Drought in Kenya and neighboring countries became so severe earlier this year that the government of Kenya declared a national disaster. Already, the effects have been devastating: Food production dropped, leaving more than 2.6 million people without access to sufficient food. Some villagers have lost 40 percent of their livestock.
Amidst the human tragedy of this drought, an unexpected actor faced shutdowns and economic losses due to water scarcity: the power sector. Almost 70 percent of Kenya’s electricity is generated by two water-dependent sources: hydropower and fossil fuels. According to Business Daily, the drought has caused Kenya’s reserve energy margin—the amount of energy needed to meet peak demands— to drop to 4.4 percent, far lower than the recommended 15 percent needed to minimize risk of blackouts.
Kenya isn’t the only country whose electricity supplies have been impacted by scarce water: In 2016 India’s coal power sector—which is highly dependent on water for cooling—suffered profit losses of, at minimum, $350 million due to severe drought.
As energy demand from industrial and domestic uses increases and water availability decreases, the energy industry in Kenya, India and other water-stressed locations around the world face increased business risks.
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