapid expansion
and integration into national energy plans.

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 Contacts
Energy Regulatory Commission
Eagle Africa Centre, Longonot Road, Upperhill
P. O. Box 42681- 00100, Nairobi.
Tel: +254 20 2847000/200/229
Cell: 0722 200 947/0734414333
Fax: +254 20 2717603
Email: info@erc.go.ke

EnergyRegulatoryCommissionKE @energy_ke

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