UNIDO commits Sh159 million to green energy project






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The project is expected to generate additional power for the country via solar energy, biomass, wind and biogas.

The United Nations Industrial Development Organisation (UNIDO) has committed Sh159 million to a green energy project called Lighting Up Kenya, which is expected to generate additional power for the country via solar energy, biomass, wind and biogas.

The investment, meant to add more than 100 megawatts of power to the national grid, is aimed at reducing the cost of doing business in Kenya, said Yoshiteru Uramoto, UNIDO deputy director general.

“The cost of production is high in Kenya especially when manufacturers use fossil fuel to run their machines. We can reduce this cost by using alternative energy,” said Mr Uramoto.

Kenya’s manufacturing sector and small businesses are facing a possible energy crisis following the shutting down of a hydro power plant last week due to inadequate water for electricity generation.

Manufacturers blame the high cost of locally produced goods on the high electricity cost.

Kenya has a total installed capacity of 1,200 megawatts with a generation mix of 56 per cent hydro, 36 per cent thermal, and eight per cent geo-thermal, but this is under threat following a prolonged drought that is stressing hydro power dams.

The country’s hydro-electricity generation capacity stands at 700 MW, but electricity generator KenGen says this has reduced by 12 per cent due to inadequate rainfall.

Prime Minister Raila Odinga named a team to fast track expansion of power generation and use of clean and renewable sources of energy such as wind, solar, biomass and biogas.

According to government plans, more than 2,000 megawatts will be added to the national grid with the use of green energy.

This is in line with the UN’s green energy projects and recommendations that countries in Africa should focus on generating power from wind and solar power.

Most of such projects are beginning to take off in Kenya’s outlying districts where communities have put up solar and wind plants that pump up about 100 megawatts of electricity for use in lighting up homes.

Next month President Kibaki is expected to launch a bio-diesel strategy that will help the country produce adequate amounts of renewable fuel by the year 2012.
The Industrialization ministry says the UNIDO funds, allocated for community electricity generation, can help bridge supply shortfalls following the shutting of the 40 megawatts Masinga Power Station after water levels went down, making the plant unable to sustain power generation.

“The money from UNIDO is particularly important during this time when we have lost a power plant due to lack of water. Our manufacturing sector could face difficulties if we don’t get alternative sources of electricity,” said Industrialisation minister Henry Kosgey.

Local manufacturers plan to cut their electricity consumption so as to conserve the available power to last longer.

The allocation from UNIDO will go to independent community power centres in Kirinyaga, Siaya, Murang’a, Kiambu, Machakos and Bungoma.

“Kenya’s electricity generation capacity, especially in rural areas, is huge. This can help the country especially following the closure of a hydro electricity plant because of lack of water,” said Mr Uramoto.

According to the United Nations, Kenya has capacity to generate more than 3,000 megawatts of electricity if the country taps into wind energy in its vast northern districts.

Potential investors
The wind energy could help inject additional power to the national grid to alleviate fears of the manufacturing sector and potential investors who have grown cold feet in putting their money in Kenya.

The Nairobi based United Nations Environmental Programme (UNEP) says the country has adequate wind to generate energy for both export and domestic use, adding that it can reduce its cost of energy by taping into the clean and efficient energy provided by its vast northern district fields.

The UN’s estimate of an existing capacity to generate 3,000 megawatts could spur renewed hope in the manufacturing sector that has complained of high electricity costs which have been caused partly by the volatile price of crude oil in the international markets.

The UN says if Kenya tapped into wind energy it would avoid the massive power rationing experienced in 2000. The power shortage was blamed on inadequate rainfall and failure to implement planned generation projects on schedule.

Compared to regional countries, Kenya has a large manufacturing sector serving both the local

market and export markets. According to the Economic Survey 2009, the sector contributed about 10 per cent of the GDP in 2008.

In May, the Africa Development Bank (ADB) injected Sh32 billion into a private consortium to develop an initial 300MW from wind energy in Turkana district — equal to around 25 per cent Kenya’s current installed energy capacity.
This follows the Government’s introduction of new legislation covering electricity generation.
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KTDA to set up energy arm






http://www.nation.co.ke/image/view/-/632806/highRes/91830/-/maxw/600/-/egcngw/-/KTDA.jpg KTDA managing director, Lerionka Tiampati. Photo/FILE
By NATION ReporterPosted Friday, July 31 2009 at 13:08

The Kenya Tea Development Agency (KTDA) will create an energy subsidiary to aid its power generation initiatives.

The move is aimed at reducing the money spend by factory companies on energy and increase tea farmers’ incomes.

The tea agency’s managing director Lerionka Tiampati said the subsidiary will consolidate KTDA’s ongoing initiatives and reduce the cost of energy investments by getting the 60 factory companies under its aegis to work together.

He made the announcement during a workshop organised by the Ministry of Energy where feasibility reports for 12 new sites for potential small hydro projects were presented.

The studies were carried out mainly in tea growing areas and were funded by the government to the tune of Sh40 million.

“The mandate of the new company will be to explore opportunities in the energy sector including hydro, wind and solar with a view to reducing production costs at the factory level for the benefit of the farmer,” said Mr Tiampati.

Last month, KTDA signed a power purchase agreement with Kenya Power and Lighting Company to supply surplus electricity from its Imenti mini-hydro project.

The project was constructed by small scale tea farmers of Imenti Tea Factory and has a capacity of 1MW.

Sell surplus

A second project located along Gura River in Nyeri District is at the initial stages of implementation and will supply power to four factories when complete. Any surplus power will be sold to the national grid.

According to Mr Daniel Theuri, the team leader at Que Energy Limited, which conducted the feasibility studies, 10 of the 12 sites are commercially viable with an estimated pay back period of between two and five years.

The 10 sites have a combined capacity of 22 MW.



Small hydros are constructed under a process known as run of river and do not affect local communities as power is generated from the natural flow of the river.

Move fast

Energy minister Kiraitu Murungi urged the agency and its factory companies to move fast and implement the projects at the viable sites.

He said affordable financing could be accessed by KTDA once a proposal for implementation is approved.

Mr Murungi said success of the small hydros depended on the protection of water catchment areas, which were in danger of total destruction.

He announced that his ministry had set aside Sh100 million for tree planting countrywide to secure the country’s key energy sources.

The Ministry of Energy initiative comes at a time when Kenya is facing an unprecedented energy and water crisis caused by wanton forest destruction in water towers.

Toyota eyes investment in power generation
Toyota Tusho Corporation, which fully owns Toyota East Africa, has announced plans to invest millions of shillings in geothermal and wind power generating plants.

Toyota East Africa chairman Dennis Awori on Friday said that although the company is known for manufacturing motor vehicles, it plans the ratio of its automotive business to non-automotive to be 50:50 by 2015.

He told reporters in Nairobi that the power shortage facing the country called for both the government and private organisations to offer solutions. “We expect to be making substantial investment within a few months,” Mr Awori said.

“As for the amount, I will not be able to disclosure but given that we are talking about Toyota Tusho Corporation, a $67 billion turnover company, this will be a sizeable investment.”

The company plans to invest in geothermal, wind power and biofuel production. It will also invest in coffee and nuts production, Mr Awori said.

Toyota said the 2009 Total Motorshow will be held from August 28 and 30 at Jockey Club, Nairobi. “This offers visitors an opportunity to see and compare makes and models, providers and industry players at one place,” said Toyota East Africa managing director Tomonori Umehara.
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The Kenya Petroleum Refineries Ltd (KPRL) will set up its own power generation plant to guarantee reliable power supplies and cut electricity costs.
KPRL has been experiencing power outages that impacted negatively on production processes.
It attributed the hitch to irregular power supply from the Kenya Power and Lighting Company (KPLC).The firm blamed the recent fuel shortage across to irregular power supplies that affected production of premium petrol.
Though production has normalised, KPRL said prevailing conditions on the power sector demanded that it reduces its reliance on supply from KPLC.
"The power generation project is a high priority project due to the prevailing constraints in power supply.
The plan is to have it up and running in the least possible time, which will include the tendering, construction and commissioning of the project," said Martin Wahome KPRL Communications Manager. "Over the last 12 months, supply of power to KPRL has been irregular and this has adversely affected vital equipment.
National Grid
The dedicated power line to KPRL from KPLC has also not been very efficient.
To mitigate this, KPRL is looking at other options, including producing its own power," he explained. The projected output of the plant is 24 MW, while KPRL’s peak demand is about 8MW. It intends to sell the balance to KPLC on a Power Purchase Agreement (PPA) basis.
The Mombasa-based refinery joins a growing list of companies that have plans or are generating power for their consumption and selling excess capacity to KPLC.
The firms include Mumias Sugar Company, Athi River Miming, the East African Portland Cement and Kenya Tea Development Agency.
The plant put up by Mumias Sugar has a capacity of 38 MW and offloads 26 MW to the national grid.
ARM has said it will put up a 30 MW coal fired plant at the Coast region and expects to be up and running by end of 2011.
KTDA announced in July it would create an energy subsidiary to spearhead its energy generation initiatives among its factories.
Income streams
The move by the agency is expected to reduce money spent by tea factories on energy, and broaden their income streams.
The agency has also signed PPA with KPLC to supply surplus power from its Imenti mini-hydro project.
The project was constructed by small-scale tea and has a capacity of 1MW.
There are, however, ten other factories that have potential to generate a combined capacity of 24MW.

Government sugar firms are rushing to roll out electricity projects to take advantage of an array of tax incentives offered by Treasury to encourage investment in energy and improve their bottomlines.

The move comes ahead of privatisation later this month and the entry of Common Market for Eastern and Southern Africa (Comesa) duty free sugar two years later.

In the footsteps of Mumias Sugar Company, which is already supplying 26 megawatts to the national grid, at least two State-owned sugar firms —Sony and Chemelil —are finalising details of the cogeneration projects.

Sony Sugar has intensified its search for strategic investors to finance its cogeneration unit while Chemelil which entered into a cogeneration partnership with KenGen a while ago has formed a committee working out the technical and financial details of setting up a plant in Western Kenya.

Last week, both the KenGen and Chemelil spokespeople told the Business Daily the outcome of the collaborative committee is what is holding the two firms’ resolve to start the power generation project.

“Cogeneration is one of the value addition projects that our consultants have identified as reliable areas that will improve the revenue streams of our sugar industry in the era of duty-free Comesa sugar imports,” said Mr Solomon Kitungu, the CEO of the Privatisation Commission of Kenya.

The government has already contracted a consortium of privatisation advisors—led by consultancy firm Ernst and Young to provide technical advice on how heavily indebted public sugar firms can be restructured to make them competitive in a liberalised market and attract private capital.

Five State corporations— Miwani, Muhoroni, Sony, Chemelil and Nzoia —have been identified for privatisation after consistently failing to meet their current liabilities like paying for suppliers and cane deliveries.

Together, public sugar firms are groaning under a heavy debt of over Sh47 billion.

According to Mr Kitungu, the first public hearing of the privatisation process will be held in Kisumu on September 18 and stakeholders of the five targeted firms have been invited to make their contribution on the best way that the corporations can be restructured to make them profitable.

In the restructuring process, Mumias Sugar Company which invested Sh6.5 billion in a cogeneration is seen as a model in the industry that is bracing for the removal of the Comesa safeguards by 2012.

Renewable energy
Apart from direct revenue earned from selling the generated power to the national grid, the other benefit is the kind of dividends that await sugar firms that venture in renewable energy production came last week when Mumias released its 2008/2009 financial year.
The results indicated that the government also doled out an equivalent of 150 per cent of parastatal’s capital investment deduction in the form of tax credit, a concession that pushed up its after-tax profit by 33 per cent from Sh1.2 billion to Sh1.6 billion.

Data from the ministry indicate that six of the country’s 13 sugar firms which have a cogeneration capacity of up to 300 megawatts require a total of $4.45 billion to put up the plants — an investment that the government hopes to attract from its partnership with the private sector.

“The ongoing restructuring in the public sugar sector will private investors to take part in tapping the huge cogeneration opportunities available in the country in joint ventures with the public sugar companies,” said Mr Raphael Khazenzi, a senior energy ministry official in charge of the renewable energy development.

In an earlier interview, Agriculture minister William Ruto hinted at the government’s plan to reduce the number of sugar companies to six, each with a cogeneration capacity.

Ten years tax break, investment deduction and zero-rating of the imports of specialised materials used in the construction of the cogeneration plants are among an array of the tax incentives that the government has been dangling to entice the private sector to invest in the renewable energy projects.

“We are creating enabling environment to encourage projects in alternative sources of energy such as wind, solar, geothermal and use of biomass to generate electricity which represent a shift from over reliance on hydro power,” Mr Joseph Kinyua, the Treasury PS said in a statement read on his behalf at the Kenya Investment Authority’s Ecotape Preparatory meeting held in Nairobi last week.

Other renewable energy projects being pursued by the government includes wind power, solar, geothermal and power alcohol.

Mr Alexander Varghese, UNIDO representative for Kenya and Eritrea said renewable energy development will also provide the easiest way to support value addition in rural areas as envisaged in both the private sector development strategy and the vision 2030.

“Apart from cow dung, there are so many wastes in this country that can be used to generate ample amount of energy in the rural areas,” he said.

Mr Khazenzi said the government is already funding a research being undertaken by the Jomo Kenyatta University of Agriculture and Technology which seeks to study the possible use of sewage in producing biogas

Sanghi Group of India will put up a power plant to support its planned cement factory in Pokot district.

The facility, set to produce up to 22.5 megawatts of electricity, will be used when its Cemtech factory commences production by December of 2011.

The $80 million (Sh6 billion) cement plant will produce up to 1.2 million tonnes of the building material per annum.

Beat high cost

Sanghi power plant comes at a time when most cement companies in Kenya are putting up own electricity generation facilities to beat the high cost of energy in the country. Cement firms use up to 45 per cent of their running costs on power.

The Indian group, the world’s largest single-stream cement plant producing over 20 million tonnes of cement annually, owns an 80 per cent share of Cemtech with the balance held by local investors.

The Pokot project has permits and licences by the government including, the Environmental Impact Assessment license by the National Environmental Management Authority.

Local leaders have invited President Kibaki and Prime Minister Raila Odinga to officiate at its ground-breaking ceremony.

Mining rights

On Tuesday, director Rajesh Rawal said: “The company has successfully completed the in-depth geological evaluation exercise, which took nine months, at its limestone quarries for which it has been granted exclusive mining rights for 99 years by the County Council of Pokot.”

He revealed that Cemtech had already received hundreds of applications for jobs adding that construction of the factory will commence soon after the ground-breaking ceremony.

Industrialisation PS John Lonyangapuo confirmed that plans are underway to upgrade road network and a railway line to facilitate transport of cement countrywide and to neighbouring countries.

A four-year interconnection of electricity grids in five Nile Equatorial Lakes countries including Kenya, has been launched.

The Sh152 million project will be implemented by the Nile Basin Initiative (NBI), Nile Equatorial Lakes Subsidiary Action programme (NELSAP) in collaboration with the African Development Bank (AfDB).

In Kenya, Lessos area in Nandi district is expected to receive 220 Kilo Volts (KV) with a 256km interconnection line from Bujagali Power Station in Uganda. The interconnection aims at creating a regional power network.

Other countries set to benefit from the programme slated to start at the end of next year are Burundi, Democratic Republic of Congo, Rwanda and Uganda.

Power exchange market

It is expected that the project will create a power exchange market among the five countries and lower the cost of electricity, Antoine Sendama, NELSAP regional co-ordinator said in a statement.

"The interconnection lowers the cost of power supply, ensures system stability, security of supply and optimises the use of energy resources." the statement read in part. Joseph

Sendama said the project will also update the feasibility study of the Lessos and Olkaria projects in the country.

Terer, the NBI project manager said besides providing electricity to rural areas to spur economic growth, the project is expected to ease the high costs of electricity.

Consultation with donors

Uganda’s Energy minister, Eng Simon D’ Ujanga launched the programme at the Grand Imperial Hotel in Kampala last week following a two-day meeting with officials from the five countries and the donors.

While each of the benefiting countries is expected to implement the projects falling under its territory, NELSAP will establish a co-ordinating and implementation unit at the regional level.

Tanzania will be linked to the regional electricity grid through a planned interconnection with Kenya in the north western part to Rusumo Falls Hydropower Project shared among Burundi, Rwanda and Tanzania.

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Geothermal Development Company will fast-track the exploration and exploitation of geothermal energy in the country to increase the country’s power output.

The firm will carry out appraisals and divide potential areas into blocks and concession the steam wells to investors.

Chief executive Silas Simiyu said that over the past 30 years, the country has only harnessed 167 MW of power out of the potential 7,000 MW.

“The massive resource has been lying idle for ages. Of the 7,000 MW geothermal potential, the sector is contributing only 167 MW or 22 per cent to the national grid,” said Mr Simiyu.

He said hydro energy was no-longer reliable as it is prone to the vagaries of weather.

“Geothermal in this country has a base load of 95 per cent making it the most reliable source of energy,” he said.

Mr Simiyu, however, said that exploiting geothermal energy requires heavy initial capital investment thus scaring away potential investors adding that the government, had committed itself to meeting the initial costs that will develop the steam fields.

“It will be difficult to progress economically in the absence of affordable, reliable and clean energy,” said the CEO. He spoke at a workshop for geothermal experts at a Naivasha hotel on Sunday.

Volcanic activities

Initial studies indicate that there are some 14 high potential geothermal sites running along the Rift Valley which is at the centre of volcanic activities.

Speaking at the same function, Prof Hiroyuki Hino the economic advisor to the Prime Minister said the government’s goal was to ensure steam worth generating close to 4,000 MW of electricity in the next 20 years.

“This development plan aspires to power Kenya into a mid-income economy. To achieve this, GDC and KenGen will need trained experts,” he said.

Mr Hino described the geothermal firm as a special purpose vehicle created by the Government of Kenya to explore and the vast geothermal resource in the country

Kenya will with the support of donors set up a $2 billion (Sh150 billion) revolving fund to lend those investing in climate-friendly green electricity generating projects. The Ministry of Finance said World Bank, French Development Agency, KfW of German and African Development Bank had agreed to help the government set up the fund.

Finance permanent secretary Joseph Kinyua said the money will be lent to the private sector to invest in commercially viable geothermal, solar and wind electricity production projects. He said the aim is to scale up investment in renewable energy sources that have low carbon emissions to provide affordable power.

It will also reduce reliance on drought prone hydro and expensive fossil fuel electricity generation modes. Speaking in Nairobi during the green electricity conference, Mr Kinyua said the government in this year’s budget allocated Sh500 million for lending to small and medium enterprises to invest in renewable energy production.

Kyoto Protocol

The PS said the government is considering granting of sovereign guarantees to independent power producers. Mr Kinyua said that Kenya is negotiating for clean development mechanism funds of the Kyoto Protocol to benefit from carbon trading through reduced emissions.

Energy permanent secretary Patrick Nyoike said Kenya is committed to enhancing green projects output as geothermal, biomass and wind-based power systems are much cheaper than fossil fuel plants. He said the country will implement green energy power generation projects with capacity of 2,000 megawatts by June 2012 through mobilising technical and financial resources to expedite construction and commissioning.

Mr Nyoike said the government will continue to undertake resource assessment and provide results to private investors. Already, wind resource assessment for 33 sites is in progress and a survey of 14 small hydro sites will start in January 2010, he said.

At the same time, the government is developing a plan that will see Kenya attain a green economy status by the year 2020 using electricity generated from climate-friendly projects with low carbon emissions. Prime Minister Raila Odinga speaking at the same event said Kenya’s plan entails increased investment in renewable energy sources.

He said the government will allocate more resources and even borrow on commercial terms to develop geothermal fields as Kenya has to produce power with reasonable tariffs that translate to reduced costs to end users. Mr Odinga said the government has received attractive proposals of a combined capacity of over 1,000 megawatts but the high cost associated with developing wind, solar and bio-mass hinders the potential of such sources.

United Nations Environment Programme said although Kenya has great potential for green energy, its weakness lies in formulating the right policies and commitment to harness fully the resources. Executive director Achim Steiner said the cost of green energy has been tumbling and in 2008 more was invested in wind, solar and geothermal globally in the sector than in oil and gas generation.

French ambassador to Kenya Elisabeth Barbier said Kenya has made progress in electricity supply. She, however, noted that connection rates remains low with 20 per cent of households in urban areas and 10 per cent in rural accessing power.