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GH2 Country Portal – Kenya

Green Hydrogen Vision

The energy sector plays a crucial role in facilitating the achievement of both domestic objectives outlined in Kenya Vision 2030 and global commitments, such as the Sustainable Development Goals (SDGs), climate accords like the Paris Agreement, and the broader Africa Agenda 2063.

The development of green hydrogen and its derivatives is in line with national objectives, representing innovation and commitment to a greener future amid the changing landscape of sustainable energy solutions. Through careful research, collaboration, and forward-thinking, the strategy aims to harness green hydrogen's potential as a pivotal component of Kenya's energy transition.

The roadmap indicates that Kenya possesses ample renewable energy resources to support large-scale green hydrogen production without negatively impacting electricity consumers' access and supply. Kenya produces more than 90% of its electricity from hydropower, geothermal energy, solar and wind energy as well as biomass.

In this context as a leading African country in renewable energy with an abundance of the elements required to develop green hydrogen, it is well placed to acquire green hydrogen as an alternative energy source. This could enable Kenya to replace fossil fuels completely and thus create a new economic sector which keeps larger portions of the value creation chain in the country, leading to the generation of domestic jobs and economic growth. 

 

National Strategy

In September 2023, Kenya launched its Green Hydrogen Strategy and Roadmap at the inaugural Africa Climate Summit in Nairobi together with the EU and Global Gateway Support for Clean Energy Transition. 

The emphasis lies on the development and expansion of the domestic market, exports, and incorporates particular goals pertaining to reducing emissions, generating employment, and attracting direct investments.

The aim of the strategy is to “Harness Kenya’s unique and abundant renewable energy sources and innovation mindset to enhance agricultural production, industrialisation and decarbonisation through a phased and demand-driven approach.”

Four key areas have been identified where the focus will be unwavering:

  1. Improved Balance of Payments: Producing green hydrogen for industrial processes will reduce imports of hydrogen-based products like nitrogen fertilizer and methanol. Creating a domestic market for green hydrogen derivatives can also open up export opportunities, enhancing Kenya's balance of payments.
  2. Food Security and Resilience: Green hydrogen can enable local nitrogen fertilizer production, improving food security and resilience. This self-sufficiency can boost agricultural productivity, promote sustainable farming practices, and mitigate the impact of international commodity market fluctuations.
  3. Green Industrialisation and Decarbonisation: Green hydrogen can drive industrialization by establishing manufacturing value chains for its derivatives. This fosters downstream industries, creates jobs, supports renewable energy growth, and improves access to electricity. It also contributes to global decarbonization efforts and opens new markets for low-carbon products.
  4. Investment in the Country: The green hydrogen industry can attract substantial public and private investments, diversifying the economy, creating jobs, and fostering industrial growth in Kenya. This investment spans various sectors and applications, including power generation, hydrogen production, and related downstream facilities.
kenya roadmap

Source: Kenya Green Hydrogen Strategy and Roadmap, Ministry of Energy and Petroleum 

Timeline and Priority Actions:

Q1 2024 - Q3 2024:

  • Create a high-level "green hydrogen program coordination committee."
  • Set up a green hydrogen secretariat, functioning as a centralized hub.
  • Host National Green Hydrogen roundtables focused on finance and green fertilizer.
  • Formulate a Monitoring and Evaluation Plan.
  • Craft a resource mobilization plan for the green hydrogen strategy and roadmap.
  • Integrate dedicated provisions regarding green hydrogen into the national energy policy.
  • Support and expedite catalytic projects showcasing commercial viability, including the implementation of KenGen's Olkaria green hydrogen demonstration project.

Q3 2024 - Q3 2025:

  • Develop a comprehensive green hydrogen stakeholder engagement and communication plan.
  • Establish local and international partnerships to expand training and capacity-building efforts.

Q3 2024 - Q4 2026 and Beyond:

  • Enhance regional and international cooperation and partnerships concerning green hydrogen.

Capacity and Price

1. First commercial scale green hydrogen projects operational by 2027

2. Import substitution of nitrogen fertilisers:

  • 20% import substitution by 2027(approx. 100,000 tonnes/year)
  • 50% import substitution by 2032 (300,000-400,000 tonnes/year)

3. Renewable capacity for green hydrogen: 

  • 150 MW (2023-2027)
  • 350-450 MW (2028-2032)

4. Electrolyser capacity:

  • 100 MW installed (2023-2027)
  • 150-250 MW installed (2028-2032)

Impact Targets

  • 100% renewable electricity system by 2030.  
  • Nationally determined contribution of reducing GHG emissions by 32% by 2030. 
  • At least $1 billion direct investments by 2030.
  • At least 25,000 direct jobs created between 2028-2032.
  • At least 250,000 tonnes CO2 avoided per year by 2030.
  • Production of green shipping fuels by 2030 

Policy Spotlight

In May 2024, the Kenyan Energy and Petroleum Regulatory Authority released Guidelines on Green Hydrogen and its Derivatives. These include various incentives to promote a green hydrogen economy, such as the establishment of export processing zones where investors in green hydrogen and its derivatives can benefit from: 

  • A 10-year withholding tax holiday 
  • Perpetual exemption from stamp duty and from VAT on machinery and raw materials 
  • Operation under a single license 
  • 25% corporate tax after the first 10-year tax holiday expires 
  • 100% investment deduction allowance over 20 years 
  • No exchange control 

Additionally, the existing general legal framework in Keyna supports the adoption and utilisation of clean energy in the country. A few examples: 

  • Under the Value Added Tax in 2013, the importation of windmills is not subject to import duty or value-added tax (VAT) while hydraulic turbines and water wheels do not attract any import duty but 16% VAT. 

  • The Finance Act 2021 reinstated VAT exemptions on renewable energy equipment, such as solar and wind generation equipment, by scrapping the imposition of 14% VAT on the equipment which had been introduced by the Finance Act, 2020.  

Project Spotlight

  • Fortescue: In March 2023, an agreement was signed between Energy, and National Treasury Cabinet Secretaries Davis Chirchir and Njuguna Ndung’u, and FFI Executive Chairman Andrew Forrest, to develop  a 300MW capacity green ammonia and fertiliser facility using the Olkaria Geothermal resources in Naivasha.

  • KenGen Green Hydrogen, Ammonia to Green Fertilizer: A 5MW Demonstration Plant, commissioning in 2025 (Phase 1) with an investment of $5 Million required. In addition, a 100 MW Electrolyser capacity plant commissioning in 2028 (Phase 2) with a total investment of 120 million.

  • Renewstable® Kenya – HDF Energy: In September 2023, a Green Baseload Hydrogen power plant was announced. The plant will deploy  a 180 megawatt photovoltaic solar farm combined with a 500 MWh hydrogen battery storage unit. Total investment required for the project is $500 million.

  • A baseline Power-X study indicates by the Ministry of Energy of Kenya in partnership with the German Development Cooperation on the potential for green hydrogen in Kenya highlights that Kenya has potential to produce fertilizers and derivatives in the short to medium terms with pilot projects starting 2025. The Coast region, Rift Valley and wider Nairobi provide suitable location for successful green hydrogen production and markets. 

  • Talus: In November 2023, the Kenya Nut Company and Talus Renewables signed a 15-year off-take agreement allowing for an on-site hydrogen-to-fertiliser facility to be started. The commercial modular green ammonia plant is located near Naivasha and will be run by Talus. It will allow the Kenyan farm to manufacture its sustainable fertiliser. Using electricity from an on-site solar farm, the facility currently produces 1 ton a day of fertiliser but is expected to produce up to 200 tons per day in the future.  

Financing

  • The European Union is offering approximately $13 million in grants to encourage both public and private investments in Kenya's green hydrogen sector.
  • Furthermore, Global Gateway has set its sights on investing $3.6 billion in diverse climate and environmental initiatives in Kenya, spanning from renewable energy to climate resilience initiatives.
  • Germany has also pledged its support for the green hydrogen project with a $64 million loan and intends to establish a Hydrogen Diplomacy Office in Nairobi to enhance dialogue and cooperation.

Government green hydrogen lead 

Comments

Kenya's green hydrogen strategy has been developed through a collaborative effort involving the Green Hydrogen Working Group, which includes representatives from the government, development partners, the private sector, and academia.

Furthermore, the process received extensive support from a diverse range of stakeholders, including the Green Hydrogen Working Group (co-chaired by MoEP and EU), government ministries, public sector institutions, academia, development finance institutions (DFIs), the private sector, and the Green Hydrogen Organisation (GH2).