Kenya needs to subsidise green power investment-PwC

* Investors opting for less risky diesel generation

* Minority believe renewable energy competitive

By Helen Nyambura-Mwaura

NAIROBI, July 22 (Reuters) - Investors will only commit to Kenya's renewable energy sector if the government subsidises their outlay, PricewaterhouseCoopers said on Wednesday.

Although Kenya has at least 3,000 megawatts of proven geothermal energy in its Great Rift Valley, it exploits only about 200 MW, analysts say.

"The message respondents are saying is that going to renewable energy without government subsidies is not competitive," Kuria Muchiru, a senior partner at PwC in Kenya, told reporters at the launch of a global survey of 65 power companies.

Most private power companies generating electricity in Kenya do so by burning fuel. Although less risky for the ventures, the environmentally-unfriendly method produces more expensive electricity for consumers.

Muchiru said that the global crisis had caused traditional sources of funding to shrink, but that sovereign funds from Asia and the Middle East were now more active.

"Sovereign funds are the only ones investing, but the hedge funds, private equity and pension funds are not there," he said. "You are chasing fewer investors who have more choice."

Only few Kenyan companies have ventured into green energy. Ormat Technologies (ORA.N) generates about 50 MW of geothermal power in the Rift Valley, and Mumias Sugar (MSC.NR) produces 26 MW made from a by-product of sugar production.

Only KenGen (KEGN.NR) -- Kenya's biggest producer and partly-owned by the government -- has so far invested substantially in the exploration and exploitation of renewable resources.

Kenya plans to add 2,000 MW of green energy -- 500 MW geothermal, 600 MW of clean coal, 800 MW from wind turbines, 30-50 MW generated as a bi-product of sugar manufacture and 30 MW from hydroelectricity -- by 2013. [ID:nLH672662]

(Editing by William Hardy)