Kenya has a current installed electricity capacity of 2,351 MW. This is expected to grow drastically to 19,200 MW by 2030. To meet this demand the Kenyan government has developed a national energy plan and a National Climate Change Action Plan (NCCAP). Geothermal energy has been identified as key to meeting Kenya’s energy demands. The country has an estimated geothermal capacity of 10,000 MW. As of 2014 Kenya’s installed geothermal capacity was 340 MW. Kenya’s NCCAP seeks to develop 1,887 MW of installed capacity by 2017 and 5,000 MW installed by 2030.
Geothermal energy in Kenya is developed as a partnership between the state-owned Geothermal Development Company (GDC) and the partially stated owned developer KenGen. These companies are currently developing geothermal energy as fast as possible but remain a bottleneck to progress due to a lack of capital capacity. Attracting international investors to address this bottleneck is a top priority for the Kenyan government.
In 2007 the term Nationally Appropriate Mitigation Action (NAMA) was coined at the United Nations Framework Convention on Climate Change (UNFCCC). NAMA collectively refers to any action and policies taken to mitigate climate change. It has been found that projects bundled as NAMAs can help to spur foreign investment. The Kenyan government formed a NAMA with the goal of directly supporting 820 MW of geothermal energy by 2020 to spur international investment. This was the first NAMA undertaken by the Kenyan government and several best practices and lessons learned were identified for encouraging foreign investment under the NAMA framework from development finance institutions (DFIs). These included:
- Producing targeted communication for stakeholders. DFIs were communicated with through a variety of means. Targeting the communication based on the DFI structure and matching a viable project with a specific funding proposal greatly increased success.
- Inviting the DFI early to participate in the funding application development. GDC missed several funding opportunities by developing proposals which were incompatible with the DFI’s funding streams. By inviting the DFI to participate early prevented this.
- Linking directly received funds with mitigation impact. The NAMA sector has been perceived as overcrowded and Kenya has been the recipient of heavy donor funds. Directly connecting the funds received to a specific impact was more successful than less developed applications with broad mitigation impact connections.
- Developing funding proposals with multiple time spans to accommodate different DFIs.
- Providing well-defined instituitional management that was transparent and expressed in the funding proposals.