Energy Efficiency and Operational Performance of Manufacturing Firms in Kenya

Abstract

Energy is a critical input to the social economic development of anynation as well as to the protection of the nation’s environment. It fuels to industry, commerce, Transportation, agriculture and other economic activities. Energy is an essential component for the industrialization process. For a country to industrialize, adequate and affordable energy supply is a pre-requisite. The energy sector mainly comprises of electricity, petroleum and renewable energy (geothermal, wind, solar, biomass). The purpose of this study was to investigate the relationship between energy efficiency and operation performance in manufacturing firms in Kenya. The target population was 70 manufacturing firms out of 735 manufacturing firms as listed by Kenya Association of Manufacturers with a bias to firms that had conducted energy Audits. Three Key performance indicators to measure operation performance were used namely: Production, Electrical energy consumption and Specific electrical energy intensity ( SEEI). Data was analyzed in terms of the baseline data and the current data. The baseline data been the data before implementation of EEMs by the companies while the current data been the data collected in after implementation of EEMs. The data was analyzed using regression model. To test the relevance of the linear best-fit curve for energy consumption, production and SEEI, the Pearson correlation coefficient for both baseline and current data were examined. The study established a considerable use of EEMs by manufacturing firms in Kenya with 92% of the targeted firms having implemented EEMS. The study also established a positive relationship between the use of EEMs and operation performance. However, this observation was not conclusive since some companies displayed weak correction coefficients of the variables both at baseline and current level suggesting a need for further analysis.