Relationship Between Electricity Infrastructure Development And Economic Growth In Kenya

Abstract

The major focus of the study was to find out the relationship between electricity infrastructure development and economic growth in Kenya. The study objectives include examining the relationship between the availability of electricity transmission lines, substation capacity, length of transmission lines and how it affects economic growth in Kenya. The market and infrastructure for electricity continue to be crucial for the growth of the economy. The electricity subsector was initially faced with a number of difficulties, including an insufficient supply, poor levels of access, low reliability, bad supply quality, and restricted transmission capacity combined with high network losses. At the time, the grid was 3200 km long. Significant changes have been made in the energy industry, including the creation of businesses with distinct tasks intended to supply the nation with effective, affordable, and sustainable electricity. In the past, Kenya's government used two primary electrical organizations to produce and distribute power. Kenya Power and Lighting Company (KPLC) and Kenya Electricity Generating Company (KENGEN) are the companies that supply electricity to off-grid stations, buy, transmit, and sell it at retail prices to households across the nation. Later on, though, the government stated that KPLC's transmission and distribution operations needed to be completely unbundled. After more consideration, it was agreed to establish a different business that would be entirely controlled by the government and financed by the exchequer to build upcoming more transmission lines. The Kenya Electricity Transmission Company Limited was subsequently established in 2008 as a state business owned entirely by the Kenyan government. To ensure a dependable, sustainable, clean, secure, inexpensive, and high-quality power supply and to encourage power trade, the corporation is putting projects to expand the national grid and connect the regional grid system into one. The length of the 400kV, 220kV, and 132kV transmission network circuits has increased to over 7220.35km, of which 48.3% is held by KETRACO. The economy has clearly grown as a result of the grid development, and this study aims to examine the causal relationship between economic growth and the expansion of the power infrastructure The study time limit was limited to the period between 1970 and 2019. The study was guided by Keynesian theory and Harrod-Domar Growth Model. The study made use of an explanatory survey research design and will employ a secondary research approach. The study was carried out in Kenya with a special focus on its economy. Data were collected using data collection forms from published statistical reports from the Energy Regulatory Commission, the World Bank, and the Kenya National Bureau of Statistics. The study used time-series econometric models to determine the link between electricity infrastructure development and economic growth in Kenya. The Autoregressive Distributed lag (ARDL) approach was used with the aid of STATA statistical software. Data was presented in the form of tables and graphs, followed by brief explanations. The study’s findings demonstrated the convergence of the model in the long run. In the short run, the coefficient of substation capacity is negative and statistically insignificant, as is the transmission line. The study recommends that reform be undertaken in the energy market structure, especially infrastructure development while creating industry-specific criteria intended to increase the security and reliability of the electrical infrastructure. The study also shows that Kenya is becoming more interested in renewable microsystems, which makes the grid infrastructure redundant.