Strategies for the Generation of Alternative Electricity to Hydroelectric Power in Kenya

A Project Report Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirement for the Degree of Masters in Business Administration (MBA)The purpose of the study was to investigate the strategic management decisions taken by the Ministry of Energy and the Energy Regulation Commission on the generation of electrical energy other than the traditional hydro-electricity. The main focus was to determine the extent to which strategic decisions adopted by the Ministry of Energy had solved the energy crisis in Kenya, the challenges that they faced in the generation of electricity and the available alternatives in the generation of electricity power other than by hydro means in Kenya. The research design that was employed by this study was descriptive in nature. A descriptive design would help provide a clear description of the various strategic decisions adopted by the government and their effectiveness as well as their success in improving the energy sector in Kenya. A 30% proportionate stratified simple random sampling technique was the method used in selecting elements from the population, comprising of four categories; MoE, ERC, KENGEN, and selected independent power producers all within Nairobi Central District. A sample population of 61 respondents was adopted. Data collection was conducted by use of questionnaires that had both closed and open ended questions. A pilot test was carried out to test the reliability of the data collection tool. In the analysis of data, inferential statistics was used. The data was coded before being keyed in SPSS for analysis. Report of these analyses was presented in form of correlation analysis, cross tabulations and regression analysis. From the findings, it was revealed that a well-functioning and fully integrated internal market for energy is key to energy security. It was also found that moderating energy demand can reduce the country’s external energy dependency. Co-ordination of risk assessment and contingency plans was also found to reduce electricity crisis. The study also found that preventing and mitigating oil disruptions can protect energy surges. It was also found that the government ought to trigger more private investments in the energy sector. It was found that efforts should focus on developing more options of electricity supply. The study revealed the ministry should work together with other stakeholders to improve Kenya’s immediate preparedness in respect of possible disruption. The study revealed that Kenya can work with other countries in the region in improving electricity supply. From the findings on challenges of impact of natural calamities, it was found that evaporation is the highest challenge, followed by flooding, reduced water run-off and finally siltation of dams. It was also found that political instability can lead to the destruction of renewable energy infrastructure; extreme insecurity leads to risk of breach of contract between government and investors; and policies governing investment in renewable energy are often altered by regimes in power for political gain. The study revealed that lack of supportive policies for renewable energy projects, as well as limited enforcement of the same inhibits growth in this sector. It was also found that too many agencies involved in the issuing of licenses poses a great barrier for investment in the energy sector. The study showed that oil is an energy alternative to hydroelectric power, and that the government of Kenya supports and promotes the development of wind energy. It was found that the government supports the exploration of oil reserves as an investment for future prospects. The study recommended that the government should seek partnership with other countries to improve on its energy source. This includes partnering with other regional states such as Ethiopia to supply cheaper electricity since the country is well endowed with the facilities to do so. It also recommended that the government should put its house in order so as to attract other players in the energy producing sector. Insecurity, corruption and bureaucracy have been found to turn away investors in the energy sector. It also recommended that the industry players should focus more on the options of producing alternative energy to hydroelectricity that are commercially viable in the country at the momen