Kenya kickstarts a Super ESCO for boosting energy efficiency

The new Super Energy Service Company will boost investments in energy efficiency and is linked to technical support from UNEP DTU Partnership.

October 6, 2021

The government of Kenya has announced the creation of a Super Energy Service Company (ESCO). The Super ESCO will develop and implement energy efficiency projects for both the public and private sectors and will be run by the Kenya Power and Lighting Company.

The creation of the Super ESCO is supported by the African Development Bank and is based on Kenya’s National Energy Efficiency and Conservation Strategy (KNEECS) developed with technical support from UNEP DTU Partnership’s Copenhagen Centre on Energy Efficiency.

Super ESCOs are considered an essential business model for channelling funds into public sector energy efficiency investments such as hospitals, schools, and street lighting, thus laying the foundation for private investment in energy efficiency.

Part of the national strategy

Super ESCOs, with their backup by the national government, can attract leading experts in energy efficiency implementation and funding from multilateral development banks. This is one of the reasons that establishing a Super ESCO was one of the priority actions included in the KNEECS.

KNEECS is Kenya’s first strategy for energy efficiency, developed with technical support from The Copenhagen Centre on Energy Efficiency. The centre also supports the development of an Implementation Plan for the Strategy to increase domestic coordination and mobilize international support.

Supporting African countries improving their regulatory framework to enable ESCO market development is also a priority of the Global ESCO Network, an initiative hosted by the Copenhagen Centre on Energy Efficiency.

Leading the way for others

The Sustainable Energy Fund for Africa (SEFA) has announced a $1 million grant to support the establishment of the Kenya Super ESCO. The fund is a multi-donor Special Fund managed by the African Development Bank providing catalytic finance to unlock private sector investments in renewable energy and energy efficiency.
It was established in 2011 in partnership with the Government of Denmark and has since received contributions from the Governments of the United States, the United Kingdom, Italy, Norway, Spain, and Sweden.

“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. The African Development Bank looks forward to supporting other countries to develop their energy efficiency market,” said Nnenna Nwabufo, Director General, East Africa Region, African Development Bank, in an article.

Building local capacity

Kenya’s Super ESCOs will enable the Kenya Power and Lighting Company to gain relevant expertise, build market demand, and lay the foundation for more ESCOs and ultimately more private investment in energy efficiency in the commercial and industrial sectors.

The SEFA grant will 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.