Understanding the Impact of Kenya Electricity Access on Economic Success
Electrification has been a major focal point for bilateral and multilateral development efforts in recent years. Research suggests that improved electricity access offers an array of economic, environmental, education, and health-related benefits, and therefore it is an important factor in sustainable development. However, electrification’s impact on a country’s economic, environmental, and other development can be difficult to measure. For instance, construction and operation of electricity generation infrastructure directly supports jobs and incomes throughout the economy. In addition, expenditures on procuring goods and services to support construction and operation also support jobs and incomes throughout the supply chain. These combined “multiplier” effects of constructing and operating electricity infrastructure contribute real economic benefits to society in addition to those gained from electricity availability and consumption.
In order to better understand these impacts, RTI researchers analyzed investments associated with building and operating grid-connected electrification projects in Kenya. The researchers studied the economic benefits on not just the power sector but also across other sectors of the economy, specifically:
- What are the historical and future projected supply chain benefits of electricity expansion in Kenya?
- What amount of skilled and unskilled labor will be required to meet Kenya’s LCDP, which defines pathways for power sector expansion into the future in order to meet the country’s sustainable development goals.
Kenya Electricity Expansion – Focusing on Renewable Energy Technologies
RTI researchers focused the scope of the study on five renewable energy technologies: biomass, geothermal, hydroelectric, solar, and wind. For historical projects, they focused on those tracked by Power Africa over the last ten years. Power Africa-supported projects that have reached completion comprise an estimated 30% of total new on-grid generation between 2015-2022 in Kenya. The majority of investment has been in solar, wind, and geothermal generation, though there have been small investments in hydropower and biomass.
For projected future Kenya electrification investments, RTI researchers referenced the Kenyan government’s LCDP from 2020-2040. The LCDP estimates that geothermal power will be the primary generation source to meet future demand, followed by hydropower, wind, and solar resources, respectively.
The study’s findings suggest that Power Africa-supported on-grid electrification projects in Kenya from the PATT database have led to $1.8 billion in domestic spending on power plant construction, operations, and related services by investors and consumers. These expenditures have supported direct and indirect wages totaling an estimated $600 million over the past 10 years. The study also found that this impact could expand over the next ten years to $8.4 billion in domestic spending and $4.5 billion in direct and indirect wage impacts in Kenya if LCDP capacity and operations plans are met.
Other key takeaways from the study include:
- Potential of roughly quadrupling jobs impacts to support projected capacity expansion over the next 20 years
- Jobs supporting operations will expand by an order of magnitude–10,000 to 100,000 by 2040–primarily in the extraction sector due to projected geothermal expansion
- Job expansion will be predominantly for unskilled labor, but the scale of expansion will require jobs training for the other skill types
This research may be useful for policymakers, economists, international donors, and other energy sector stakeholders interested in a more complete accounting of the economic benefits and opportunities provided by electricity expansion projects. At a global level, given the increasing attention to climate finance and ensuring a just energy transition, the study may also be useful to demonstrate that investments in renewable energy are ethical and inclusive of the needs of communities. Finally, the study may be useful in raising awareness and support among communities for investments in energy infrastructure, clearly illustrating that investments in megawatts can translate into concrete benefits in terms of jobs and incomes.
