Kenyan firms win UN carbon funds

A wind farm. Lake Turkana Wind Power Limited hopes to supply close to 300 Mega Watts (MW) to the national grid through wind sources. Photo/FILE

By ALLAN ODHIAMBO (email the author)
Posted Friday, March 5 2010 at 00:00

Two Kenyan firms have won grants from a new UN-backed facility that aims to boost the African carbon market through environmentally friendly projects.

Lake Turkana Wind Power Limited (LTWP) and Athi River Mining Limited (ARM) are among beneficiaries of the African Carbon Asset Development facility (ACAD) that has been set up as collaboration between the United Nations Environment Programme (Unep), Standard Bank and the German government’s International Climate Initiative.

The work plan of the ACAD showed it would support African carbon projects through a combination of technical assistance, grants and preferential access to corporate finance and transactional guidance.

The size of the grants to LTWP and ARM was, however, not immediately clear.

“Huge investments, especially in Africa, will be needed if we are to minimise the effects of climate change,” said Sylvie Lemmet, director of Unep’s Paris-based division of Technology, Industry and Economics. “Government investment alone will not be enough. ACAD is a good example of how we can attract much-needed private capital for investments that address climate change.”

LTPW Limited, a consortium comprising Aldwych International, South Africa’s Industrial Development Corporation (IDC) and KP&P of the Netherlands, hopes to supply close to 300Mega Watts (MW) to the national grid through wind sources.

The company envisages to construct a wind farm consisting of 353 wind turbines, each with a capacity of 850 kilowatts (kw).

The total power generated in the initial phase of the project expected to reach 300Mw by July 2012. LTWP already has an agreement with Danish firm -- Vestas Wind to supply 360 wind turbines for use in the project estimated at about Sh55 billion.

Cement manufacturer, ARM on the other hand is hoping to reduce coal consumption at its Athi-River based cement plant by opting to use locally available biomass resources.

“As we are continuously working to improve our environmental footprint, Athi River Mining appreciates the technical and financial support provided by the new ACAD Facility to get this project off the ground. We will look to the lessons of this project for further energy and cost savings across the company,” ARM managing director Mr Pradeep Paunrana said in a statement.

Supporters of the ACAD facility said one of the key challenges Africa faces is the removal of investment barriers to low-carbon sustainable development.

They point out that combined with traditional debt or equity finance, carbon finance is a promising means of attracting funding for energy and infrastructure projects.

“We are keen to bring our global experience on carbon finance back to our roots in Africa and to combine it with the leading technical expertise of Unep,” head of carbon sales and trading at Standard Bank, Geoff Sinclair said. “Our objective is to collaborate with local companies and investors to bring Africa to the forefront of the carbon markets and we look forward to working with everyone to achieve this.”

Kenya has over the years failed to exploit green energy sources despite glaring deficits in its traditional sources of power.

For instance statistics showed that the country has an installed power capacity of 1, 480 mega watts, including temporary emergency power of 290, but is supplying about 1,050 megawatts at peak time.

The Energy Regulatory Commission (ERC) blames lack of investment in the sector as a major contributor to the current energy crisis despite widespread claims that poor weather was to blame.

Kenya relies heavily on hydro-generation which accounts for about 60 per cent of its power capacity.

The current generation mix comprises of 7,19MW hydro, 163 MW geothermal, and 407 MW thermal power--including 290 MW from emergency power producers

Reports however indicate that Kenya plans to launch an open-ended green energy fund in the coming financial year to cater for the generation of environmentally friendly energy.

“To address those challenges, we are turning to green energy. Kenya cannot depend on hydro because of our climatic hydrology conditions,” Geoffrey Mwau, economic secretary at the ministry of Finance, said in January.