Page 18 - AfrElec Week 44 2021

AfrElec NEWS IN BRIEF AfrElec

COAL Tribunal. straightforward. According to Global Energy
Standard Bank, which is among the lenders Monitor (GEM), there is currently over
Lamu coal plant PPA lapses that had agreed to finance the Lamu power 2,067,713 megawatts (MW) of unabated (i.e.
CCS unequipped) coal capacity in operation.
plant, recently issued a new lending policy
A power sector task force in Kenya found that severely restricts its participation in coal As detailed in the IEA’s net-zero emissions
that the Lamu coal-fired power plant’s power energy ventures. scenario, unabated coal capacity declines to
purchase agreement (PPAs) with Kenya Power Acknowledging the challenges facing 1,192,000 MW by 2030. Operating coal units
had lapsed the project, Centum said it had made an are currently on average 314 MW in size
The task force to review power purchase impairment provision of KES2bn against based on GEM data. This equates to 2,925
agreements, which involves both Kenya the carrying value of the investment in Amu coal units, or nearly one unit every day, until
Power and the country’s generators, aims to Power Company Limited in its annual report. 2030, which will need to be retired, retrofitted
renegotiate the country’s wholesale and retail or converted to meet the 1.5 degree climate
energy prices. target.
The task force said in a report presented For perspective, from 2010 to 2020,
to President Uhuru Kenyatta that some PPAs COAL 319,549 MW in total was retired with an
should be terminated, while others should be average unit age of 38 years. While there was
renegotiated. Vale writes down a record number of retirements in 2020, there
President Kenyatta appointed the taskforce needs to be more than a threefold increase in
in March after it emerged that Kenya Power Mozambique coal business the amount of capacity closed from 2010 to
had signed contracts committing it to take 2020 to meet a 1.5 degree target. The average
more electricity than it can sell. by almost US$2 billion age of the world’s existing fleet is currently
The move marks the latest setback for Amu 22 years, meaning stranded assets from
Power’s Lamu project, a joint venture in which Brazilian mining company Vale has written premature closures are all but inevitable.
Centum Investment Company is the majority down the value of its coal business to zero Retiring this amount of capacity in less
shareholder with a 51% stake. with a “full impairment” of almost US$1958 than a decade would arguably be impossible
“There were instances of signed PPAs million. if it wasn’t for one nation: China. Half of the
with inactive plants whose PPAs had lapsed The company noted China’s accelerating world’s coal plants are in China and the nation
with no construction including OrPower 22 steel cuts “should dampen coking coal has already shown an ability to act decisively
(Menengai), Akiira Geothermal and Marine demand.” and comprehensively to decarbonise its
Power Generation Company, Roadtech However, the company expects thermal electricity grid. China is already a world leader
Solutions, Amu Power, Gatiki and Tindiyo coal prices to rise due to the combination in the production, deployment, and financing
Falls Resort,” said the John Ngumi-led of increasing demand in the northern of clean energy. Last year, China connected
taskforce. hemisphere winter and the lack of additional 72 gigawatts (GW) of wind and 48 GW of
The Lamu coal project has faced a series mine production. Vale is currently seeking solar to the grid, an increase that equates to
of setbacks since its inception including to sell its Moatize mine and associated more than three large wind turbines and five
revocation of an environmental licence, infrastructure in Mozambique. football fields of solar panels every hour.
delays in raising funds from banks and an TRANSITIONZERO
announcement by the technical partner
General Electric that it is exiting the coal
power business. COAL
Amu Power has been in talks with its
partners in the stalled 1,050-megawatt coal- To meet the 1.5 degree
fired power plant in Lamu with a view to
advance the project. temperature goal, the world
Amu Power had made substantial
progress, including securing a power will need to close nearly
purchase agreement with Kenya Power, loan
agreements and a Government of Kenya 3,000 coal units, or around
Letter of Support.
It has, however, not yet secured a one unit per day, from now
partial risk guarantee which is required to
access funds from lenders. The project’s until 2030.
environmental approvals have also been
revoked by the National Environment The maths behind this statement is

P18 www. NEWSBASE .com Week 44 04•November•2021