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Kenya Power signs new financing deal with AfDB

By Steve Umidha

The African Development Bank (AfDB) through its clean energy program has extended to Kenya Power a USD1 million grant to develop and implement energy efficiency projects for both public and private sectors.

Through the Sustainable Energy Fund for Africa (SEFA) by AfDB will see the power distributor create a special financing vehicle under the tag name, Super Energy Service Company (ESCO).

Such financing models are typically used in the financing of high intensive projects in the energy sector as well as other investments such as hospitals, schools, and street lighting, laying the foundation for private investment later in the commercial and industrial sectors.

The SEFA grant will also support the training of a dedicated team within the Kenya Power and Lighting Company’s Institute of Energy Studies and Research to operate as a Super ESCO, in addition to support for private ESCOs in Kenya to develop their Energy Performance Contract services.

“The Kenya Power and Lighting Company Super ESCO will allow Kenya to not only improve efficient utilization of energy in the public sector, but also enable a vibrant and sustainable energy efficiency service market which will create jobs and promote investment in energy efficiency,” said Dr Jeremiah Kiplagat, Director of the KPLC Institute of Energy Studies and Research.

Kenya’s Super ESCOs is also expected to see Kenya Power and Lighting Company acquire relevant expertise for the expected market demand and lay the foundation for more ESCOs and ultimately more private investment in energy efficiency in the commercial and industrial sectors.

“The Super ESCO to be run by the Kenya Power and Lighting Company is the first initiative of its kind in East Africa. We expect that Kenya’s lead will trigger the uptake of the Super ESCO model in other countries in the region. We look forward to supporting other countries to develop their energy efficiency market,” said Nnenna Nwabufo, Director General, East Africa Region, African Development Bank.

The government of Kenya considers energy efficiency a priority area of improvement in its efforts to enhance the quality of life of its citizens.

The Kenya National Energy Efficiency and Conservation Strategy formulated in 2020 pursues, among many other sectoral objectives, the creation and implementation of various energy efficiency business models.

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