Is government intervention hampering private investment into East-African renewables?

Many experts believe the contribution of governments within East-Africa is slowing the speed of growth in the renewable energies sector. Government involvement in the design, development and operation of mini-grids is deterring potential private investments; private investments into East-African renewable energies were predicted to surge in recent years but this has not been the case. 
Experts from within the sector are pointing the finger at government agencies that are crowding out the developers using legal and political tools that are in need of reforms. Private companies have indeed shown an interest in investing but they have insisted the power and subsidies given to government companies need addressing if their investment is to be warranted. 
Kenya’s ministry of energy has said that overall electricity access has increased within the country from 23 percent in 2009 to 50 percent in 2015; however, the unequal distribution of this electricity is still highly prevalent with much of northern Kenya still deprived of such resource. Regions such as northern Kenya have access of about 5 percent. It says eight out of the 20 poorest parliamentary constituencies “where 74 percent to 97 percent of people live below poverty line” are found in this northern region.
A number of renewable energies companies would happily address this problem, through investment into the northern and other neglected territories of Kenya, however, the unfair position of power given to Kenya’s Rural Electrification Authority (REA), just completely deters these prospective companies. 

In countries such as Kenya, which has such vast areas which do not have access to any electricity, mini-grids are definitely a better option to grid extension; it provides better quality and more reliable electricity to remote areas. 

“Currently government agencies, such as Kenya’s are acting both as players and referees in the mini-grid business, which creates an unfair playing field and does not open up the industry to expected economic transparency levels,” Hankins said. In Kenya, there are 21 mini-grid stations with a collective capacity of 24.8 MW. REA owns 19 of the mini-grid stations, which are managed by two other government companies, Kenya Generating Company (KenGen) and Kenya Power Company. The stations include 23.7 MW thermal, 0.55 MW wind and 0.569 MW solar, according to Ministry of Energy.
 “Governments in Africa are generally happy to own mini-grids but at the moment are unable to deliver quality power and cannot offer customer support services while environmental issues are not a priority in development of these projects,” he said.

An Energy Sector Management Assistance Programme report released by the Ministry of Energy early this year said potential mini-grid developers in Kenya lack guidelines, standard or best practices for development of mini-grids “which may prevent future interconnections to the main grid and result in sub standard mini-grid infrastructure.”

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