Investment in Renewable Energies East Africa

Background Info

The East Africa Community (EAC) region with its five member states Kenya, Uganda, Tanzania, Rwanda and Burundi is abundant with energy resources. This mainly refers to renewable energies such as hydropower but also geothermal, solar and bio-energy. On the other hand most of the commercial energy has to be imported in the form of hydrocarbons. Energy prices are high in the region – especially compared to incomes. Furthermore electricity supply is insufficient and thus unreliable; power cuts are frequent and rarely scheduled. As climate change is also affecting the region, an own contribution should be developed by harnessing renewable energy potential so as to prevent further damage.
The East Africa Community and the East African Business Council (EABC) are major players in the energy sector. EAC has recently implemented the Power Master Plan in order to strengthen the efforts regarding renewable energy and to improve the basic conditions for a better integration from stakeholders in the energy sector. Furthermore the EAC has adopted the “Strategy on Scaling-up Access to Modern Energy Services” which shall now be implemented. Thus energy and renewable energies can be regarded as a main lobbying scheme of the recent EABC policy.
On behalf of EABC a recent DFIC study gives a summary about the present situation regarding renewable energy in the EAC member states. The study focuses on the following potentials for renewable energies for rural and industrial applications:
  • Solar energy (thermal and photovoltaic),
  • Wind energy,
  • Hydro energy,
  • Geothermal energy,
  • Bio-energy (biomass, thermal use and cogeneration, biogas and bio-fuels).
In most East African countries governments are opening up their electrification programs for private sector investment, e.g. de-central use of energy for rural electrification. The transfer of modern technologies and investments from Germany into the energy sector can be a win-win scenario for both East African businesses and for high-tech companies in Germany / Europe.
For business there are ample opportunities to invest which shall become even more attractive as governments improve framework conditions.
Within the East African Community the framework conditions for private sector participation (PSP) in renewable energies and their present application vary from country to country. Nevertheless renewable energies have long had the attention of development partners. It is important to note that ministries of energy in several EAC countries expressed their concern that development partner projects should become more sustainable in a commercial sense and that this is a main reason to increase the focus on PSP.
EAC and EABC are working to overcome obstacles within the energy sector in order to promote economic and private development. A recent study recommended the following reforms: sector reform liberalization of the power sector, PSP in renewable energies sector policy, finance and subsidies, use of rural electrification funds for private sector projects and encouragement of PSP in the power sector.
The liberalization of the energy sector is necessary to encourage capital investment from donors and stakeholders. The EAC region states will be an increasingly attractive territory for private sector investment in the energy sector in regards to renewable energy.
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