Page 8 - AfrElec Week 26

AfrElec RENEWABLES AfrElec
Setback for Kenyan coal paves way for green energy
KENYA
A Kenya environment tribunal has cancelled the $2bn Lamu coal and power project environmen- tal licence, ruling that the developer Amu Power had not consulted the local community enough.
“ ere was an outright disregard on the need to carry out public participation,” National Envi- ronment Tribunal chairman Mohammed Balala said in his ruling at the end of June.
Chinese-backed Amu Power will have to conduct a second environmental impact assess- ment (EIA) and carry out more extensive con- sultations with the public in order to move ahead with the project.
e project has proved controversial, as it will run on imported coal, produce CO2 emissions and cause widespread local pollution.
e court ruling is a major setback for the project, which has made considerable nancial and regulatory progress in recent years.
Amu Power, a consortium of Kenya’s Gulf Energy and Centum Investment along with Omani, US and Chinese interests, has signed a $2bn, 25-year build, own and operate (BOO) contract with China Power Global to build the plant. e Industrial Commercial Bank of China is to provide $1.2bn, while General Electric has taken a 20% stake for $400m, and will supply its Ultra Super-Critical clean coal technology.
It forms part of the Chinese-backed $25.5bn Lamu Port South Sudan Ethiopia Transport (LAPSSET), itself a key plank of Beijing’s Belt and Road Initiative (BRI) in Africa. Kenya needs the investment to drive industrialisation in its northern coastal regions.
However, the PPA will lock the Kenyan government into paying $360mn per year in xed-capacity payments.
ere is also concern about generating costs.
Although Amu Power has claimed it can pro- duce power at $0.072 per kWh, a recent report from the US-based Institute for Energy Econom- ics and Financial Analysis found this gure to be “highly optimistic.” e institute warned that higher coal costs could push the price of power to $0.22-$0.75 per kWh.
Instead, the institute argued in a June brief- ing note that Kenya should use its location in the Great Ri Valley to harness its signi cant wind and geothermal potential.
Kenya expanded its green capacity by 22% in 2018, the brie ng note said, with projects such as the 310-MW Lake Turkana wind farm. e 100- MW Kipeto wind farm also recently reached nancial closure.
Solar progress
Solar is also making progress, with the African Development Bank (AfDB) having recently nanced the utility-scale 40-MW Kopere solar project.
Globeleq announced in June that it had reached nancial closure for the $69m, 40-MW Malindi solar project, the country’s rst IPP util- ity-scale solar project.
With solar costs falling – Zambia recently secured a record low solar tari for sub-Saha- ran Africa of $0.04 per kWh – coal may nd it increasingly di cult to compete on price.
While Lamu has support from Chinese capital, the western-orientated AfDB is rmly pro-renewables.
AfDB presdient Akinwumi Adesina said in March: “I believe that the future is renewable energy and as the head of the African Develop- ment Bank I should not be investing in the past, I have to be investing in the future.”™
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w w w . N E W S B A S E . c o m Week 26 03•July•2019