IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v125y2023ics0140988323003080.html
   My bibliography  Save this article

Quantifying the local economic supply chain impacts of renewable energy investment in Kenya

Author

Listed:
  • Woollacott, Jared
  • Henry, Candise L.
  • de Hernández, Alison Bean
  • DiVenanzo, Lauren
  • Oliveira, Horacio
  • Cai, Yongxia
  • Larson, Justin

Abstract

Improved electricity access in developing countries can offer an array of economic and environmental benefits. In Kenya, much attention has been devoted to the array of end-user benefits from electrification; however, there are also potential supply-side benefits from building and operating electricity generating units (EGU). This study focuses on the latter by examining supply chain impacts of recent renewable energy construction projects in Kenya tracked by the U.S. Agency for International Development's (USAID) Power Africa program and construction projected in Kenya's Least Cost Power Development Plan (LCPDP). By combining construction cost estimates with information on expenditure shares across economic sectors combined with data on wages and jobs, this study provides an assessment of the direct and indirect wage and job benefits of past and future EGU construction and operations. On-grid electrification projects tracked by Power Africa have increased domestic spending in Kenya by $1.3 billion and increased direct and indirect wages by $344 million over the ten years from 2012 to 2021. This impact could expand to $18.9 billion in domestic spending and $5 billion in nominal wages from 2022 to 2040 if the Kenyan government's LCPDP projected capacity and operations goals are met. The direct jobs required to support new LCPDP power sector construction out to 2040 could be 177,000 jobs in an average year, or 3.5 times higher than the average over the past ten years (2012−2021). Meanwhile, direct and indirect jobs supporting new power plant operations and maintenance would be 46,000 jobs in an average year, or 7 times the average over the past ten years. These findings suggest the high potential of renewable energy projects for supporting employment in Kenya, and thus the importance of creating an enabling environment that allows these projects to succeed.

Suggested Citation

  • Woollacott, Jared & Henry, Candise L. & de Hernández, Alison Bean & DiVenanzo, Lauren & Oliveira, Horacio & Cai, Yongxia & Larson, Justin, 2023. "Quantifying the local economic supply chain impacts of renewable energy investment in Kenya," Energy Economics, Elsevier, vol. 125(C).
    • Handle: RePEc:eee:eneeco:v:125:y:2023:i:c:s0140988323003080
    DOI: 10.1016/j.eneco.2023.106810
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988323003080
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2023.106810?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shahidur R. Khandker, Hussain A. Samad, Rubaba Ali, and Douglas F. Barnes, 2014. "Who Benefits Most from Rural Electrification? Evidence in India," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Kenneth Lee & Edward Miguel & Catherine Wolfram, 2020. "Does Household Electrification Supercharge Economic Development?," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 122-144, Winter.
    3. Nathan Ratledge & Gabe Cadamuro & Brandon Cuesta & Matthieu Stigler & Marshall Burke, 2022. "Using machine learning to assess the livelihood impact of electricity access," Nature, Nature, vol. 611(7936), pages 491-495, November.
    4. Kirubi, Charles & Jacobson, Arne & Kammen, Daniel M. & Mills, Andrew, 2009. "Community-Based Electric Micro-Grids Can Contribute to Rural Development: Evidence from Kenya," World Development, Elsevier, vol. 37(7), pages 1208-1221, July.
    5. Yadoo, Annabel & Cruickshank, Heather, 2012. "The role for low carbon electrification technologies in poverty reduction and climate change strategies: A focus on renewable energy mini-grids with case studies in Nepal, Peru and Kenya," Energy Policy, Elsevier, vol. 42(C), pages 591-602.
    6. Vernet, Antoine & Khayesi, Jane N.O. & George, Vivian & George, Gerard & Bahaj, Abubakar S., 2019. "How does energy matter? Rural electrification, entrepreneurship, and community development in Kenya," Energy Policy, Elsevier, vol. 126(C), pages 88-98.
    7. Brandon C. Welsh & David P. Farrington, 2008. "Effects of Improved Street Lighting on Crime," Campbell Systematic Reviews, John Wiley & Sons, vol. 4(1), pages 1-51.
    8. van Ruijven, Bas J. & Schers, Jules & van Vuuren, Detlef P., 2012. "Model-based scenarios for rural electrification in developing countries," Energy, Elsevier, vol. 38(1), pages 386-397.
    9. Boliko, Charles M. & Ialnazov, Dimiter S., 2019. "An assessment of rural electrification projects in Kenya using a sustainability framework," Energy Policy, Elsevier, vol. 133(C).
    10. Sievert, Maximiliane, 2015. "Rural electrification and domestic violence in Sub-Saharan Africa," Ruhr Economic Papers 570, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Angel Aguiar & Maksym Chepeliev & Erwin L. Corong & Robert McDougall & Dominique van der Mensbrugghe, 2019. "The GTAP Data Base: Version 10," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(1), pages 1-27, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Obsa Urgessa Ayana & Jima Degaga, 2022. "Effects of rural electrification on household welfare: a meta-regression analysis," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(2), pages 209-261, June.
    2. AbuBakr Bahaj & Luke Blunden & Christopher Kanani & Patrick James & Isaac Kiva & Zoë Matthews & Heather Price & Hildah Essendi & Jane Falkingham & Gerard George, 2019. "The Impact of an Electrical Mini-grid on the Development of a Rural Community in Kenya," Energies, MDPI, vol. 12(5), pages 1-21, February.
    3. Gómez-Hernández, D.F. & Domenech, B. & Moreira, J. & Farrera, N. & López-González, A. & Ferrer-Martí, L., 2019. "Comparative evaluation of rural electrification project plans: A case study in Mexico," Energy Policy, Elsevier, vol. 129(C), pages 23-33.
    4. Holstenkamp, Lars, 2019. "What do we know about cooperative sustainable electrification in the global South? A synthesis of the literature and refined social-ecological systems framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 109(C), pages 307-320.
    5. Ferrer-Martí, Laia & Garwood, Anna & Chiroque, José & Ramirez, Benito & Marcelo, Oliver & Garfí, Marianna & Velo, Enrique, 2012. "Evaluating and comparing three community small-scale wind electrification projects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 5379-5390.
    6. Javadi, F.S. & Rismanchi, B. & Sarraf, M. & Afshar, O. & Saidur, R. & Ping, H.W. & Rahim, N.A., 2013. "Global policy of rural electrification," Renewable and Sustainable Energy Reviews, Elsevier, vol. 19(C), pages 402-416.
    7. Giacomo Falchetta & Nicolò Stevanato & Magda Moner-Girona & Davide Mazzoni & Emanuela Colombo & Manfred Hafner, 2020. "M-LED: Multi-sectoral Latent Electricity Demand Assessment for Energy Access Planning," Working Papers 2020.09, Fondazione Eni Enrico Mattei.
    8. Domenech, B. & Ferrer-Martí, L. & Pastor, R., 2015. "Hierarchical methodology to optimize the design of stand-alone electrification systems for rural communities considering technical and social criteria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 182-196.
    9. Islam, Asif M. & Amin, Mohammad, 2023. "The gender labor productivity gap across informal firms," World Development, Elsevier, vol. 167(C).
    10. Sedai, Ashish Kumar & Jamasb, Tooraj & Nepal, Rabindra & Miller, Ray, 2021. "Electrification and welfare for the marginalized: Evidence from India," Energy Economics, Elsevier, vol. 102(C).
    11. López-González, A. & Domenech, B. & Ferrer-Martí, L., 2018. "Formative evaluation of sustainability in rural electrification programs from a management perspective: A case study from Venezuela," Renewable and Sustainable Energy Reviews, Elsevier, vol. 95(C), pages 95-109.
    12. Lahimer, A.A. & Alghoul, M.A. & Yousif, Fadhil & Razykov, T.M. & Amin, N. & Sopian, K., 2013. "Research and development aspects on decentralized electrification options for rural household," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 314-324.
    13. Pueyo, Ana & Carreras, Marco & Ngoo, Gisela, 2020. "Exploring the linkages between energy, gender, and enterprise: Evidence from Tanzania," World Development, Elsevier, vol. 128(C).
    14. Boliko, Charles M. & Ialnazov, Dimiter S., 2019. "An assessment of rural electrification projects in Kenya using a sustainability framework," Energy Policy, Elsevier, vol. 133(C).
    15. Falchetta, Giacomo & Stevanato, Nicolò & Moner-Girona, Magda & Mazzoni, Davide & Colombo, Emanuela & Hafner, Manfred, 2020. "M-LED: Multi-sectoral Latent Electricity Demand Assessment for Energy Access Planning," FEP: Future Energy Program 305213, Fondazione Eni Enrico Mattei (FEEM) > FEP: Future Energy Program.
    16. Marinella Davide & Enrica De Cian & Alexis Bernigaud, 2019. "Building a Framework to Understand the Energy Needs of Adaptation," Sustainability, MDPI, vol. 11(15), pages 1-32, July.
    17. Cheng, Zhiming & Tani, Massimiliano & Wang, Haining, 2021. "Energy poverty and entrepreneurship," Energy Economics, Elsevier, vol. 102(C).
    18. Sedai, Ashish Kumar & Vasudevan, Ramaa & Pena, Anita Alves & Miller, Ray, 2021. "Does reliable electrification reduce gender differences? Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 580-601.
    19. Sudatta Ray & Hemant K. Pullabhotla, 2023. "The changing impact of rural electrification on Indian agriculture," Nature Communications, Nature, vol. 14(1), pages 1-12, December.
    20. Herbert, Caren & Phimister, Euan, 2019. "Private sector-owned mini-grids and rural electrification: A case study of wind-power in Kenya's tea industry," Energy Policy, Elsevier, vol. 132(C), pages 1288-1297.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:125:y:2023:i:c:s0140988323003080. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.