Impact
Understanding on-grid electrification's full economic benefits to society, job creation, and income in Kenya
Objective
Estimate the supply chain benefits of recent and future electric power generation projects in Kenya, focusing on five renewable technologies: biomass, geothermal, hydroelectric, solar, and wind.
Approach
We identified recent Power Africa-supported projects that focus on on-grid electrification and estimated their investment totals. We assessed future investments in Kenya’s electricity sector expansion using the Kenyan government’s Least Cost Power Development Plan (LCPDP) to see how new electricity project investments translate into employee wages and number of jobs created.
Impact
Our work led to an increased understanding of how domestic spending for power generation projects in Kenya can create the potential for more job opportunities that increase incomes and economic growth.
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 Least Cost Power Development Plan (LCPDP), 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 ten years (2012–2021). Power Africa-supported projects that have reached completion comprise an estimated 30% of total new on-grid generation between 2015–2022 in Kenya. Most of the investments have 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 LCPDP 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 found that:
- Power Africa-supported on-grid electrification projects in Kenya have led to $1.3 billion in domestic spending on power plant construction, operations, and related services by investors and consumers.
- These expenditures have increased direct and indirect wages by $344 million between 2012-2021.
- This impact could expand over the next ten years to $18.9 billion in domestic spending and $5 billion in direct and indirect wage impacts in Kenya if LCPDP capacity and operations plans are met.
Other key takeaways from the study include:
- Jobs created to support new LCPDP power sector construction out to 2040 could be 177,000 direct jobs per year which represents 3.5 times the number of jobs over the 2012–2021 period.
- Potential to create 46,000 jobs in an average year to direct and indirect jobs supporting new power plant operations and maintenance, or 7 times the average over 2012–2021.
These findings suggest the high potential of renewable energy projects for supporting employment in Kenya, and thus the importance of creating an enabling environment that allows these projects to succeed.
At a global level, given the increasing attention to climate finance and ensuring a just energy transition, the study results can be used to demonstrate that investments in renewable energy are ethical and inclusive of the needs of communities and in raising awareness and support among communities for investments in energy infrastructure. In summary, the study illustrates that investments in megawatts can translate into concrete benefits in terms of jobs and incomes in Kenya.
