MINISTRY OF ENERGY

Feed-in-Tariffs for Renewable Energy Resource

Generated Electricity

Guide for Investors

1st Edition, May 2008

2nd Edition, January 2010
 Table of Contents

Table of Contents 1
1 Background Information on Feed-in-Tariffs 2
1.1 Feed-in-Tariffs Policy 2
1.2 The Feed-in-Tariff Instrument and its Objectives 2
1.3 Feed-in-Tariffs Summary 2
1.4 Tariffs duration 3
1.5 Purchase Obligations 3
1.6 Summary of the Procedure for Implementation 3
1.7 Feed-in-Tariffs Policy Document 3
2 Purpose of this Guide for Investors 4
3 Expressions of Interest 4
3.1 Objective 4
3.2 Information to be included in the EOI 4
3.2.1 Particulars of the Applicant 4
3.2.2 Project Site Location 5
3.2.3 Site ownership and control 5
3.2.4 Technology 5
3.2.5 Preliminary Project Feasibility Assessment 5
3.2.6 Project Sponsors and Developers 5
3.2.7 Technical Advisors, Experts and Contractors 6
3.2.8 Project Financing 6
3.2.9 Project Development and Implementation 6
4 Detailed Proposals 6
5 Submission of the Expressions of Interest and Proposals 6
6 Deadline for Submission of Expressions of Interest and Proposals 7

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1. BACKGROUND INFORMATION ON FEED-IN-TARIFFS

1.1 Feed-in-Tariffs Policy

1. In March, 2008,.the Ministry of Energy has formulated, published and has been
implementing a feed-in-tariffs policy for wind, small hydros and biomass resource
generated electricity. In a bid to facilitate accelerated investment in generation from
renewable sources, as well as incorporate other renewable energy resources namely,
geothermal, biogas and solar, the Ministry of Energy deemed it necessary to undertake
a mid-term review of trhe policy, and consequently published the revised Feed in Tariffs
Policy in January, 2010 This policy is aimed at accelerating private sector
investments in electricity generation from Renewable Energy Sources as a
means of diversifying national power sources, enhancing national energy
security, creating employment and income generation.

1.2 The Feed-in-Tariff Instrument and its Objectives

A Feed-in-Tariff is an instrument for promoting generation of electricity from

renewable energy sources (RES). A Feed-in-Tariff allows power producers to sell
and obligates the distributors to buy on a priority basis all renewable energy sources
generated electricity (RES-E) at a pre-determined fixed tariff for a given period of
time. Its objectives are to:-

a) facilitate resource mobilization by providing investment security and

market stability for investors in Renewable Energy Sources (RES)
electricity generation
b) reduce transaction and administrative costs by eliminating the
conventional bidding processes
c) encourage private investors to operate the power plant prudently and
efficiently so as to maximize its returns.

1.3 Feed-in-Tariffs Summary

The power grid connections tariffs applicable are indicated in the table below:

Technology Plant Maximum Firm Power Maximum Non Firm

Type Capacity Tariff ($/kWh) at the Power
(MW) Interconnection Point Tariff ($/kWh) at the
Interconnection Point
Geothermal Up to 70 0.085 -
Wind 0.5 – 100 0.12 0.12
Biomass 0.5 – 100 0.08 0.06
Small Hydro 0.5 – 0.99 0.12 0.10
1–5 0.10 0.08
5.1 – 10 0.08 0.06
Biogas 0.5-40 0.08 0.06
Solar 0.5-10 0.20 0.10

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1.4 Tariffs duration

The tariffs which are for power grid interconnections shall apply for Twenty(20)
years.

1.5 Purchase Obligations

• The grid system operators shall connect plants generating electricity from
renewable energy sources and guarantee priority purchase, transmission and
distribution of all electricity from renewable energy sources specified in this
document.

• Grid operators shall pay a tariff agreed upon between them and the power
producer subject to the maximum tariffs and maximum capacities specified in
the above table.

• Power Producers and grid system operators may agree by contract to digress
from the priority of purchases, if the plant can thus be better integrated into
the grid system. The parties shall seek approval for such variations from the
Energy Regulatory Commission.

1.6 Summary of the Procedure for Implementation

a) Private investors who wish to become power producers shall send an

expression of interest (EOI) to the Ministry of Energy.

b) A Committee comprising representatives of the Ministry of Energy, the grid

operator (KPLC) and the Energy Regulator (ERC) will review the EOI and
communicate its decision to the applicant within three months. The
communication shall give further guidance on the way to proceed.

1.7 Feed-in-Tariffs Policy Document

Full details on the feed-in-tariff policy are contained in the policy document available
at the Ministry’s Website www.energy.go.ke. The same can be downloaded free of
charge from the said website.

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2. PURPOSE OF THE GUIDE FOR INVESTORS

This guide has been prepared to guide potential investors, who wish to exploit the
investment opportunity presented by the feed-in-tariffs, on how to submit their
applications and the information that should be provided with the expressions of
interest.

3. EXPRESSIONS OF INTEREST

3.1 Objective

The Expression of Interest (EOI) is the first communication of the applicant’s

intention to invest under the feed-in-tariffs policy. It is expected that an applicant who
sends an EOI has done some preliminary appraisal work on the proposed project
and can provide basic information on the renewable energy resource to be used,
location, plant capacity, tariff, expected duration of plant development and any other
information that the investor wishes to disclose to the Ministry of Energy to facilitate
decision making. Applicants should note that joint ventures and partnerships are
allowed.

3.2 Information to be included in the EOI

The information provided in the EOI should be sufficient to demonstrate the

applicant’s commitment and ability to proceed with further development of the project
if an approval to proceed is granted. It should be a seen as a project appraisal or
better still, a pre-feasibility assessment. The EOI should as a minimum contain the
information sought hereunder

3.2.1 Particulars of the Applicant

• Name of Applicant (Business/Entity/Group)

• Type of Entity (sole proprietorship, private limited, public limited, other)
• Date of Incorporation
• Head Office Address
• Telephone No.
• Fax No.
• E-Mail
• Website
• Main Business Activities
• Authorized Share Capital where applicable
• Business/Entity ownership and shareholding structure where applicable
• Business/Entity Registration Certificate
• Income Tax Registration (PIN) Certificate
• VAT Registration Certificate

The Ministry of Energy is aware that some organizations such as Saccos and Self-
Help groups can not provide some statutory documents in the above list. This will not
affect their applications provided that the other relevant information is provided.

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Foreign investors also qualify to invest under the feed-in-tariffs policy subject to
compliance with other relevant laws governing foreign investments.

3.2.2 Project Site Location

Description of the project site location giving sufficient details to enable the Ministry
of Energy to easily identify the site. Provide the following information:

• Site name
• GPS and/or geographical co-ordinates
• Nearest urban centre
• Location/Division
• Constituency
• District
• Province

3.2.3 Site and Land Ownership and Control

Indication of the site ownership. If not the owner, indicate how the project developers
intend to acquire and control the site either through long term lease, buy-out or other
arrangements.

3.2.4 Technology

Type of renewable energy technology to be employed:

• Geothermal
• Wind
• Small Hydro
• Biomass
• Biogas
• Solar

3.2.5 Preliminary Project Feasibility Assessment

Brief description of the project basing the information on preliminary investigation

carried out. As a minimum, indicate the energy resource assessment results,
projected plant generation capacity (kW), estimated cost, estimated capacity factor
(also called load factor), availability and expected annual electricity sales and
indicative tariff. Any other information that would help the Ministry of Energy to
decide whether the project is financially viable may be included.

3.2.6 Project Sponsors and Developers

Briefly outline the background and profiles of project sponsors and/or developers

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3.2.7 Technical Advisors, Experts and Contractors

Give an outline of the technical advisors or contractors indicating their capability and
experience in similar technology development projects.

3.2.8 Project Financing

A project may be financed through debt, equity or a combination of both. Briefly

describe how the project will be financed. Indicate sources of finance and the
expected amounts. Provide basic information on your financial advisors, if any.

3.2.9 Project Development and Implementation Plan

Outline below project development and implementation plan including time

schedules (from the date of acceptance of the EOI by the Ministry of Energy) for
major tasks and milestones.

4. DETAILED PROPOSALS

Investors whose EOIs are approved will be required to carry out detailed feasibility
studies including environmental and social impact assessments and submit detailed
proposals. Detailed proposals should be considered as the business plans of the
investors and should therefore be detailed enough and be presented in a bankable
format. Detailed proposals should therefore contain all the information sought in
section 3 above and in sufficient detail as they will provide a basis for power
purchase negotiations and agreements.

5. SUBMISSION OF EXPRESSIONS OF INTEREST AND DETAILED

PROPOSALS

Expressions of interest, detailed proposals and enquiries on feed-in-tariffs should be

addressed to:

The Permanent Secretary

Ministry of Energy
23rd Floor
Nyayo House
P.O. Box 30582
Nairobi, Kenya.

Telephone: +254 20 310112

Telefax: + 254 20 240910
Email: ps@energymin.go.ke

EOIs and proposals may be mailed or delivered by hand. Submission through

electronic mail is also acceptable.

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6. DEADLINE FOR SUBMISSION OF EXPRESSIONS OF INTEREST AND
PROPOSALS

The implementation of the feed-in-tariffs policy is a continuous process. Investors

should however note that applications will be processed and approved on a first-
come basis and that applications that are received after the attainment of the
capacity targets set in the policy may not be considered.

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