No part of this report may be circulated, quoted, or reproduced for distribution without prior written

approval from KenGen. All the information contained herein was prepared for information only.

CONFIDENTIAL

Disclaimer:

Germany-Kenya Business Forum

27 September 2012, Hilton Hotel, Nairobi, Kenya

Eddy Njoroge, MD & CEO, KenGen

Overview of the Power Sub-Sector in

Kenya

1

Conclusion 4

OUTLINE:

Overview of KenGen and Available Opportunities 3

Overview of Germany and Kenya Power Sectors 2

Preamble – The World, Europe & Africa 1

2

1

Source: www.eia.gov

HIGHLIGHTS ON WORLD POWER GENERATION: 4,821 GIGAWATTS,

POPULATION 6,853 MILLION (2009)

North America

1,217 GW

Pn: 467m

Consumption per capita:

~13,000kWh

Africa

129 GW

Pn: 1,015m

Consumption per capita:

~500kWh

South America

250 GW

Pn: 480m

Consumption per capita:

~2,400kWh

Europe

943 GW

Pn: 606

Consumption per capita:

~4,000kWh

Eurasia

353 GW

Pn: 283

Consumption per capita:

~3,000kWh

Middle East

181 GW

Pn: 212

Consumption per capita:

~5,000kWh

Asia & Oceania

1,748 GW

Pn: 3,780

Consumption per capita:

~13,000kWh

3

• Major 5 countries - Egypt, Tunisia, Algeria, Libya, Morocco

(population ~ 170 million)

(electricity consumption

per capita ~ 1,120kWh)

HIGHLIGHTS ON AFRICA : ENERGY SECTOR…

Source: IEA, World Energy Outlook 2011 and AFREPEN Nairobi

North

Africa

Main Energy

Sources

Oil & Gas

129 GW

52 GW

South

Africa Coal, Oil & Gas 44 GW

• South Africa only

(population ~ 50 million)

(electricity consumption

per capita ~ 5,350kWh)

Sub-

Saharan

Africa Traditional

Biomass & Hydro

33 GW • >50 countries including

Islands

(population ~ 790 million)

(electricity consumption

per capita ~ 140kWh)

1

4

1

Source: http://en.wikipedia.org/wiki/List_of_African_countries_by_GDP_(PPP)_per_capita; * Includes only EU 27

REGIONAL MARKET : INDICATORS

EUROPEAN UNION (EU)

UNITED KINGDOM

FRANCE

BELGIUM

NETHERLANDS

PORTUGAL

SPAIN

GERMANY

IRELAND

ICELAND

NORWAY

SWEDEN

FINLAND

ESTONIA

LATIVA

LITHUANIA

BELARUS

UKRAINE

POLAND

CZECH SLOVAKIA

HUNGARY

ROMANIA

BULGARIA

GREECE

SWISS

ITALY

DENMARK

CROATIA

AUSTRIA

SLOVENIA

BOSNIA

SERBIA

FYROM

ALBANIA

MOLDOVA

- Member Countries 27

- Size 4.3m sq km

- Population 503m

- GDP $16trillion

- GDP per Capita $31,607

- Power Generation 833,000 MW1

EAST AFRICA COMMUNITY (EAC)

Kenya (40m)

Uganda (34m)

Rwanda (11m)

Burundi

(11m) Tanzania

(46m)

- Member Countries 5

- Size 1.8m sq km

- Population 142m

- GDP $ 0.15trillion

- GDP per Capita $1,200

- Power Generation 4,205 MW

5

Conclusion 4

OUTLINE:

Overview of KenGen and Available Opportunities 3

Overview of Germany and Kenya Power Sectors 2

Preamble – The World, Europe & Africa 1

6

KEY HIGHLIGHTS ON GERMANY & KENYA 2 Key Facts

Source: http://en.wikipedia.org/wiki/List_of_African_countries_by_GDP_(PPP)_per_capita; ERC, http://www.energy.eu/#domestic

Kenya

• Size ~ 582,000 km² -

• Electricity Access Rate ~ 22%

• Household Electricity Prices 21.2 US cents/kWh

• Has ~ 40 million people.

• Electricity Consumption p.a ~ 7,000GWh

• Consumption per capita ~ 170kWh/Yr

• Size ~ 357,021 km2

• Electricity Access Rate: ~ 100%

• Household Electricity Prices 27.81 US cents/kWh

• Has ~ 82 million people.

• Electricity Consumption p.a ~ 600,000GWh

• Consumption per capita ~ 7,400 kWh/YR Germany

7

INSTALLED CAPACITY : GERMANY and KENYA High dependence on hydro leads to use of temporary thermal power during times of dry hydrology…

Source: RWE, IEEJ : June 2012

2

National Installed (170,200 MW) National Installed (1,708MW)

51%

34%

13%

Germany Kenya

Includes 120MW

temporary thermal

power

Hydro (808MW)

Thermal (542 MW)

Geothermal(207MW)

Wind&Bagasse(31MW)

2012

51%

34%

13%

2%

Wind (27,200MW)

Solar (17,300MW)

Biomass (4,900MW)

Others (6,200MW)

2010

16%

10%

3% 4%

Nuclear (21,500MW) 13%

14% Gas (23,800MW)

Thermal (5,900MW) 3%

Brown Coal (22,700MW) 13%

Hydro (10,400MW) 6%

18% Hard Coal (30,200MW)

Includes

7.3MW

Geothermal

8

POWER SECTOR REFORMS KENYA

Ministry of Energy (MoE)

(responsible for policy matters)

ELECTRICITY (single-buyer model)

Energy Regulatory Commission(ERC) (responsible for regulating the entire energy sector)

Source: KenGen;

2

KPC (Transport)

KPRL (Refinery)

NOCK (Marketer)

Private

Marketers

PETROLEUM

KETRACO – Kenya Electricity Transmission Company Ltd REA – Rural Electrification Authoirity KPLC – Kenya Power & Lighting Company Ltd GDC – Geothermal Development Company Ltd IPPs – Independent Power Producers KPC – Kenya Pipeline Company Ltd KPRL – Kenya Petroleum Refinery Ltd NOCK – National Oil Company of Kenya

GDC (Geo-

Resource

Assess-

ment)

IPPs (Power

Gene-

ration)

KenGen (Power

Gene-

ration) KE-

TRACO ( New Trans-

mission)

REA

(Rural

Elec-

trification)

KPLC (Dis-

tribution &

Existing

Trans-

mission

Generation Transmission

& Distribution

KenGen have ~80% installed

capacity market share and

IPPs ~20%

Nuclear

Electricity

Project

(NEP)

9

2 KENYA POWER SUB-SECTOR TODAY (UNBUNDLED SINCE 1996)

Source: KenGen;

Transmission

& Distribution

Generation

Ministry of

Energy

(responsible for

policy matters)

Tsavo (74MW)

Rabai (89MW)

Orpower 4

(48MW)

IberaAfrica

(108MW)

Mumias (26MW)

Upcoming

• Turkana Wind

(300MW)

• Athi-River

(80MW)

• Others

thermals and

renewables…

RURAL

(9MW)

IPPs**

(347MW)

KenGen*

(1,232MW)

* - KenGen capacity excludes 120MW Emergency Power (manages Aggreko Temporary Power on behalf of Government of Kenya (GoK))

** - More Independent Power Producers (IPPs) expected in thermal, wind , solar and geothermal

*** - KPLC will retain the existing transmission network and remain a single buyer for sometime before further unbundling

**** - KETRACO is a 100% owned by GoK and will implement all new transmission lines (earmarked to be the Independent System Operator (ISO)).

***** - REA was established to accelerate rural electrification and works with KPLC in implementing the rural programme

Geothermal Development

Company(GDC) established in

2009 by GoK to accelerate

Geothermal Resource

Assessment and provide steam

for Power Generation

Energy

Regulatory

Commission

(ERC)

(responsible

for regulating

the power

sector)

REA*****

KETRACO

****

KPLC***

Customer

UETCL

(Imports)

EPP

(120MW)

10

2 IPPs IN KENYA

Source: KenGen;

Independent

Power

Producers

(IPPs) –

347MW

Rabai (89MW)

Tsavo (74MW)

Orpower 4 (48MW)

[Adding another 50MW]

IberaAfrica (108MW)

Mumias (26MW)

Upcoming • Turkana Wind (300MW)

• Thika – 80MW

• Athi-River (80MW)

• Others thermals and

renewables…

1997

1998

2001

2009

2009

11

Peak Demand (MW)

Source: Update of Kenya’s Least Cost Power Development Plan 2010-2030

Kenya has significant natural

power potential in form of:

(i) Geothermal(~ 10,000MW);

(ii) Hydro (~1,500MW);

(iii) Wind (~4,400 MW); and

(iv) Potentially Coal, Oil&Gas.

Vision 2030 ~

15,000MW

In 2018 Kenya must have at

least 30-35 % electricity

penetration to reach the

Vision 2030 target

Vision 2030 demand

Forecast of 8-10 %

PEAK DEMAND FORECAST TO MEET VISION 2030 ASPIRATIONS

1,482

3,141

4,659

8,226

12,141

17,764

1,278 2,038

3,474

6,768

10,097

15,066

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

Total Capacity (MW)

Peak Demand (MW)

2026/27 2018/19 2029/30 2023/24 2014/15 2009/10

2

12

Source: Update of Kenya’s Least Cost Power Development Plan 2010-2030

PROJECTED CAPACITY EXPANSION MIX

4,812

1,600

17,754

4,679

Total

Capacity

Hydro

263

Wind Imports

(Hydro)

2,200

Nuclear

4,200

Thermal

(Coal,

Gas & Oil)

Geo-

thermal

National Capacity Expansion (17,764MW) - 2030

3

Kenya has

signed the first

400MW

imports from

Ethiopia

Geothermal

to contribute

~ 30% of

power

requirements National

Electricity

Project (NEP)

established

to determine

viability of

nuclear in

Kenya

13

HIGH WIND POTENTIAL SITES 2

Wind Site Wind Speed-m/s

Jun-12 Jul-12 Aug-12 LTA

Isiolo-Mugae 10.45 10.63 10.77 7.86

Isiolo-Mweromalia 13.62 13.80 14.11 9.01

Isiolo-Kiremu 10.77 10.56 11.24 10.86

Isiolo-Matabiti 11.83 12.12 12.91 12.29

Bubisa West 13.24 13.60 13.88 10.90

Bubisa East 10.85 10.94 11.20 9.64

New Marsabit 9.86 9.61 10.33 9.50

Kinangop 5.99 3.99 6.02 6.97

Malindi 7.53 7.60 7.47 5.86

Marsabit

Isiolo

Malindi

Kinangop

Long-Term Average(LTA) over 36 months

14

HIGH SOLAR POTENTIAL SITES 2

PV Technology Sites

Garissa

Lamu

Malindi

Magadi

Gitaru

CSP Technology Sites

Lamu

Malindi

Magadi

15

HIGH GEOTHERMAL POTENTIAL SITES 2

Source: KenGen; TMO; BDS

GDC

Private

developers also

coming in to

prove the

resource in

various fields

KENGEN

3. Bogoria-Silali Block(3,000MW)

2. Menengai Block (1,600MW)

1. Olkaria Block (1,200MW)

(Currently developing 280MW)

>14 sites in Kenya

where geothermal

resource potential has

been confirmed

16

Up-front Investment; Institutional & Regulatory framework to tap

Geothermal 2

* - Local and Foreign financing to be used

Source: KenGen; TMO; BDS

Geothermal Development

Company (GDC)*

Geothermal Prospects

Bogoria Olkaria Menengai Paka Silali

Geothermal Resource

Exploration & Assessment

Government

meeting upfront

exploration and

drilling investment

KENGEN & IPPs

Kenya Power

(Off-Taker) Off-Taker 2 Off-Taker 3 ……

Power Purchase Agreement

17

PROJECTED GEOTHERMAL PROGRAMME TO 2012-2030 2

* - Local and Foreign financing to be used

Source: KenGen; TMO; BDS

MW

No. of drilled Wells

Rigs–Own

Rigs - Hired

700

150

15

3

1,400

250

15

-

2,340

550

15

-

5,000

1400

15

-

Next 3 yrs 8 yrs 13 yrs 18 yrs

2015 2020 2025 2030

• KenGen has acquired 3 drilling rigs and hiring 5 more

• GDC has acquired 4 drilling rigs

18 Source: KenGen;

ONGOING OLKARIA I&IV 280MW Project –

Commissioning Sept. 2014

2

19 Source: KenGen;

Geothermal Steam Drilling – [GoK, KenGen]

(June 2007- Aug 2012) 1

1 Kenya (GoK)

Cross-Continental Collaboration – both engineering and financing

~US$330m

Local

Infrastru

cture &

resettle-

ment of

PAPs [Lot D –

KenGen]

5

5 Kenya

(Local Companies) US$36m

Consul-

tancy &

Adminis-

tration [Lot Zero –

KfW,

KenGen]

2

2 New Zealand (SKM)

US$30m

Power

Plant

Cons-

truction [LotB1&B2

KfW, JICA,

AfD, EIB

KenGen]

6

6 S.Korea (Hyundai) &

Japan (Toshiba/

Toyota Tsusho)

US$382m

Sub-

station &

Trans-

mission [Lot C -

EIB,

KenGen]

4

4 India (KEC )

US$ 27m

Steam

Field

Develop-

ment [Lot A –

IDA, KfW,

KenGen]

3

3 China (Sinopec)

US$ 138m

Olkaria I&IV 280MW Geothermal

Project (June 2014)

Multi-financing (KenGen, GoK, EIB, AfD, KfW, JICA, IDA ~ US$ 1 billion) 7

Tariff ~ 7 Uscts/kWh. One of

the most competitive

renewable project in Kenya

Olkaria I&IV 280MW Geothermal Project – Multi-financed 2

20

Accelerating Geothermal through Portable Wellhead

Plants

2

Cooling towers

Condenser &

NCG Extraction

Generat

or &

Turbine

Steam Separator

Silencer

Wellhead

Generator &

Turbine

3

2

1

4

Video

21

2 Accelerating Geothermal through Portable Wellhead

Plants

22

2004

2005

2006

2007

2008

2004

2010

65

45

28

5

0

10

20

30

40

50

60

70

80

90

100

110

Hydro

Thermal

Geothermal

Wind

2018

18

49

2013

30

24

1

2009

22

13

1

… the target is a

green KenGen

by 2018 with

~50%

geothermal…

% share of generation modes

2018

2009

3,200MW 1,200MW

MOVING TO A GREEN ECONOMY 3

23

5.24

4.24

3.24

2.74

2.24

1.24

0.74

0.240.210.040.00

1.74

2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

BENEFITS: TO GENERATE MORE TONNES OF CERs FROM

GEOTHERMAL

Cumulative Carbon Reductions - CERs

Million tonnes of CO2 equivalents

Possible sites

Assumptions; after 2012, grid emission factor 0.5 tonnes of CO2e per megawatt hour, Geothermal load factor 90% , *CERs Certified Emission

Reduction. CERs earnings begin 1 year after commissioning of power plants Source: KenGen

280 MW 2018

140 MW 2017 140 MW 2016

140 MW Olkaria 2012 140 MW Olkaria 2014 140 MW 2015

2.5 MW Eburu 2012

35 MW Olkaria 3rd unit 2010

Olkaria II 35MW 3rd Unit

first project to be

registered as a CDM

3

24

THANK YOU

25

DISCUSSION…

Kenya Germany