Review and Assessment of the Techno- economic Tools for Power Systems with Renewable Energy Penetration in Kenya.

Abstract

Kenya is on the path of developing domestic renewable energy resources to reduce the overdependence on imported petroleum products and reduce carbon emissions. Presently, Kenya has increased the renewable energy penetration into the existing power systems for the purposes of reducing the overreliance on thermal power generation which stands at 36% and growing. Environmental conditions affect renewable energy generation thereby making energy supply to be intermittent and uncertain. To understand the potential use of renewable energy technologies and the Levelized Cost of Electricity (LCOE), there exist several techno-economic tools that offer great insights of the renewable power generation world over. These tools and methods categorized into financial analysis, impacts analysis and system analysis tools combine the capital costs, operation and maintenance costs, fuel costs and the energy output which when computed provide the necessary metrics which are indicators of project viability. LCOE is an economic assessment of the cost of energy generating system and should include all the life cycle costs, usually determined at the point where the sum of all the discounted revenues equalizes with the sum of all the discounted cost. However, there are certain aspects that are not covered by LCOE which includes damage from air pollution, energy security, transmission and distribution costs and the environmental impacts. This paper will present a review of these techno-economic modeling tools, identify their gaps and propose modifications to the LCOE calculations that will provide a realistic cost of electricity in Kenya’s hybrid energy system. Keywords: Levelized cost of electricity, Environmental Impacts, Life cycle cost