Analysing how. Kenya. instituted its REFIT and investigating future solar plans. By Eng. David Mwangi Energy Consultant. Kenya

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1 Analysing how Kenya instituted its REFIT and investigating future solar plans By Eng. David Mwangi Energy Consultant Kenya

2 Presentation Outline REFIT policy background RE Feed-in Tariffs and policy Current and planned solar use and/or projects Solar energy background Use of solar PV systems Pilot solar street lighting project Solar/diesel hybrid mini-grids Solar water heating system

3 REFIT policy background Time and resources for undertaking feasibility studies, tendering and negotiating PPAs for power plants conventionally was a big challenge Ministry of Energy in 2007/08 proposed to Public Procurement Oversight Authority (PPOA) to approve in principle the setting of Feed-in-Tariffs for electricity generated from renewable energy sources - specifically wind, biomass and small hydro

4 REFIT Background - 2 PPOA subsequently granted approval and the first Kenyan Feed in Tariffs policy was launched in March 2008 for wind, biomass and small hydro renewable energy sources The policy was revised in January 2010 to include geothermal, solar and biogas sources

5 Feed in Tariffs, 2008 Technology Type Plant Capacity (MW) Maximum Tariff ($/kwh) at the Interconnectio n Point Maximum Non Firm Power Tariff ($/kwh) at the Interconnection Point Wind < Biomass < Small Hydro <

6 Factors considered in determination of REFIT Besides including 3 additional technologies, 2010 revision also raised tariffs for wind and biomass Factors considered in arriving at tariffs for all technologies: Estimated costs of the projects Avoided costs of alternative projects in the indicative Least Cost Power Development Plan Tariffs offered in other countries

7 Factors considered in determination of REFIT - 2 Some key parameters underlying the tariffs: Project Term - 20 years Debt to Equity Ratio - 75:25 Interest on Debt - 12% p.a. Return on Equity - 18% p.a. Debt repayment period - 12 years

8 January 2010 Feed-in-Tariffs Technology Type Plant Capacity (MW) Maximum Firm Power Tariff ($/kwh) at the Interconnection Point Maximum Non Firm Power Tariff ($/kwh) at the Interconnection Point Geothermal Up to Wind Biomass Small Hydro Biogas Solar

9 January 2010 Feed-in-Tariffs Technology Project Capacity Limit (MW) Aggregate Capacity Limit (MW) Geothermal Wind Biomass Small Hydro -Firm capacity -Non-firm capacity Biogas -Firm capacity -Non-firm capacity Solar -Firm capacity -Non-firm capacity

10 Other important aspects of REFIT Kenya Power, the off-taker, is obliged to buy power from approved REFIT projects Currently, the tariffs are fixed for tenure of the PPA Escalation of appropriate proportions of tariffs by US CPI may soon be allowed The tariff includes cost of interconnection 70% of the tariffs (85% for solar) are designated as pass-through costs to consumers

11 EOIs Received and Approved under REFIT policy As at May 2011, the REFiT Policy had elicited a total of 49 expressions of interest (EOIs) with total capacity of 1,521 MW, out of which 42 EOIs with capacity of 1,311 MW had been approved Wind technology had the lion s share, with 23 EOIs received (47% of total) with capacity of 1,118 MW (74%), of which 20 with capacity of 1,008 MW had been approved None of the EOIs was for solar projects

12 Current and planned Solar Use and/or Projects

13 Solar Energy Background - 1 Kenya has daily insolation of above 6kWh/m2 Solar used mainly for PV systems, drying and water heating PV systems mainly for telecommunication, cathodic protection of pipelines, lighting and water pumping. Barriers of more use of solar energy: High initial capital costs

14 Solar Energy Background - 2 low awareness of the potential opportunities and economic benefits offered by solar technologies lack of adherence to system standards by suppliers Government s mitigation efforts: zero-rated import duty and removed VAT on renewable energy, equipment and accessories

15 Solar Energy Background - 3 The Energy Regulatory Commission (ERC) has prepared Solar Water Heating Regulations Introduction of Green Energy facility Awareness creation through sensitization and demonstrations Development of standards by Kenya Bureau of Standards and regulations by ERC

16 Use of Solar Photovoltaic (PV) -1 Private sector has supplied 220,000 PV systems with estimated total capacity of 7 MWp Annual market demand for PV panels estimated by Govt at 500 kw and projected to grow at 15% annually Govt started a program in 2005 to provide PV panels to boarding schools and health facilities in arid and semi arid areas at least 15 km from nearest grid, which has increased annual PV demand by 200 kw peak

17 Use of Solar PV public institutions equipped with PV Systems in the last five years. Programme to continue, and to cover other public facilities including water pumping One firm has recently set up an assembly plant for solar PV panels with estimated annual production of 100kW peak annually

18 Pilot Solar Street Lighting Project 18 Piloting use of solar for streetlights on Parliament Road and Harambee Avenue in Nairobi ongoing Fixed 34 streetlights, now serving without using grid electricity complement Capable of running effectively for 5 nights once fully charged To fix solar street lights in 11 main streets in Nairobi s CBD estimated to require 576 columns, at a total cost of US$ 6 Million Funding being sought from Chinese Government

19 Solar/Diesel Hybrid Mini-Grids Govt has commenced a programme to install solar hybrid systems at off-grid diesel-fired power stations at a cost of US$ 68 million, to be completed in Q4 of st phase increase capacity of PV systems in existing mini-grids from 160kW to 2,800kW, so that 30% of generation will be from renewable energy sources 19 2 nd phase install 150kW of PV systems in new mini-grids

20 Solar Water Heating Systems (SWH) - 1 ERC will gazette the Solar Water Heating Regulations, making installation and use of SWH mandatory for new premises within jurisdictions of local authorities and with hot water requirements exceeding 100 litres/day Existing facilities will have to comply within 5 years upon gazettement of the regulations A SWH project planned, estimated to cost US$ 60 million and be implemented over a 3 year period 20

21 Solar Water Heating Systems (SWH) - 2 Project funds to leverage private sector funds to buy down transaction costs, build capacity and create awareness among industry stakeholders and end users Project targets minimum of 50,000 SWH systems to catalyze the market 21

22 Presenter s Contact Details For any additional information, please do not hesitate to contact me: Eng. David M. Mwangi: dmwangi55@yahoo.com; dmmwangi55@gmail.com Phone: or Skype Name: dmmwangi55

23 Thank You for Your Attention