Renewables in East and Horn of Africa - The Potential Contribution of Cogeneration and Geothermal Technologies. A Regional Assessment

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1 Renewables in East and Horn of Africa - The Potential Contribution of Cogeneration and Geothermal Technologies A Regional Assessment Authors: Stephen Karekezi Waeni Kithyoma Geoffrey Muthee Ezekiel Manyara Jordan Lwimbuli African Energy Policy Research Network (AFREPREN/FWD) P.O. Box 30979, GPO, Elgeyo Marakwet Close, Nairobi, Kenya Tel: or Tel (mobile): Fax: or or afrepren@africaonline.co.ke OR stephenk@africaonline.co.ke Web site: 1

2 Brief Regional Profile: East and Horn of Africa Selected indicators: East and Horn of Africa (2003) Ethiopia Uganda Kenya Tanzania Land area (Km2) 1,097, , , ,000 Capital city Addis Abba Kampala Nairobi Dar es salaam Population (million) Population growth rate Rural population as percentage of the total population GDP (million US $) 7,933 8,086 9,993 6,784 Contribution of agriculture to the national GDP (%) GDP growth rate (%) GNP per capita Exchange rate (US$) Birr 8.8 = US$ 1 (March, 2003) Main economic sector Agriculture, forestry, manufacturing, fishing, mining. Ush 1, 880 = US$1 (January, 2003) Agriculture, mining and quarrying, manufacturing, construction, commerce. Kshs = US$ 1 (April, 2003) Tourism, agriculture, forestry, mining, manufacturing, construction, commerce. Tsh = US$1 (September 2003) Agriculture, mining, financial services, tourism, commerce, construction. 2

3 1.0 Overview of the Energy Sector in East and Horn of Africa Countries in East and Horn of Africa meet the bulk of their energy needs from biomass energy sources. Available statistics indicate that in the year 2001, biomass energy sources accounted for more than 75% of total energy consumption in the region (IEA, 2003). The East and Horn of Africa region is well endowed with significant energy resources, which include renewable energy resources (wind, solar, biomass, hydro and geothermal) and conventional energy sources. The following table shows the main energy resources of each of the countries. Table 1: Energy Resources in East and Horn of Africa Energy sources Ethiopia Uganda Kenya Tanzania Biomass, natural gas, hydro, imported oil, dung, geothermal energy. Biomass, Hydro, solar, imported petroleum, geothermal Biomass, Geothermal, hydro, solar, imported coal, imported oil. Biomass, Hydro, coal, natural gas, imported petroleum, solar, wind, geothermal. The East and Horn of Africa has one of the lowest levels of modern energy consumption. In the year 2001, modern energy consumption per capita for the region was estimated at less than 100kgoe. The table below provides key indicators for modern energy use in the four countries in East and Horn of Africa. Table 2: Modern Energy in East and Horn of Africa Indicator Ethiopia Uganda Kenya Tanzania Modern energy consumption per capita (Kgoe) Installed capacity (MW) Electricity generation (GWh) 1,812 1,575 4,563 2,770 Electricity consumption per capita (KWh) System losses (%) Electrification Levels (%) National Urban Rural Sources: Nyoike, 2002; UNDP, 2002; AFREPREN/FWD, 2003a, 2003b; EIU, 2003a, 2003b, 2003c; NARC, 2002; Katyega, 2003; Marandu, 2003; Marandu, 2002; Ministry of Energy and Minerals, 2003; Kyokutamba, 2003; Kyokutamba, 2002a; Mengistu, 2002; Wolde-Ghiorgis, 2002a; World Bank, 2003a, 2003b, 2002a, 2002b; IEA, 2002, AFREPREN, 2003 Electricity Total installed electricity generation capacity in the region is about 2,833 MW, while total electricity generation is about 10,824.7 GWh (AFREPREN Data and Statistics, 2003; Nyoike, 2003; Kyokutamba, 2003; Katyega, 2003; Wolde, 2003; Teferra, 2003). The region has one of the lowest average per capita electricity consumption levels in the world of about kwh. Table 1.2 shows electricity consumption per capita for other developing world regions. 3

4 Table 3: Electricity consumption per capita for selected developing regions of the world Region Electricity consumption per capita (kwh) 1999 Latin America and the Caribbean 1,470 East Asia and the Pacific 816 South Asia 337 Sub Saharan Africa 435 East and Horn of Africa 72 Source: World Bank 2003, AFREPREN 2002, UEB 1999, and UNDP 2002 Electricity generation in the East and Horn of Africa heavily depend on hydro sources. As shown in the table above, close to 70% of total electricity generated, comes from large and small hydro electricity generating units (AFREPREN/FWD, 2003). Consequently, hydroelectric power (HEPs) consume the bulk of energy sector investments. In the long run, the entire population of the involved economy service the loans although the power projects do not benefit all citizens equally in the respective countries. Although HEPs projects cab have other adverse impacts such as displacement of local inhabitants from from their agricultural land without proper compensation. HEP still accounts for a dominant share of regional power investment. (Bhagavan, 1999; Karekezi and Ranja, 1997) Figure 1.1 Electricity Production in East and Horn of Africa (2000) Bagasse-based cogeneration 2.81% Geothermal 3.25% Thermal 21.49% Hydro 72.45% Source: Karekezi et al (eds.), 2002; AFREPREN, 2002; IEA, 2002 As shown in Figure, electricity generation in east and horn of Africa countries is mainly sourced from hydro and thermal (primarily petroleum) sources, with very little use of geothermal and bagasse. 4

5 Figure 1.2: Installed Electricity Generation Capacity Hydro Thermal Hydro Thermal Geothermal Gas Turbine Diesel Hydro Thermal- Diesel Geothermal Other Hydro Megawatts (MW) Diesel Tanzania Kenya Ethiopia Uganda Source: AFREPREN, 2002; BCSE, 2003; Karekezi and Kithyoma, 2003; Kyokutamba, 2003; Wolde-Ghiorgis, Most of the electricity generated is lost through technical and transmission inefficiencies, demonstrated by the high system losses. The average national electrification rates are low with over 90% of the population having no access to electricity. Table 1.3 shows electrification levels for east and horn of Africa countries. Table 1.1 Electrification Levels Country National electrification levels (percentage) Tanzania 10.0* Kenya 9.8* Uganda 5.0 Ethiopia 2.0 * 2002 data Source: AFREPREN, 2002; BCSE, 2003; Republic of Kenya, 2002; Okumu, 2003; Kinuthia, 2003; Engorait, 2003 The electricity industry in East and Horn of Africa is characterized by a monopoly structure, dominated by vertically integrated, state-owned power utilities. However, numerous developments have taken place in the power sector over the years in the region, which have led to four countries commercialising their power sectors. Table 1.4 shows the status of power sector reforms undertaken in East and Horn of Africa. Table 1.2 Status of power sector reforms in Eastern African countries (2003) Reform measures Ethiopia Tanzania Kenya Uganda Amendment of the Electricity Act U U U Corporatisation/Commercialisation U U U U Establishment of Independent Regulator U U Restructuring (unbundling) U U Independent Power Producers U U U Full Privatisation of Generation Full Privatisation of Distribution Source: Authors compilation In the region, Kenya and Uganda have established independent regulators and unbundled their operations in generation, transmission and distribution while Tanzania is the only country that has not amended its Electricity Act. Ethiopia is the only country without independent power producers. (Karekezi et al., 2003). Uganda has concessioned its generation facilities to ESKOM of South Africa. Attempts to concession distribution in Uganda have stalled after disagreements on the terms between the Government and the proposed concessionaire. Perhaps the most significant impact of power sector reform in the region is the increased involvement of IPPs. With the exception of Kenya, the capacity 5

6 of IPPs (both implemented and proposed) is greater than the prevailing installed capacity (largely from the state-owned utility). Figure 1.2 compares proposed capacity of IPPs with the prevailing installed capacity of state-owned utilities. Figure 1.3 Installed capacity (MW) of state owned utilities compared to IPPs for East and Horn of Africa countries* * There has been no IPP development in Ethiopia to date. Source: Adapted from Karekezi and Kimani, 2002 Many of the IPPs have come into operation recently and are predominantly fossil-fuel-based. Kenya was the first country in the region to have a renewable-based IPP, after the licensing of a geothermal IPP (OrPOWER III) Kenya Tanzania Uganda Installed capacity of implented and planned IPPs Installed capacity of state-owned utilities Fossil Fuels The energy sector in east and horn of Africa is characterised by high levels of imports of petroleum products accounting for significant proportions of export earnings (an average of 20-40% for non-oil exporting sub- Saharan African countries). The transport sector is the major consumer of oil accounting for 60% of total consumption (IEA, 2003). The high oil import bill exposes east and horn of Africa s energy sector to the external energy price shocks. Table 1.2: Petroleum imports in East and Horn of Africa, 2000 Country Petroleum Imports in 000 toe, 2000 Total Primary Energy Supply in 000 toe, 2000 Kenya 1,024 3, Tanzania 938 1, Uganda Ethiopia 1,171 1, Sources: EIU, 2001a, b; IEA, 2003 Renewable Energy Technologies % of Petroleum Import to Total Energy Supply, 2000 The East and Horn of African region is well endowed with modest levels of renewable energy resources that can be used to significantly diversify the region s energy sector. These resources include wind, solar, biomass, small and micro hydropower. Table 1.3 below presents the potential and current levels of renewable energy resource exploitation available in the region. Table1.3. Renewable energy technologies Country Energy Resource Potential Installations Kenya Wind Solar Biomass 3m/s 5.8 kwh/ m 2 /day million tons 360 units 3,600 kwp 1,450,000 improved stoves Uganda Wind Solar Biomass 4m/s 5 kwh/ m 2 /day 1,268.7 million tons 13units 152 kwp 52,000 improved 6

7 stoves Tanzania Ethiopia Wind Solar Biomass Wind Solar Biomass m/s 4-8 kw/ m 2 /day 3,333.6 million tons m/s 5 kwh/ m 2 /day 2,197.7 million tons 58 units 300 kwp 54,000 improved stoves 200 units 1,200 kwp 45,000 improved stoves Sources: Karekezi and Ranja, 1997; Ngeleja, 2000, FAO, 2000 Renewables energy resources are cleaner options with fewer adverse compared to conventional energy sources such as large-scale dams and fossil fuels. Most renewables are appropriate for the scattered rural settlements in the region (Karekezi and Ranja, 1997). Previous attempts to electrify the region through the use of PV have proved unsuccessful because of the high upfront costs involved to install imported equipment. In addition, the power produced can only cater for lighting and powering low voltage appliances (Karekezi, 2002). Renewables and Poverty Alleviation A growing number of energy analysts, especially within the AFREPREN Network, perceive certain types of renewable energy technologies as important options for poverty alleviation. This is particularly true of renewable energy technologies that are locally made and that provide thermal and animate power. These sets of renewable energy technologies are not only affordable to the very poor but can be a source of jobs, employment and enterprise creation for both the rural and urban poor in east and horn of Africa. Examples of such renewable energy technologies include: Low cost efficient hand tools and animal drawn implements, which would increase the agricultural productivity of rural areas of east and horn of Africa. Low cost but more efficient biomass-based combustion technologies (e.g. improved cookstoves, efficient charcoal kilns, brick making kilns, fish smokers, tea dryers and wood dryers). Pico and micro hydro for shaft power that can be used to process agricultural produce and increase its value, as well as for water pumping. Ram pumps for irrigation, which increase agricultural outputs thus generating income to the rural farmer Solar dryers that can lower post-harvest losses and enable the rural farmer to market his/her produce when prices are higher Solar water pasteurizers that provide clean potable water and reduce water borne diseases, which translates to increased availability of labour and thus increases agricultural output and income. Rationale and Motivation Recent interest in renewable energy in the east and Horn of Africa is driven by, among others, the following important developments. The first is the recent increase in oil prices, which, recently, peaked to US$ per barrel (Economist: Jan, 98 - Dec, 2000) at a time when Africa s convertible currency earnings are very low due to poor world market prices and decreased volumes of its commodity exports. Consequently, it is estimated that in the year 2000, petroleum imports as a percentage of export earnings doubled from about 15-20% to 30-40% for a number of African countries (AFREPREN, 2001). The second important development that has increased interest in renewables in the region is the recurrent crises faced by most power utilities in the region. For example, in year 2000 alone, Ethiopia Kenya, Malawi, Nigeria and Tanzania faced unprecedented power rationing which adversely affected 7

8 their economies. The rapid development of renewables is often mentioned as an important response option for addressing the power problems faced by the region. Two important global environment initiatives have also stimulated greater interest in renewables in the region. The first was the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, Brazil in At this Conference, an ambitious environment and development document entitled "Agenda 21" was reviewed by one of the largest gathering of Government Heads of States and, perhaps more importantly, was endorsed by a large number of multi-nationals companies. Agenda 21 sought to operationalise the concept of sustainable development. In addition, the Rio Conference provided the venue for the second important event, the signing of the United Nations Framework Convention on Climate Change (UNFCCC) by 155 Governments (United Nations, 1992). The Convention came into force in early 1994 after ratification by 50 States. The recent 2002 Johannesburg World Summit on Sustainable Development further underlined global interest in renewables. Renewables featured in both Agenda 21 and the Climate Change Convention (United Nations, 1992). Because of the important role of fossil fuels in the build-up of greenhouse gases in the atmosphere (it is estimated that the energy sector accounts for about half the global emissions of green-house gases) and concomitant climate change concerns, renewables are perceived to constitute an important option for mitigating and abating the emissions of greenhouse gases (Socolow, 1992). The above perspective was, however, not initially shared by the many energy analysts in the east and horn of Africa. In contrast to the industrialized world which is worried by the long-term global environmental impact of current patterns of energy production and use, the east and horn of Africa is largely pre-occupied with the immediate problems of reversing the persistent decline of their centralized power systems as well a meeting the long-standing and pressing demands for a minimum level of modern energy services for the majority of their poor - many of whom have no electricity and continue to rely on inefficient and environmentally hazardous unprocessed biomass fuels. Although the contribution of east and horn of Africa countries to global greenhouse emissions (GHGs) is, on a per capita basis, there is growing realization that the region is likely to be disproportionately affected by the impacts of climate change. Of particular concern is the dependence of the poor in the east and horn of Africa on rain-fed agriculture, which is believed to be already under threat from unpredictable weather patterns triggered by what appears to be climate change. The recent floods that adversely affected parts of the east and horn of Africa appear to indicate that the impact of climate change may already be a reality. In spite of the growing evidence of climate change, the position of the African energy community on the climate change question has not been unanimous. Support for renewables was, at best, lukewarm on the part of energy experts from oil-exporting African countries such Algeria, Angola, Cameroon, Nigeria and Libya. In spite of the continued divergence on the part of African energy analysts on how to respond to the climate change challenge, the consensus around the further development of renewables appears to be growing. The challenge of engendering a consensus on renewable energy development appears to be less onerous than that faced by the African energy efficiency community. As mentioned earlier, renewables featured high on the agenda of the Johannesburg World Summit on Sustainable Development (WSSD) in In the UN-led implementation plan of action for the WSSD, dubbed WEHAB (which stands for Water, Energy, Health, Agriculture and Biodiversity), top priority was given to the renewables and other alternative forms of energy services (WEHAB Working Group, 2002). One of the targets proposed at WSSD was for every country to commit itself to meeting 10% of its national energy supply from renewables. Although the 10% target was not agreed to at the summit, there is growing interest in renewable energy technologies at national level in many eastern and horn of African countries. Approach and Methodology: 8

9 To address aforementioned challenges, a study on the Status of Renewables in Africa with the following key objectives: 1. To examine viability of 10% renewable energy technology target proposed at the Johannesburg WSSD Summit in selected African Countries 2. To assess the benefits and drawbacks of the 10% renewable energy technology target in Eastern Africa Other objectives of the study include: - Review the status and potential of renewable energy technologies in 4 Eastern African countries - Investigate the impact of renewable energy technologies on debt and balance of payments - Document other benefits of renewables such as job and enterprise creation - Provide empirical/database for detailed analysis of sustainable energy technologies in the region - Disseminate findings of the study to key stakeholders and the general public To tackle the study, a two-step approach was adopted. The first step involved assessing how 10% of electricity supply in the country could be met using renewables. The technologies to be considered in this step are cogeneration, and geothermal electricity generation. The idea was to assess the potential for each technology contributing 5%, to make up the 10% target. The second step will assess how 10% of total energy supply in the country could be met using renewables. A wider range of renewables will be covered in this case, with special emphasis on renewables that have significant impact on poverty alleviation. The methodology for the study is outlined below: Technical Assessment: The gross energy potential and technical potential of key renewable energy technologies was assessed. The installed capacity, cost, job creation potential and enterprise creation potential of each key renewable energy technology was also determined. Economic/Policy Assessment: This upstream macro-economic and policy assessment was reviewed, and included the following indicators: Contribution of conventional energy investment to debt build up The impact of renewables on energy imports Role of RETs in job creation, enterprise creation and poverty alleviation This report is a compilation of studies on the first phased of the project, which assessed the potential contribution of renewables to the energy sector in the region. The contribution of two technologies to the electricity sector is assessed: geothermal and biomass-based cogeneration. Part II covers geothermal, while Part III discusses cogeneration. Part IV provides background data on the electricity sector and renewables in sub-saharan Africa. 9

10 Part II: The Potential Contribution of Geothermal Energy to the Electricity Sector in East and Horn of Africa 10

11 1.0 Geothermal energy in East and Horn of Africa 1.1 Overview of Geothermal Energy Geothermal energy is the natural heat from the earth s interior stored in rocks and water within the earth s crust. Geothermal energy is mainly used for electricity generation, and direct applications Geothermal power exploitation has numerous advantages over other energy sources. Among the benefits of geothermal power are the near zero emissions (true for modern closed cycle systems that re-inject water back to the earth s crust), and the little space required for geothermal power development compared to other energy sources such as coal fired plants. Advantages of Geothermal Geothermal energy is clean, renewable, uses little land, decreases deforestation, increases energy diversity and provides local jobs for construction, operation and maintenance. Geothermal is a renewable source of energy with low levels of emissions, near zero (true for modern closed cycle systems that re-inject water back to the earth s crust). They can be sited in farmland or forests and can share land with cattle and wildlife. The Hell s Gate National Park in Kenya was established around an existing 45 MWe Olkaria I geothermal power station. Land uses in the park include livestock grazing, growing of foodstuffs and flowers, and conservation of wildlife and birds. A second geothermal plant, a 64 MW Olkaria II, was approved for installation in the park in 1994 after extensive environmental impact analysis, and an additional power station, Olkaria III, was commissioned in Compared to other renewable energy sources, geothermal power plants require relatively little land. A geothermal energy plant occupies the least space per MW of electricity generated. Figure 1 shows the land occupied in m 2 per MW per year for 30 years. Geothermal power plants require approximately 11% of the total land used by coal fired plants and 12-30% of land occupied by other renewable technologies (Bronick, 2001). This makes geothermal energy a competitive renewable energy source in terms of economic utilisation of land space. Figure 1 Land occupied in m 2 per MW per year for 30 years Coal including pit coal mining Solar Thermal Photovoltaic Technology Wind (Land with turbines and roads) Geothermal Source: Bronicki, 2001 Geothermal installations don t require damming of rivers or harvesting of forests, and there are no mineshafts, tunnels, open pits, waste heaps or oil spills. Table 1 compares acreage requirements by technology and shows that an entire geothermal field uses only 1 8 acres per MW versus 5 10 acres per MW for nuclear plants and 19 acres per MW for coal plants. Table 1 Comparison of land requirement for baseload power generation Requirement Power source land (acre/mw) Geothermal 1 8 Nuclear 5 10 Coal 19 Source: Shibaki,

12 The energy supply can be unlimited as resource supply can be indefinite especially if good re-injection practices are maintained. In addition, geothermal resources are usually located in otherwise unproductive areas, far from hydropower resources. Geothermal plants are built on modular basis, with most projects including one or more MW turbines. The modular nature of the technology lowers the risk of geothermal development. Geothermal plants take a shorter duration to install than conventional energy plants. Typical payback periods are 15 years delivering power at 5 10c/kWh. Costs then fall by % to just cover operating and maintenance for the remaining years. Operation costs are very low because fuel costs are eliminated. In comparison, fossil fuel station capital costs are usually significantly cheaper, but have high fuel costs (Shibaki, 2003). Unlike solar, wind and hydro-based renewable power, geothermal power plant operations are independent of fluctuations in daily and seasonal weather. This makes it a more reliable source than conventional energy sources. Geothermal power plants operate at well over 90% availability all year round. Geothermal plants are benign with respect to water pollution. Production and injection wells are lined with steel casing and cement to isolate fluids from the environment. Spent thermal waters are injected back into the reservoirs from which the fluids were derived. This practice neatly solves the water-disposal problem while helping to bolster reservoir pressure and prolong the resource s productive existence. Fluids from geothermal energy development contain dissolved gases, mainly carbon dioxide and hydrogen sulphide, small amounts of ammonia, hydrogen, nitrogen, methane and radon, and minor quantities of volatile species of boron, arsenic, and mercury. Geothermal power provides significant environmental advantage over fossil fuel power sources in terms of air emissions because geothermal energy production does not release nitrogen oxides, and sulphur dioxide, and releases less carbon dioxide than fossil- fuelled power. The reduction in nitrogen and sulphur emissions reduces local and regional impacts of acid rain, and reduction in carbondioxide emissions reduce contributions to potential global climate change (Shibaki, 2003). Geothermal power plant carbon dioxide emissions can vary from plant to plant depending on both the characteristics of the reservoir fluid and the type of power generation plant. Binary plants have no carbon dioxide emissions, while dry steam and flash steam plants have carbon dioxide emissions on the order of 0.2 lb/kwh, less than one tenth of the carbon dioxide emissions of coal- fired generation. According to the Geothermal Energy Association, improved and increased injection to sustain geothermal reservoirs has helped reduce carbon dioxide emissions from geothermal power plants (Shibaki, 2003). 1.2 Disadvantages of Geothermal The initial capital outlay required for geothermal energy development is significant. Geothermal power plants incur high capital costs at the beginning of the project. Therefore they are typically at an economic disadvantage to conventional fossil fuel power plants. Fossil fuel plants have lower up- front capital costs, but incur fuel costs for the life of the plant. Geothermal drilling is much more difficult and expensive than conventional petroleum drilling. This is because of the high temperature and corrosive nature of geothermal fluids, as well as the hard and abrasive nature of reservoir rocks found in geothermal environments. Each geothermal well costs $1 4 million to drill, and a geothermal field may consist of wells. Drilling can account for 30 50% of a geothermal project s cost. (Shibaki, 2003). Most of the components are sourced from offshore countries. Some parts of the system require regular servicing. Pipes are subject to corrosion, which can be problematic Geothermal fluids contain dissolved gases, mainly carbon dioxide and hydrogen sulfide, small amounts of ammonia, hydrogen, nitrogen, methane and radon, and minor quantities of volatile species of boron, arsenic, and mercury (shibaki, 2003). These gases have been identified with acid rain and climate change, although this is rarely the case with geothermal plants, due to the miniscule amounts. ise occurs during exploration drilling and construction phases. ise levels from these operations can range from 45 to 120 decibels (dba). ise levels in quiet suburban residences are in the order of 50 dba, and noise levels in noisy urban environments are typically 80 to 90 dba. Site workers are normally protected by wearing ear mufflers. However, with best practices, noise levels can be kept to below 65 dba, and construction noise should be practically indistinguishable from other background noises at distances of one kilometer (Shibaki, 2003). 12

13 2.0 Status of Geothermal Energy Development in East and Horn of Africa At an international level, approximately 8,100 MW of geothermal power is generated out of a global potential of 60,000 MW (Mariita, 2002; Bronicki, 2001). Using today s technology, Africa has the potential to generate 6,500 MW of energy from geothermal power. Out of this potential, only 127 MW has been tapped in Kenya, and less than 2 MW 1 in Ethiopia. Table 2 shows the geothermal potential in east and horn of Africa countries have in geothermal generation. Table 2 Geothermal potential for selected African countries Country Potential generation in MW Kenya 2,000 Ethiopia >1,000 Djibouti Tanzania 150 Uganda 450 Source: Gwang ombe 2004, Kamese 2004, Wolde 2004, Mbuthi 2004, BCSE, 2003 Varying levels of geothermal exploration and research has been undertaken in Djibouti, Eritrea, Uganda, Tanzania, Zambia, Malawi and Madagascar but the potential for grid connected electrification is highest in Ethiopia, Kenya, Uganda and Tanzania. 2.1 Tanzania In Tanzania the geothermal resources are fairly small. Geothermal exploration was carried out between by SWECO, a Swedish Consult Group in collaboration with Virkir-Orkint of Iceland. Reconnaissance missions and surface exploration were carried out in the north (near Arusha, Lake Natron, Lake Manyara and Maji Moto) and in the south (Mbeya region), while a Tanzanian company carried out exploration in the Rufiji area. The objective of these missions was to make a preliminary appraisal of the existence and feasibility of exploiting geothermal resources in Tanzania. The Arusha and Mbeya regions were singled out for further exploration. Approximately 50 hot springs were mapped which are associated with block faulting and recent volcanicity. The results were considered promising and SWECO/Virkir/Sida prepared a draft geothermal development plan. The Government of Tanzania is committed to participate in a private sector led initiative in geothermal energy development. There are plans for further exploration and analysis of selected geothermal prospects, at Arusha, Mbeya and Rufiji. First Energy Company (FEC) developed plans for a 6 MW plant in Rufiji and is looking for an international partner for implementation of the project (BCSE, 2003). In Tanzania, thermal prospects appear in two extreme geological settings. However, there is no evidence of high temperature hydrothermal system in the northern part of the country. The region is characterised by a few low temperature advective systems discharging alkaline waters of similar composition. The region around Lake Natron transfers high-grade heat of at least 50 MW but none of the low temperature systems appears to have economic potential at present (Hochstein, et. al., 2002). In Southern Tanzania, probably three hydrothermal systems occur within the northern Malawi rift. They derive heat from hot rocks beneath the Rungwe volcanic fields. At the terminus of the outflows, there are associated thermal springs. High temperatures cannot be expected in the close proximity of these outflows. The Songwe River thermal area constitutes a viable low temperature resource as indicated by its natural heat output of 10MW (Hochstein, et. al., 2002). There are other regions with lower prospects of between 1 and 5 MW that are marginal for direct utilisation. The Rungwe and southwest Usanga basins discharge little heat and derive from small, low temperature reservoirs. 2.2 Uganda Geothermal energy studies in Uganda date back to Between 1993 and 1994, explorations were carried out on three geothermal energy prospects in the western branch of the Eastern Rift Valley under Geothermal Energy Exploration I (GEEP I). Table 3 shows the geothermal prospects studied under GEEP I. Table 1 Geothermal Prospects Studied Under GEEP I Prospect Characteristics Katwe High sub-surface temperatures 1 The geothermal plant in Ethiopia has been discontinued due to technical problems at the plant. There are, however, plans to rehabilitate it. 13

14 Prospect Characteristics Proximity to the national grid Desirable geological characteristics Buranga Large volumes of water at o C Attractive prospects for electricity generation and drying of agricultural produce Kibiro Simple geologic structure Source: EAPIC EAMIC, 2003 Sub-surface temperatures above 200 o C Located near a population of about one million without electricity The Government of Uganda plans to commission the second phase of Geothermal Energy Exploration II (GEEP II) once the Uganda Alternative Energy Resources Assessment and Utilization Study (UAERAUS) study is completed. The key objective of UAERAUS is to formulate a long-term integrated least cost Alternative Energy Resources Development Program (AERDP) for Uganda. Pre-feasibility and feasibility studies will be conducted on one or two of the selected prospect areas. 2.3 Ethiopia Usable geothermal energy potentials have been known to exist in Ethiopia. Two areas [Aluto-Langano (Lakes District) and Tendaho (rthern Afar) geothermal fields] have been subjected to deep exploratory drilling. A feasibility study began in Ethiopia in 1981 and a construction contract awarded to ORMAT International in 1996 at the Aluto Langano geothermal plant. Between 1993 and 1998, a total of six wells were drilled at the Tendaho geothermal fields (BCSE, 2003). Feasibility studies at this region indicated that four productive wells could supply steam for a 5 MW pilot plant (BCSE, 2003). The Aluto Langano plant was constructed in 1997 and started operations in July However, due to operational problems associated with low quality of steam, the geothermal plant had to close down. The plant started by yielding 4.1 MW and the output slowly declined to 0.82 MW. Eventually the plant was closed in June The operations were characterised by decreasing pressures, and the problematic operation has since discouraged Ethiopian leaders from considering the construction of additional geothermal plants despite the large potential. Ethiopia s geothermal power installed capacity is 8.5 MW. Table 4 shows the level of geothermal exploitation in Kenya and Ethiopia. Table 2 Level of geothermal power exploitation in Kenya and Ethiopia Country Kenya Ethiopia Potential generation (MW) 2000 >1000 Installed Capacity (MW) Available (MW) 127 Nil Source: BCSE, 2003; Fridleifsson, 2001 Ethiopia s proposed geothermal development plans include refurbishment of the Aluto-Langano pilot plant, development of the 5-20 MW Tendaho geothermal field, and further exploration and analysis of the prospects that are at advanced exploration stage. 2.4 Kenya Kenya was the first country in Africa to invest and exploit geothermal resources for electricity generation. Geothermal investigations in Olkaria in the Rift valley began in 1956 when a consortium of two companies undertook two exploratory drillings. Two tunnels were drilled without any marked success. It was not until the end of the following decade that interest in geothermal power revived. Investigations were carried out between 1970 and 1972 and further work carried out on the two exploratory wells at Olkaria. Drilling started in earnest in 1973 and by 1975, four more wells had been drilled in the area. A feasibility study carried out to evaluate Olkaria s potential for generating electricity found that the geothermal field covered 80 km 2 and steam for 25,000 MW years. So far, 103 geothermal wells have been drilled in Kenya for exploration, production, monitoring and re-injection. Of these, 97 wells are in the Olkaria area and the rest in the Eburru field. Kenya has involved both the private and public sector in the development of geothermal energy (BCSE, 2003). The installed capacity presently stands at 127 MW, of which 12 MW is exploited by ORMAT International, a private 14

15 power company. Olkaria I has steam of 69 MW but it is presently producing only 45 MW (BCSE, 2003). An additional 70 MW 2 power station (Olkaria II) owned by KENGEN is feeding into the grid. Several sites have been prospected for geothermal power development. Reconnaissance studies and citing of wells have been carried out on all the sites. Complete surface studies have only been carried out on three prospected sites while drilling of wells has only been carried out on the Olkaria Domes (BCSE, 2003). Electric application of geothermal energy in Kenya over the last 20 years has demonstrated high levels of availability of above 98%. Kenya s Least Cost Power Development Plan foresees an additional 484 MW generated from geothermal resources by the year 2019 (BCSE, 2003; Fridleifsson, 2002). Geothermal development plans in Kenya target at accelerated appraisal drilling including six additional deep wells in south of Olkaria Domes (Olkaria IV). Donors provided a credit amounting to Shs 1.37 billion to evaluate the performance of Olkaria IV, which will contribute to an additional 70 MW to the grid on completion (Ministry of Energy, 2003). The government plans to involve the private sector in future geothermal developments. 2 The Olkaria II Geothermal Power Station was initially designed to generate 64 MW using 2X 32 MW geothermal turbines. However in order to obtain maximum benefits of new technology, tendering included design by the bidder, the terms of reference being the ability to generate the highest generation from the available steam. The successful design was for using 2 x MW single flow, six stage, condensing turbines which consume the same amount of steam as the old design of 2 x 32 MW units. (Source: The East African Standard Friday, March 26 th 2004) 15

16 3.0 Analysis of the Geothermal Option: A regional perspective 3.1 Technical and Economic Assessment Theoretical Geothermal Potential The combined theoretical geothermal energy potential in the east and horn region is estimated at 3,300 MW. Geothermal explorations carried out in northern Tanzania indicate the existence of geothermal resources, which could be used for industrial/power generation purposes. Similar explorations with same results have been done in the southern and coastal regions of Tanzania, but the amount of electricity that would be generated from these sources has not yet been quantified (Hochstein et al, 2000). Uganda s theoretical geothermal potential is estimated to be about 450 MW (BCSE, 2003). However, the potential is likely to be higher than the estimate, since new sites continue to be discovered e.g. in Karamoja and west Nile. The geothermal energy potential in Ethiopia is >1000 MW (Acquatter, 1996b), while in Kenya; the potential is estimated at 2,000 MW. Out of the more than thirteen geothermal prospects identified in Kenya, exploration drilling has only been done at two fields -Olkaria and Eburru. Therefore, the theoretical potential could surpass 2,000 MW. Table 2.1 summarizes geothermal potential in the East and Horn of Africa with the installed electricity capacity. Table 4: Country Geothermal potential as a percentage of total installed potential Installed electricity Total potential for generation capacity geothermal energy Geothermal potential as a percentage of installed electricity generation capacity Tanzania Kenya 1,236 2, Ethiopia 494 >1, Uganda East and Horn of Africa 2,814 3, Source: Authors compilation Technical Geothermal Potential Tanzania has not been able to carry out detailed studies on geothermal potential and exploration activities are ongoing. Therefore the technical potential is not yet known. A geothermal exploration project has been proposed, whose objectives include the preparation of technical and financial/investment plans for the installation of an appropriately sized geothermal power plant, and also study the feasibility of direct-use of the same geothermal resource(s) in industry and agriculture. Similarly, the technical potential of geothermal in Uganda is unknown; explorations are still under way and will lead to the drilling stage, which will eventually determine the country s geothermal technical potential. Total geothermal resource potential in Ethiopia is estimated to be over 1,000 MW (BCSE, 2003). Exploration has been centred in two main areas, Aluto-Langano -the site of the pilot geothermal power plant and the Tendaho geothermal fields. Taking into account problems related to technically inaccessible prospects, owing to rugged terrains and inaccessibility, among other factors, Kenya currently has a technical potential to generate over 964 MW (Omenda, 2001). With the on-going global advances in improving geothermal exploitation technologies, much higher technical potential may become evident over time. Over the 20 years the Olkaria geothermal plant has been in operation, the average level of efficiency has been considerably high at above 90% Installed Geothermal Capacity Only Kenya and Ethiopia have utilised geothermal energy for electricity generation in the region. Kenya s installed geothermal energy capacity presently stands at 127 MW, while Ethiopia s is 8.52 MW. (As mentioned earlier, after commissioning, the Ethiopian pilot plant started by yielding 4.1 MW and had to be shut down in 3 Recent studies indicate a geothermal power potential of 150 MW (Rufiji >100 and Mbeya >50) though studies on geothermal potential in the country and exploration activities are ongoing around the Rift Valley mainly in the areas of Lake Manyara, Lake Natron, Lake Eyasi, Ngorongoro Crater and Musoma. 16

17 June 2002 after a year of operation due to very low power generation of 0.82 MW.) The installed geothermal capacity in Kenya is equivalent to 10% of the country s total installed capacity. Both Uganda and Tanzania have not been able to exploit their geothermal energy resources. On a regional scale, only about 4.54% of the total installed electricity generation capacity is obtained from geothermal energy (BCSE, 2003). This is illustrated in table 2.2. However, the proven geothermal energy potential for all countries in the region (excluding Tanzania, whose geothermal potential has not been verified) exceeds the total current installed electricity generation capacity. Table 6: Geothermal energy installation as a proportion of total installed electricity capacity Country Installed electricity generation capacity Geothermal installed capacity Percentage of total installed Tanzania Kenya Ethiopia Uganda East and Horn of Africa Source: Authors compilation Potential for Local Assembly and Manufacture Globally, three geothermal technologies are available for exploiting geothermal energy resources. These are; Flash plants; Binary cycle plants and Hybrid flash and binary cycle plants. Flash plants are conventionally applied in moderate to high temperature liquid dominated resources and are the most common plants worldwide. Typically flash condensing geothermal power plants varies in size from 5 MWe to over 100 MWe. Binary plants are conventionally applied to moderate-temperature and low-temperature liquid-dominated resources. Medium temperature systems may also be exploited using binary fluid plants. This relatively new technology can be used with sources down to 80 0 C but elaborate equipment and technical training is required. The hybrid cycle power plants achieves higher overall utilisation efficiencies as the conventional steam turbine is more efficient at generating power from high temperature steam, and the binary cycle from the low temperature separated water. The plant design selected is dependent on the temperatures and pressures of the reservoir while the plant sizing and technology selection for geothermal plant is determined by the geothermal resource and its characteristics. Based on the range of equipment for geothermal power plant and associated technical activities as presented in Table 7, there is a potential for local manufacture and/or assembly of some of these power plant components. 17

18 Table 7: Major Equipment for Geothermal Power Plants Equipment Steam and/or Brine Supply: Down hole pumps Wellhead valves & controls Silencers Sand / particulate remover Steam piping Steam cyclone separators Flash vessels Brine piping Brine booster pumps Final moisture separator Heat Exchangers: Evaporators Condensers Turbine-Generator & Controls Steam turbine Organic vapour turbine Dual-admission turbine Control system Plant Pumps: Condensate Cooling water circulation Brine Injection n-condensable Gas Removal System: Steam-jet ejectors Compressors Vacuum pumps Cooling Towers: Wet type Dry type Type of Energy Conversion System Dry Steam Single Flash Double Flash Basic Binary () () () Poss. Poss. () (Poss.) Poss. () () () (Poss.) Poss. Poss. () (Poss.) Poss. () Poss. Poss. Poss. Poss. Poss. Poss. Poss. te: =generally used, =generally not used, Poss.=possibly used under certain circumstances Currently no country in the East and Horn of Africa manufactures these parts but potential for future local manufacture is high. All tools and equipment for geothermal resource exploration and development in the region are imported. Table 8 shows the countries from where geothermal plant materials were sourced for Kenya s geothermal plants. Table 8: Kenya s geothermal plant construction materials by country of origin Material Country of Origin Turbines Japan Pipes New Zealand Control USA Transmission Germany Source: Consultations on field visit, Cost of Geothermal Energy Geothermal plants are relatively capital- intensive, with low variable costs and no fuel costs. Capital costs are the fixed costs for power plant construction. These consist of the cost of land, drilling of exploratory and steam field wells, and physical plant, including buildings and power- generating turbines. Drilling costs are often high and associated with significant risk. The capital cost for geothermal power plants ranges from $1,150 to $3,000 per installed kw, depending on the resource temperature, chemistry, and technology employed (Shibaki, 2003). These costs may decrease over time with additional technology development. Plant lifetimes are typically years. Financing is often structured such that the project pays back its capital costs in the first 15 years. Costs then fall by 50 70%, to cover just operations and maintenance for the remaining years that the facility operates. Table 2.5 shows the costs for geothermal plants based on the quality of the geothermal resource. Table 9: Geothermal power direct capital costs Plant Size High-Quality Resource (US$) Medium-Quality Resource (US$) Small plants (<5MW) 1,600-2,300 1,800 3,000 Medium plants (5 30MW) 1,300-2,100 1,600-2,500 18

19 Large plants (>30MW) 1,150-1,750 1,350-2,200 Source: Shibaki, 2003) Table 11 the costs shows of installed geothermal plants in east and horn of Africa. Table 11 Installed geothermal plants in east and horn of Africa Geothermal Plant Installed Capacity Generating Technology Used Total Cost (US$ million) Cost of Energy Year of Commissioning Olkaria I (Kenya) Flash technology 45 MW 36 US$ 800 per kw 1981 Olkaria II (Kenya) Flash technology 64 MW US$ 2, per 2004 kw Olkaria III (Kenya) binary cycle 12 MW US$35* 2000 technology Aluto Langano (Ethiopia) binary cycle technology 8.5 MW 16.5 US$ 1, per kw 1998 *These are costs for only part of the plant Source: Authors compilation Job and Enterprise Creation Potential Geothermal resource development and exploitation can create significant job and enterprise opportunities both directly and indirectly. In 2002, the 45 MW plant at Olkaria I employed a total of 493 people, comprising of 15 scientists, 21 engineers, 82 technicians, 175 artisans/craftsmen and 200 support staff (Mariita, 2002). This translates to jobs/mw in operations and maintenance. The estimated jobs that can be generated from geothermal energy development based on potential in east and horn of Africa is presented in the table below: Job creation potential of geothermal energy in east and horn of Africa Country Total potential for geothermal energy (MW) Estimated jobs created (10 jobs/mw) Tanzania 150 1,500 Kenya 2,000 20,000 Ethiopia 1,000 10,000 Uganda 450 4,500 East and Horn of Africa 3,300 33,000 Source: Authors estimates Geothermal energy development would result in a wide range of enterprises, which would also offer employment opportunities. The range of enterprises is shown in Table 12. Table 12: Range of enterprises that can be created based on geothermal energy development Processing Industries Fish processing Fish farming Crop processing Horticulture Mineral water industry Chemical recovery from the brine Salt processing Service Industries Tourist attractions Health baths (spas) Heated swimming pools Kenya has, on a modest scale, employed direct use of geothermal in floriculture (green house heating for roses), this is on an experimental basis and poultry farming (hatching of chicken). For decades, Kenya has also used geothermal heat to dry pyrethrum flowers at Eburru. Continued development of geothermal will lead to further establishment of horticulture and poultry farming. Geothermal development in Uganda could be very beneficial to the country, in particular, to the government and local communities. Geothermal resources are located in rural areas and can thus facilitate low cost rural electrification. Geothermal lends itself to a number of industrial applications among them fish and crop processing (BCSE 2003). Geothermal development can give rise to several enterprises in Uganda due to the high water temperatures, the mineral content of the brine and the location of geothermal resources in the country. These enterprises are not limited to, but include development of the mineral water industry, chemical 19

20 recovery from the brine, salt processing industry, tourism, agro processing industry, fish processing and hot water supply. The districts of Kasese, Bushenyi, Kamwenge, Kyenjojo and Kabarole, which are in close proximity to the geothermal prospect (Buranga), have a total population of 2,277,006 (population census, 2002) which will offer a good market for the geothermal energy. In addition, enterprise creation in the rural areas could curb rural urban migration, rampant in Uganda. 3.2 Economic, Policy and Gender Impacts of Geothermal Development The Impact of Renewables on National Debt All countries in East and Horn of Africa have significant national debts. A proportion of these debts are linked to energy sector development, mostly for large-scale hydro power plants investments and credit to finance petroleum imports. Geothermal energy investment costs can be lower than those of hydro and can reduce the debt linked to hydro projects. Uganda is among the Highly Indebted Poor Countries (HIPC) of the world. Its external debt burden is estimated at US $ 4 billion. This debt has been accumulating over time and the conventional energy sector has been one of the sectors that has contributed to these loans. In addition, a national energy plan developed in 1999 by British consultants and approved by the Government of Uganda will require it to secure loan funding amounting to US $ 1.6 billion to meet the energy plan requirements. Almost all the projects under this energy plan are large hydropower projects including the Bujagali and Karuma hydropower projects. Geothermal generation can help the reduce the debt burden associated with energy development, as it is cheaper to produce geothermal per mega watt compared to hydro electricity power. The other advantage of geothermal energy is that its modular nature allows a country to develop its energy resources incrementally, therefore spreading out the investment cost. This allows a country to plan for geothermal energy development based on availability of resources and reflecting incremental increase in demand. For example, Kenya started with a 15MW plant at Olkaria I, which increased over time to 30MW then 45MW, and eventually over 120MW. The modular nature of geothermal also allows for adoption of improved technologies. The initial 15MW plant at Olkaria was an open circuit plant, with some environmental problems. However, the consequent phases of the plant adopted the closed circuit technology, thereby largely eliminating associated environmental problems The Impact of Renewables on Balance of Payments Geothermal power does not use imported fossil fuels thus saving foreign exchange. All the four countries in the east and horn of Africa have geothermal resources, which could prove to be an important source of power and revenue. Geothermal projects can reduce the economic pressure of fuel imports, while offering local infrastructure development and employment. One of the most important economic aspects of geothermal energy is that it is generated with indigenous resources, reducing a nation s dependence on imported energy, thereby reducing trade deficits which in turn retains wealth within the country and promotes healthier economies. Geothermal can help governments in east and horn of Africa reduce their foreign exchange expenditure on the importation of fossil fuels. This is especially true in cases where geothermal energy replaces electricity generated from fossil fuels The Impact of Renewables on Poverty Reduction Geothermal development will lead to both direct jobs as well as indirect jobs arising from other enterprises that will come up as a result of the geothermal development. Geothermal prospects are located in rural and remote areas, where poverty levels are particularly high. Development of geothermal would improve on rural household incomes. Small and medium enterprises, a major source of employment, can play a major role in geothermal development and associated secondary industries. Improved employment opportunities in rural areas where geothermal development is taking place can greatly improve the socio-economic status of local communities. In Kenya, KenGen and OrPower 4 Inc geothermal companies have employees from the local Maasai community. KenGen has also participated in improving the public infrastructure by constructing roads, building schools, health centres, shops and providing telephone service in a remote area. 3.3 The Impact of Geothermal on Other Development Sectors 20

21 Geothermal energy can provide electricity to meet energy needs for basic social services. Electricity from geothermal energy can be used to power water pumps for household water supply and irrigation, electrify rural schools and power hospital equipment alongside refrigeration of vaccines. Many rural communities near geothermal sites do not have access to safe and clean water. Development of geothermal can help improve the provision of power required for pumping of treated water, which is safe and clean. Geothermal can also provide hot water thereby saving on the time women spend looking for fire wood to boil water thus decreasing fire wood demand which in truant could assist in the conservation of the environment. Improved quantity and quality of water supply can greatly improve the livelihoods of many of the rural communities. In Kenya, KenGen, the owners of the Olkaria I geothermal power plant have provided water tanks to the local Maasai community living around the geothermal plant and 90% of them draw water from these tanks. (Mariita, 2002). Geothermal plant development often include the building of social facilities such as hospitals. Many rural women and children die due to lack of easy access to good medical facilities. Geothermal development could facilitate the provision of improved medical services and facilities thereby reducing the high maternal and infant mortality rates in rural areas. Geothermal energy can widen electricity access and enhance education standards, especially in rural areas that lack electricity. Some of the beneficiaries will be the girl children whose work-load on fuel wood collection and cooking will be reduced. By providing good efficient lighting in rural areas, rural children can be able to study effectively and compete with their counterparts in urban areas with electricity supply. Access and use of the computer and internet facilities can be improved thus enabling rural communities to share and learn from experiences worldwide. Many rural women in east and horn of Africa depend on farming for their livelihoods while their husbands look for casual or formal employment. Provision of electricity from geothermal to power agricultural processing plants can greatly improve incomes of rural women and consequently their livelihoods. The processing plants can not only improve market access for local agricultural produce but also improve food security in the country. Post harvest crop losses have a great impact on the agriculture sector and a major contributing factor to food insecurity in the country. The establishment of agro-processing industries in rural areas can minimise post harvest crop losses. In addition, geothermal can lead to the adoption of higher value rural productive activities such as fish and flower farming. Geothermal power development can strengthen security of electricity supply. Geothermal power is not affected by drought, and records availability levels of over 90%. Geothermal energy is, therefore, advantageous over hydro which is prone to drought leading to significant economic losses. For example, during the drought of that crippled Kenya s hydropower plants, geothermal came to the rescue with the country two geothermal power plants at Olkaria offered continuous base-load power with almost 100% availability, unaffected by the prevailing weather. A secure and affordable supply of electricity is crucial to economic development. Without a reliable supply of electricity, the export-oriented industrial development strategy that countries in the region are actively pursuing will not be feasible. Geothermal power could play an important role in strengthening economic development. 21

22 4.0 Key Conclusions Viability of 5% Geothermal Target Based on the technical and economic and policy assessments presented, geothermal energy development is a viable energy option, and would yield significant benefits to countries in the region. The achievement of a 5 % target for electricity generation from geothermal in each of the countries in east and horn of Africa is technically viable, based on the technical potential. Based on the technical potential of geothermal in the 4 countries in the region, the 5% target is viable, as shown in the table below. In the case of Kenya, the 5% target has already been surpassed with geothermal providing around 10% of the National Power Supply. Table 4.1 Viability of 5% target Country Installed electricity capacity 5% of current installed capacity Technical geothermal potential Viability of 5% target Tanzania 863 MW MW 150 MW Viable Uganda 326 MW 16.3 MW 450 MW Viable Ethiopia 494 MW 24.7 MW 700 MW Viable Kenya 1236 MW 61.8 MW 2000 MW Viable Geothermal energy is also economically viable. Geothermal electricity is now Kenya s least cost power option, showing that geothermal can compete cost competitively with other energy forms. There are multiple benefits that can be derived from the 5% geothermal development. Geothermal plants take up the least land space compared to other electricity generating technologies. Therefore if a 5% geothermal energy development is adopted in the region, there will be more efficient land use that will lead to the environment s conservation. This is particularly true since there are no forests logging and displacement of the ecosystems. In addition the near zero emissions ensures no pollution. Geothermal development will ensure that countries in the region have a fair energy balance mix. In addition, it will replace electricity generated from fossil fuel whose use has adverse negative effects. Power outages occasioned by low generation will become minimal, since geothermal plants have been known to operate at higher percentages of availability, unhindered by climatic conditions such as drought which adversely affects hydro power. Their modular nature will make it easy for the region to match its geothermal power development with demand. The economies of the east and horn of Africa region can improve due to geothermal development. Installations of the plants in its self can generate jobs both directly and indirectly. Industries can be set up to take advantage of cheaper power in remote areas where the geothermal resources are located. All these can stimulate economic income that with important spill over effects to national economies. The high initial capital cost and associated risks of exploration and development poses a major draw back to the 5% geothermal development in the region. One has to invest in drilling a number of wells in order to assess the economic geothermal power potential for a particular prospect. These up-front costs of locating and drilling geothermal power reservoirs constitute a major barrier to the development of geothermal in the region. Countries in the east and horn of Africa have not yet developed local industries to manufacture geothermal components. The manufacture of components of geothermal plants locally could greatly reduce the capital cost of geothermal plants. 22

23 5.0 Recommendations As discussed in the previous section, the benefits of geothermal energy development far outstrip its drawbacks. The following recommendations would ensure the increased development of geothermal energy in the region. Higher policy priority Renewables in general are yet to receive the requisite policy attention. Based on the potential benefits of geothermal, there is a strong case for ensuring that geothermal is given higher priority in power sector development plans. Higher budgetary allocation One way of measuring higher priority given to renewables is higher budget allocations. Promote information exchange Kenya, as a country in the region that has successfully demonstrated the use of geothermal, provides a model example that other countries can emulate. Policies that allow for private participation Given the significant amounts of investment required to develop geothermal energy (especially the exploration stage), there is need to encourage the private sector to invest in geothermal energy development. Creation of supportive policies would be a key step in encouraging development of geothermal energy. Manufacturers and SMEs - The local manufacture and assembly of geothermal equipment could result in significant reduction of costs. By partnering with their counterparts in the rth, SMEs in the east and horn of Africa could gain capacity in local assembly and manufacture. Financial Institutions and Micro Finance Institutions These could assist in providing credit to meet the investment cost of geothermal development. Large private sector Large scale industries located close to geothermal resources could invest in geothermal energy to meet their energy needs. An example is in Kenya, where one of the large flower farms Oserian, plans to construct a 2MW geothermal plant to provide electricity and heat energy to its form and associated agro processing facilities. From an environmental and economic perspective, civil society and other stakeholders need to lobby Government in the region and development partners to encourage greater attention to geothermal resource development. The use of data contained in this study could provide additional rationale for lobbying for the wider adoption of geothermal in the regions electricity water. There is need to educate local communities on the benefits of geothermal energy. This can be done through establishment of demonstration units at grass root levels that would used as models for the communities to learn from. 23

24 References AFREPREN/FWD, 2003a. AFREPREN Energy Data Handbook. AFREPREN Secretariat, Nairobi. Kenya. AFREPREN/FWD, 2003b. Draft Proposal, The Regional Launching Workshop for Eastern Africa. Renewable Energy and Energy Efficiency Initiative (REEEP). AFREPREN Secretariat, Nairobi. Kenya. BCSE, Geothermal Market Assessment Report, The Eastern Africa Market Assessment Acceleration Geothermal Conference Agenda. Business Council for Sustainable Energy (BCSE), Washington, DC. Daily Nation, Reflections of a Working Nation, First year. Article Published by the Nation Media Group on 15 th December Nairobi, Kenya. EAPIC/ EAMIC, Conference Proceedings for the 5 th Annual East African Power and Mining Industry Convention, th 7 th August 2003, Kampala, Uganda. Economist Intelligence Unit (EIU) 2000 Country Profile-Kenya. EIU. London. Economist Intelligence Unit (EIU) 2003 d. country Profile-Uganda. EIU. London. Economist Intelligence Unit (EIU), 2003a. Country Report- Tanzania. EIU, London. Economist Intelligence Unit (EIU), 2003b. Country Report- Uganda. EIU, London. Economist Intelligence Unit (EIU), 2003c. Country Report-Kenya. EIU, London Engorait, S. P., 2003: Meeting the Challenges of Increased Private Sector Investments and Increased Access, Updated 3 rd Draft Research Report, Energy Sector Reform Theme Group. AFREPREN, Nairobi, Kenya. Fridleifsson, I. B., 2001, Geothermal Energy: Experience of Iceland and Opportunities for Africa. Article Published in the Renewable Energy Technologies: Potential for Africa Booklet, United Nations Environment Program (UNEP). Nairobi, Kenya. Godfrey, B., 2003: Status of Geothermal Exploration in Uganda, Presentation at the Workshop on Geothermal Energy for Uganda. EAPIC/EAMIC Conference, Kampala, Uganda. Hochstein, M.P., Temu, E.P., Moshy, C.M.A., Geothermal Resources of Tanzania. Proceedings of the World Geothermal Congress, Kyushu-Tohoku, Japan. Document Downloaded from the International Geothermal Association Website IEA, 2002., World Energy Outlook Energy and Poverty, Rue de la Federation, Paris, France. IEA, 2003., Energy Balances for n-oecd Countries. International Energy Agency. Paris, France. Kamfor, Study on Kenya s Energy Demand, Supply and Policy Strategy for Households, Small Scale Industries and Service Establishment. Kamfor Company Limited. Nairobi, Kenya. Karekezi, S., Poverty and Energy in Africa- a brief Review, Energy Policy, Vol. 30 s , Special Issue Africa: Improving Modern Energy Services for the Poor. Oxford: Elsevier Science Limited 24

25 Karekezi, S., Kimani, J., Mutiga, A., Amenya, S., 2003, (Unpublished). Energy Services for the Poor in East and Horn of Africa Sub-Regional Energy Access Study of East Africa. Prepared for the Energy Access Working Group, Global Network for Sustainable Development. African Energy Policy Research Network (AFREPREN). Nairobi, Kenya. Katyega, M., 2003, Country Data for Validation: Tanzania. AFREPREN, Nairobi. KPLC, 2001/2002., Annual Reports and Accounts, 2001/2002. Kenya Power and Lighting Company (KPLC). Nairobi, Kenya. Kyokutamba, J., 2002a. Country Data for Validation: Uganda. AFREPREN, Nairobi. Kyokutamba, J., 2002b. Energy Services Among Urban Poor Households in Uganda. AFREPREN, Nairobi. Kyokutamba, J., 2002c (Ed.)., Energy Services for Small Scale Enterprises in Uganda- Proceedings of a National Policy Seminar. AFREPREN, Nairobi. Kyokutamba, J., Country Data for Validation: Uganda. AFREPREN, Nairobi. Mamo, T., Geothermal Exploration in Ethiopia: Ethiopia Country Report presented at the World Geothermal Congress Kyushu, Japan. Document Downloaded from the International Geothermal Association Website Marandu E., 2003: Submission Data for Country Validation, Energy Sector Reform Theme Group. AFREPREN, Nairobi, Kenya. Marandu, E., Country Data for Validation: Tanzania. AFREPREN, Nairobi. Mariita, N., The Socio-Economic and Environmental Impact of Geothermal Energy on the Rural Poor in Kenya. AFREPREN Occasional Paper Number 12. AFREPREN/FED, Nairobi, Kenya. Mengistu, T., 2002., Power Sector Reforms in Ethiopia: Options for Promoting Local Investments in Rural Electrification? Energy Policy, Vol. 30 s , Special Issue Africa: Improving Modern Energy Services for the Poor. Oxford: Elsevier Science Limited Mengistu, T., 2003: Submission Data for Country Validation, Energy Sector Reform Theme Group. AFREPREN, Nairobi, Kenya. Meseret, T., 2003: Overview of Geothermal Resource Utilization and Potential in Eastern and Horn of Africa. Presentation of made at a Conference. EAPIC/EAMIC Conference, Kampala, Uganda. Ministry of Energy and Minerals, /2003 Budget Speech to Tanzanian Parliament by Minister for Energy and Minerals. Ministry of Energy, Draft National Energy: Ministry of Energy, Kenya. Mugadu, E. I., Geothermal Energy in the Development of Uganda, Proceedings of World Geothermal Congress. Kyushu, Japan.. NARC, The Election Manifesto, National Rainbow Coalition. NARC, Nairobi, Kenya. Nyoike, P., Is the Kenyan Electricity Regulatory Board Autonomous? Energy Policy, Vol. 30 s , Special Issue Africa: Improving Modern Energy Services for the Poor. Oxford: Elsevier Science Limited Okumu, D., Electricity Data Submission. AFREPREN, Nairobi. 25

26 UEB 1999: Uganda Electricity Board (UEB) Annual Reports and Accounts. Kampala, Uganda. UIA, Uganda Investment Authority (UIA). Investing in Uganda s Energy Sector. Document downloaded from UIA website, United Nations Development Programme (UNDP), Human Development Indicators. Oxford University Press, New York, USA. Wolde- Ghiorgis, 2002a., Data and Statistics Renewable Energy for Rural Development. AFREPREN/FWD, Nairobi, Kenya. Wolde-Ghiorgis, 2001., Data and Statistics Renewable Energy for Rural Development. AFREPREN/FWD, Nairobi, Kenya. Wolde-Ghiorgis, 2002b., Renewable Energy for Rural Development in Ethiopia: The Case for New Energy Policies and Institutional Reform. Energy Policy, Vol. 30 s , Special Issue Africa: Improving Modern Energy Services for the Poor. Oxford: Elsevier Science Limited World Bank, Operations Evaluation Department. Document downloaded from the World Bank Website. World Bank, 2002a., Poverty Dynamics In Africa- Growth, Distribution and Poverty In Africa. Messages from the 1990s.World Bank, Washington D.C. USA. World Bank, 2002b., World Development Indicators. World Bank, Washington, DC. World Bank, 2002c. African Development Indicators. World Bank, Washington, DC. World Bank, 2003a., World Development Indicators. World Bank, Washington, DC. World Bank, 2003b, African Development Indicators. World Bank, Washington, DC. 26

27 Part III: Potential Contribution of Cogeneration to the Electricity Sector in East and Horn of Africa 27

28 Chapter 1: Status of Cogeneration in Eastern and Horn of Africa 1.1 Overview of Cogeneration Technology Cogeneration is the simultaneous production of electricity and process heat from a single dynamic machine. The machine heats up steam that drives a turbine to produce electricity. Various forms of biomass can be used to fuel this machine including bagasse from sugar industries and wastes from other agro industries like paper and pulp, palm wood and rice. For instance, in the cane milling industries, cane stalks are shredded and crushed to extract cane juice while bagasse is sent to the boiler to provide steam and electricity for the factory. This report focuses mainly on the use of sugarcane waste for cogeneration, although in some cases the use of forest waste-based cogeneration is covered. Broadly, there are two types of cogeneration technology in practice: bottoming cycle and topping cycle cogeneration. In the former, primary heat is used directly at a high temperature for process requirements. The low heat-grade waste heat is then used to generate electricity at low efficiency due to low steam pressure and temperature. On the other hand, in the latter, primary heat at high temperature steam end of the Rankine cycle is used to generate high pressure and high temperature steam and electricity (Quevauvilliers, 2003; Gwang ombe, 2003). There are four technologies for production of process heat and electricity in sugar factories. These are: Back pressure steam turbine, exhausting steam (this is the most commonly used technology) Condensing steam turbine with extraction of steam Combination of any of these steam processes with a gas turbine and a heat recovery steam generator Combination of any of the steam processes with a gas turbine and a heat recovery stream generator with supplementary firing The figure below illustrates the thermal conversion routes of biomass to generate electricity and process heat. Figure 1.1: Thermal conversion routes of biomass BIOMASS STORAGE FUEL PREPARATION COMBUSTION GASIFICATION Source: Twente University THERMAL ENERGY STEAM CHEMICAL ENERGY MECHANICAL POWER PROCESS HEAT ELECTRIC POWER Electricity available from sugar factories and other agro-industries evolve in four stages. First, an agro-firm attains own generation status when electricity from cogeneration is used to supplement or replace supply of electricity from the grid. Secondly, own generation can evolve to intermittent power supply to the grid. Here, excess electricity from cogeneration is available only when capacity permits and can be exported to the national grid. Thirdly, continuous power supply is achieved when electricity is available throughout the year from the agro-industry except during off-crop seasons. Lastly, firm generation status is achieved when commercial generation is available to the national grid on a continuous basis providing an agreed amount of energy and power. During the crop season, the cogeneration plant uses bagasse and other agro-wastes like trash to generate electricity. During the off-crop season, the cogeneration plant can use other fuels such as coal or fossil fuels in order to meet the agreed export of energy (Yuko et al, 2004; Gwang ombe, 2004; Deepchand, 2002) 28

29 Globally, cogeneration technology has been practiced for about a century now. But its intensive application to export electricity to national grids was prompted by, among other factors, the two international oil crises that shook the world in the early and late 1970s, which encourage the shift from electricity generation for selfsufficiency in agro-industries, to generation for export to national grid. In addition, today s competitive world market for sugar and other agro products require business diversification, consequences more agro-industries are considering power export as another by-product of agro processing (Karekezi and Ranja, 1997; Rabah, 2000) The Eastern and Southern African region produces about 50 million tonnes of sugarcane annually (Deepchand, 2000). This is approximately about 60% of Africa s total sugarcane production. It is estimated that sugar factories in the Eastern and Southern African countries have the potential of producing electricity in the range of between 2,500 GWh (continuous power) to 5,500 GWh (firm power) annually (Ibid, 2000). The development of cogeneration in the Mauritian sugar sector provides a model example (Box 1) in the region on the potential of cogeneration in the power sector. As demonstrated by the Mauritius experience, cogeneration can no longer be perceived as an intermittent source of electricity, but can shoulder a significant proportion of the electricity base load. Box 1: Cogeneration in Mauritius. The Mauritian experience in cogeneration is one of the success stories in Africa. As a result of extensive use of co-generation in Mauritius, the country's sugar industry is self-sufficient in electricity and sells excess power to the national grid. In 1998, close to 25% of the country's electricity was generated from sugar industry, largely using bagasse, a by-product of the sugar industry (Deepchand, 2001). By 2002, electricity generation from sugar estates stood at 40% (half of it from bagasse) of the total electricity demand in country (Veragoo, 2003). Government support and involvement has been instrumental in the development of a cogeneration programme in Mauritius. First, in 1985, the Sugar Sector Package Deal Act (1985), was enacted to encourage the production of bagasse for the generation of electricity. The Sugar Industry Efficiency Act (1988) provided tax incentives for investments in the generation of electricity and encouraged small planters to provide bagasse for electricity generation. Three years later, the Bagasse Energy Development Programme (BEDP) for the sugar industry was initiated. In 1994, the Mauritian Government abolished the sugar export duty, an additional incentive to the industry. A year later, foreign exchange controls were removed and the centralization of the sugar industry was accelerated. These measures have resulted in the steady growth of bagasse-based electricity to the country s electricity sector. Bagasse-based Cogeneration development in Mauritius has delivered a number of benefits including reduced dependence on imported oil, diversification in electricity generation and improved efficiency in the power sector in general. Using a wide variety of innovative revenue sharing measures, the co-generation industry has worked closely with the Government of Mauritius to ensure that substantial benefits flow to all key stakeholders of the sugar economy, including the poor smallholder sugar farmer. The equitable revenue sharing policies that are in place in Mauritius provide a model for emulation in ongoing and planned modern biomass energy projects in Africa. Sources: Veragoo, 2003; Deepchand, Although Mauritius does not fall under the East and Horn of African region, it provides a good example of cogeneration model that can be replicated to other countries in the region. Although cogeneration technology accrues a number of possible benefits as demonstrated by the Mauritius example, it has not been used intensively as will be demonstrated later in the report. 1.2 Benefits of Cogeneration Technology Cogeneration technology can minimise the impact of foreign exchange rate fluctuations and world oil prices on electricity tariffs. The Mauritian experience demonstrates that electricity generated from cogeneration can have a fixed and stable price. For example, since 1982, the price of electricity from cogeneration plants has remained the same as per the original power purchase agreement. For about six continuous power plants, 56% of the unit electricity price is fixed (Deepchand, 2000). Secondly, the farmer a benefits from additional revenue from sale of cane trash, as only minimal additional effort is required for harvesting the trash 4. Regional economies need to emulate the Mauritius example where a wide variety of innovative revenue sharing measures have been instated. Here the co-generation industry works closely with the Government to ensure that substantial benefits trickle down to all key stakeholders of the sugar economy, including the poor small-scale sugar cane farmer (Veragoo, 2003; Deepchand, 2002; Yuko et al, 2003). 4 Trash from sugar cane include leaves and cane heads that are currently burnt in sugar cane farms in many countries in the region (Yuko, et al, 2004;Gwang ombe, 2004;Wolde-Ghiorgis, 2004;Baanabe, 2001) 29

30 Thirdly, investment in cogeneration can spur growth in other areas. Other sugarcane by-products such as medicinal and power alcohol, yeast, paper industrial particle boards, and animal fodder require electricity as a major input. Hence availability of lower cost electricity near to the factories can reduce industrial running costs thereby improving the sector profitability (Yuko, et al, 2003) Fourthly, the use of cogeneration reduces carbon emission and green house gases. Boilers and firing equipment used in cogeneration are more efficient than traditional thermal generators that are commonly used in cane milling factories in the region. In addition, sugarcane plants absorbs carbon dioxide during growth. Furthermore, cogeneration can eliminate dumping of bagasse waste as currently practiced in some factories produces methane and other green house gasses (Yuko et al, 2003) Above all, the use of cogeneration technology can save substantial amounts of foreign exchange. This is because cogeneration utilizes locally available resource, bagasse to generate electricity. Regionally, over 5% of total energy used in various economies is imported: either as fossil fuel or ready-to-use electricity to complement national grids (EIU, 2002a, b, c, d; IEA, 2003) 1.3 Status of Cogeneration in East and Horn of Africa As mentioned earlier, cogeneration in many countries of the region is still in its embryonic stages limited to generation for internal factory use only. However, there is significant potential to further develop this technology, especially in the sugar industry. Estimates indicate that a significant portion of the installed electricity generation capacity in the East and Horn of African countries could be met by bagasse-based cogeneration (Table 1.1) Table 1.1: Total Installed Capacity Vs Cogeneration Potential in East and Southern Africa, 2001 Country Installed Capacity Electricity Co generation potential (MW) 2001 generation (GWh) 2001 Electricity generation (GWh) % of national electricity generation Ethiopia 493 1, Kenya 1,194 4, Malawi 306 1, Mauritius 517 1, Sudan 638 2, Tanzania 863 2, Uganda 318 1, Zimbabwe 1,961 7, Total 6,290 23,841 3, Source: AFREPREN, 2003; Deepchand, 2001; Karekezi and Kimani, Using 2001 electricity generation figures, it is estimated that the cogerneration industry could meet 10% of electricity needs of the Eastern and Southern Africa, (Figure 1.2). 30

31 Figure 1.2: Cogeneration Potential (as % of National Generation) Cogeneration Potential (as % of National Generation), Cogeneration Potential as % to Total National Electricity Generation Tanzania Ethiopia Uganda Kenya Country Sources: AFREPREN, 2003; Deepchand, 2001; Karekezi and Kimani, Despite this substantial cogeneration potential, this technology has not fully been developed in the East and Horn of Africa. Table 1.1 below present the current installed cogeneration capacity in the region. Table 1.2: Cogeneration installed capacity in the East and Horn of Africa Country Installed cogeneration capacity (MW) Ethiopia 13.4 Kenya 36.5 Tanzania 35.8 Uganda 10.0 East and Horn of Africa 95.7 Sources: Gwang ombe, 2004; Yuko et al, 2004; Kamese, 2004, Engorait, 2004; Wolde-Ghiorgis, 2004 The following section briefly describes the status of cogeneration in each of the individual countries in the region Uganda In Uganda, there are three sugar factories producing an average of 130,000 tonnes of sugar annually. Kakira sugar factory in the Eastern Uganda has a rated capacity of 3,000 tonnes of cane per day with an installed capacity of 4.5MW of electricity. Kinyara Sugar Works (KSW) with 2,000 tonnes of cane per day has an installed capacity of 2MW, and the Sugar Corporation of Uganda with 2,500 tonnes of cane per day has 4MW installed capacity (Baanabe, 2001). These factories produce electricity from cogeneration to meet most of their internal factory demand. Currently, KSW is negotiating for a power supply agreement with Uganda Electricity Board (UEB) to supply 7.5MW (Kalebbo, 2001; Baanabe, 2001). Table 1.2 below shows the current status of electricity generation from cogeneration and total proposed increment capacities in Uganda. Table 1.2: Current Cogeneration Installed Capacity in Uganda (MW) Sugar Factory Current Cogeneration capacity (MW) Current Cogeneration Installed Capacity as % of total National Capacity (776MW) Kakira Sugar Works (1985) Ltd Sugar Corporation of Uganda Ltd Kinyara Sugar Works Total

32 Source: Kamese,

33 With liberalization and a favourable policy framework, existing sugar factories are planning to double their cogeneration capacity in Uganda (Kamese, 2004) Tanzania The estimated cogeneration potential in Tanzania is over 315 GWh per year. Currently, the country has an installed capacity of MW from both sugar and forest industries. Table 1.3 below present a summary of existing biomass fuelled power plants in Tanzania Table 1.3: Existing Biomass Fuelled Power Plants in Tanzania Name of the plant Current Cogeneration capacity (MW) Current Cogeneration Installed Capacity as % of total National Capacity (863MW) Kilombero Sugar Plant K Kilombero Sugar Plant K Mtibwa Sugar Estate Tanganyika Planting Company Kagera Sugar Company Sao Hill Saw Mill Tanganyika Wattle Company (TANWAT) Total Source: Gwang ombe, 2004 With the exception of TANWAT (Box 2) which exports between 1,400 and 2,100 kva of electricity to TANESCO, the above agro-industries generate electricity primarily for internal factory cogeneration with some limited electrifying of their neighbourhoods (Ariss, 2003; Ngeleja, 2003; Gwang ombe, 2004). Once the envisaged that 10MW condensing turbine will be installed in Sao Hill sawmill, the above existing cogeneration capacity will increase significantly (Libaba, 2004) Kenya Cogeneration technology in Kenya is widely practised in the western part of Kenya where sugar factories use bagasse as a primary fuel. A total of seven (7) companies use cogeneration. Currently, these western Kenya sugar companies produce on average of 1.8million tonnes of bagasse per annum, 60% of which is used as boiler fuel for steam generation, with electricity being generated from surplus steam. The remaining 40% of the bagasse is simply off usually at a cost (Yuko et al, 2003; Rabah, 2000). Table 1.4 below presents a summary of the operations of the western Kenya sugar factories during the year Table 1.4: Current installed capacity of cogeneration plants in Kenya, 2002 Company Current Cogeneration capacity (MW) Current Cogeneration Installed Capacity as % of total National Capacity (1,236MW) Western Muhoroni Nzoia Mumias Chenuilil Sony Total Source: Yuko et al, 2004 Due to various managerial problems, only Mumias Sugar Company among the seven companies is selfsufficient in electricity from cogeneration with a small surplus capacity of 2.5 MW for export to the national grid. The remaining sugar companies are net importers of electricity from the national grid (Rabah, 2000; Yuko et al, 2003; Githinji and Maina, 2003). According to the recent press release, the Ministry of Energy is currently at advanced stages of negotiations with sugar companies and it is hoped that soon the two parties will sign a power purchase agreement (PPA). This step will encourage sugar companies to install larger and more efficient boilers to enable them to fully utilise all bagasse produced; first to ensure self-sufficiency in electricity supply and second to generate surplus electricity for export to the national grid (Omondi, 2004) 33

34 1.3.4 Ethiopia In Ethiopia, bagasse based cogeneration for export of electricity the national grid is not yet practiced. All the existing sugar factories (Metahara, Wonji/Shoa, Finchaa) adequately co-generate electricity to meet internal power needs. Some of the companies, they use electricity from the national utility, the Ethiopian Electric Power Company (EEPCo) for their irrigation, and surrounding residential areas. During crop season, the Finchaa Sugar factory (FSF) located about 335 km away from Addis Ababa, cogenerates electricity not only for internal factory use, but also to power its irrigation systems as well as sorrounding, towns and villages. Currently, FSF generates 5.46 MW both for the plant and outside loads while working at crushing rate of 4,000 TCD (Tonnes of cane per day) and with ethanol plant in full production (with the maximum capacity of 45,000 lts per day) (Worku, 2004). Table 1.5 below presents the current cogeneration installed capacity in Ethiopia from two sugar factories. Table 1.5: Current Cogeneration Installed Capacity in Ethiopia (MW) Factory Current Cogeneration capacity (MW) Current Cogeneration Installed Capacity as % of total National Capacity (493MW) Finchaa Sugar Factory (FSF) Shoa Sugar Factory (SSF) Total Source: Wolde-Ghiorgis,

35 Chapter 2.0 Analysis of the Cogeneration Option: A Regional Approach This section analyses the potential contribution of cogeneration in meeting 5% of the electricity supply in East and Horn of Africa countries. The first section discusses the technical potential of cogeneration in the region. 2.1 Technical Assessment Theoretical Potential Cogeneration potential in the East and Horn of Africa can be examined at two levels: theoretical and actual potential. Table 2.1 below presents theoretical cogeneration potential. This is the total amount of electricity that can be generated if all available sugar bagasse residues were used for electricity generation. Table 2.1 Theoretical Cogeneration Potential in the East and Horn of Africa, 2001 Country Total residue available for cogeneration (tons) Electricity potential (MW) 5 National Installed Capacity MW Tanzania 16,100, Kenya 14,300, Uganda* 1,707, Ethiopia 17,500, *Quantified residue from sugar cane factories only Sources: Yuko et al, 2003; Gwang ombe, 2003; Worku, 2003; Baanabe, 2001; Engorait, 2004 Cogeneration Potential as a %age Installed Capacity According to various country studies conducted in the region, the East and Horn of Africa has two major sources of agro residue: forest and sugarcane. According to Gwang ombe (2004), sugar industries in Tanzania, can contribute to about 20% of the current national generating capacity. In addition, the country is well endowed with forest resource that can further add to the available potential from the sugar industry. Nationally, there is a woody growing stock of about 4.39billion m 3 with mean annual increment of 140 million m 3 in Tanzania. Hence, hypothetically, for biomass residue, there exists about 15 million tons/annum of crop residue and 1.1 million tons/ annum of forest residue available to fuel co generators (Gwang ombe, 2004) The positive performance of both TANWAT (Box 2) and Saohill forest cogeneration plants over the years ( about seven years) is a clear indication that forest based cogeneration can make a significant contribution to national power needs (Ngeleja, 2003; Harris, 2003). According to a preliminary study compiled (in the northwest of Tanzania) by RIPLY (Tanzania) Ltd, 2001, there is enough waste for a 4.5MW forest cogeneration plant at division 3 of Saohill forest plantation. Both Buhindi and Rubya forest plantations around Lake Victoria have sufficient wood waste to generate about 2MW. Rondo and Ukaguru have access to ample land to plant fast growing trees for about 2MW-electricity cogeneration plants. It is anticipated that agro residue potential available for cogeneration will increase as more studies are conducted (Ngeleja, 2003). Box 2: Tanzania Wood Project Tanzania s forest resources cover about 33.6 million ha, most of which are miombo type woodland. Tanganyika Wattle Company (TANWAT) a private company has the largest forest plantations in the country of about 15,000 ha. The forest estate comprises of 8,000ha of wattle trees, 4,000ha pine trees and 1,000ha eucalyptus trees. Founded in 1949, TANWAT operates a 2,500kWh biomass fired power station at its factory site situated near Njombe town in the southern highlands of Tanzania. The station generates GWh; with 41,687tons of biomass burned. The station was commissioned in 1995 (Ariss, 2003; Ngeleja, 2003) The TANWAT power station provides sufficient power to meet various needs of the company i.e. the wattle factory, sawmill and timber treatment plant including associated offices and housing. In addition, the surplus power produced is made available to a neighboring tea estate and the rest sold to TANESCO. Currently, the maximum power supplied from TANWAT to TANESCO varies between 1,400 and 2,100 kva. In the year 2002, the station supplied GWh of electricity to the national utility, TANESCO (Ariss, 2003) Sources: Ngeleja, 2003; Ariss, tonne yields 100kWh. To convert electricity from kwh to MW the following conversion formula was used: 1000kWh=1MWh 1GWh/(0.85*X200**X24***)=GW key *Systems losses estimated at 15% **Crop session ranges between 6 and 8 months in a year (roughly an average of 200 days) ***It is assumed that the cogeneration plant is operates the whole day (24hrs) 35

36 Currently, sugar industries based residue available for electricity cogeneration in Kenya is estimated at 1.8millions tones annually. Out of this annually available residue, only 60% is used as a boiler fuel for steam and partly for electricity generation. The rest, 40% is disposed off at times at a cost usually borne by the sugar factory (Githinji and Maina, 2003; Yuko et al, 2003; Rabah, 2000). In Uganda, there are three sugar factories that produce an average of 455,000 tonnes of bagasse annually after processing sugar. These are: Kakira Sugar Works in Eastern Uganda, Sugar Corporation of Uganda, and Kinyara Sugar Works. Despite the enormous biomass available in the country, Uganda s total cogeneration potential from agro-residue is not known. There are several biomass-based industries that would have played an important role in cogeneration; especially the wood, tea and coffee industries, but their potential is not known. Currently, cogeneration is only carried out in the three industries; even for these industries, little is known about their full cogeneration potential (Baanabe, 2001; Kamese, 2004). Ethiopia generates between 15 and 20million tonnes of residue annually. Assuming that this entire residue is made available for electricity generation, the country is capable of generating 1,750 GWh per year (Wolde- Ghiorgis, 2003; Worku, 2004). Since not all available agro wastes in the country is used for cogeneration due to technical inefficiency, poor collection of wastes among other factors, the following section discusses actual technical potential that considers only agro wastes that can be viably collected and made available for electricity generation purposes Technical Cogeneration Potential Most of the regional sugar factories tend to use small bagasse-fired back-pressure steam- Rankine cycle turbine systems supplied with steam at MPa, typically about kg steam, with low electricity generation of between 15-25kWh/ton of cane milled. The system is made inefficient on purpose to ensure that all bagasse is consumed to meet factory energy demands, and no excess bagasse is accumulated (Gwang ombe, 2004; Yuko, et al, 2003) Table 2.2 below provides a summary on the current status of cogeneration in the East and Horn of Africa Table 2.2: Country Current status of Cogeneration in East and Horn of Africa Total Potential for Current cogeneration Cogeneration potential Cogeneration: Energy installed capacity as a percentage of total (MW) 2001 (MW) installed electricity Current cogeneration installed capacity as % of total potential generation capacity Tanzania* Kenya Uganda * Ethiopia Key *Quantified residue from sugar cane factories only Source: AFREPREN, 2003 As shown in the table above, technical cogeneration potential available in the region is well above 5%. This shows that if well-harnessed, available potential is capable of meeting the overall 5% target of electricity supply without considering other renewable energy sources. 2.2 Economic Assessment Investment costs Theoretical and actual electricity potential to be generated from cogeneration technology might not materialize unless the relevant costs involved have been appraised to determine their financial viability. In any economy, this is influenced by various factors that include, host country s political and macro-economic environment, legal and regulatory framework, the power sector structure of the country, and the rate of return on investment. As stated earlier, there are various cogeneration technology possibilities available for adoption for electricity generation purposes. Table 2.3 The following presents a summary of gross investment costs required to meet the 5% target for countries in the East and Horn of Africa. Depending on the technology used, investment costs range between US$26 million and US$217million to achieve the 5% target of total electricity generation (Gwang ombe, 2004). 36

37 Table 2.3: Estimated cost of Cogeneration Investment to Meet 5% Electricity Generation Target Country Total installed electricity generating capacity (MW) Installed capacity required to meet 5% target (p.a.) (MW) Investment Cost (millions of US$)* Tanzania Kenya 1, Uganda Ethiopia Key *Investment costs for cogeneration ranges from 1,600USD/kW and 3,500USD/kW (Gwang ombe, 2004; Deepchand, 2001) Sources: Authors compilation The investment requirements reflected in the table above is not conclusive due to a number of inherent costs that it omits. These cost estimates reflect only the capital costs for the equipment that is required to be installed in order to meet the 5% electricity generation target. First, it does not include training costs to obtain the relevant skill and expertise incase the cogeneration option to be adopted is not currently used in a particular sugar factory. Secondly, the investment costs here do not include the costs of expanding sugar plantations to ensure sufficient cane supply to cogeneration plants. Currently, most sugar milling factories incur unnecessary cost in the transportation and disposal of excess bagasse. For instance, in Uganda, it costs up to 5US$/ton to transport bagasse waste for disposal (Kalebbo, 2001). If such costs are saved, they would be used to reduce some of the factory upgrading costs required to generate electricity for export toe grid. Due to poor corporate performance of most of the sugar factories in the region, internal financing might not be possible as a result of poor financial performance. However, many of the sugar companies are undergoing radical reform which could lead to greater profitability in the near future thus providing a sound financial base for cogeneration investment. This leaves them with the option of sourcing funds for external finances. The funds can be acquired as loans from local financial institutions as the funds seem to be modest and affordable by regional economies Energy and Foreign Exchange Savings Countries in the region rely on scarce convertible currency reserves to procure energy resources. Financial reserves are needed for either installing new electricity generating plants or importing fossil fuels or electricity from other countries. Cogeneration, which utilizes locally available resource, bagasse, can assist in reducing the use of scarce convertible currencies required for energy. The use of cogeneration would significantly reduce the need to import fossil fuels. Tables 2.4 and 2.5 present a summary of expected electricity and fossil fuel import savings that could be realized through the wide scale use of cogeneration option in Tanzania and Kenya for the year

38 As mentioned earlier, all oil/petroleum products consumed in the East and Horn of Africa are imported as these countries do not have commercial deposits that can be economically used. Unfortunately, fossil fuel account for over 70% of commercial energy used in the region. As shown in the previous table the use of agro-waste basedcogeneration could reduce fossil fuels used in power generation by close to 10%. Economies in the East and Horn of Africa can save significant amounts of foreign exchange if they can revert to cogeneration. In effect, this would reduce energy import bills mostly fossil fuel and electricity discussed earlier. Through the multiplier effect, the savings made can be used to develop other sectors and the general welfare of the economy. For instance, in 2002 the Kenyan exchequer used approximately Ksh.40 billion to import 2.37 million tonnes of crude petroleum and fuels, including lubricants. This accounted for 31.4% of the total merchandise export earnings net of oil export (Karekezi and Ranja, 1997; Wandera, ). These funds could have been used in developing other sectors e.g. health, water, education and agriculture. 2.3 Linkages: Cogeneration and other Sectors in the Economy Agriculture According to Deepchand (2001), cogeneration of bagasse energy in Mauritius on a commercial basis is a winwin situation for all stakeholders in the sugar industry. The co generator secures an additional stream, revenue, 60% of which is tax exempt and initial allowances thereto. In addition, the cogenerator is entitled to a share of 50% of the BTPF on a pro rata basis, with respect to the cogenerators electricity export. On the other hand, the agricultural and non-agricultural workers of the sugar factories and estates as well as their respective staff, and the employees of the parastatal organizations dealing with the sugar industry all benefit from increased returns arising from the export of co generated electricity (Gboney, 2003). The main negative agricultural impacts from trash and agro-waste collection include loss of cane field due to additional soil compaction caused by trash recovery operations, increased cost of farm inputs (fertilizer application), soil erosion and loss of soil quality due to reduced nutrient recycling. To abate these negative impacts in the agricultural sector, it is advisable for cane out growers and factory plantations to practice crop rotation (Macedo et al, 2001; Karekezi and Ranja, 1997) and other ecological practices that minimise the use of pesticides and fertilizers Health A significant proportion of the population lack proper health care due to absence of electricity in remote areas. Cogeneration together with other renewable energy technologies in decentralized minigrids can be used by the rural health clinics for lighting and vaccine refrigeration. This can reduce child and maternal mortality due to increased immunization coverage. 6 Media information need to be treated with care until crosschecked with various source authorities. KenGen gets Grant by el Wandera. Nation Media Group, Thursday, March 11,

39 2.3.3 Education Like health clinics, most of the rural off-grid schools do not have electricity. These schools could benefit from reliable electricity from cogeneration plants. Modern benefits from electricity will not only attract more students and improve student performance, but will also retain quality teachers and staff currently unwilling to be posted in the un-electrified areas. In the evenings, the school facilities can be utilized for other social services such as adult education, health education or recreational activities Environment Increased electricity generation in sugar factories has a positive environmental impact. It would reduce greenhouse gases, emissions. For example in Mauritius, the impact of bagasse energy projects on the environment have been quantified; in the short term, the bagasse projects avoided the use of 215,000 tonnes of coal, the emission of 650,000 tonnes of CO 2 and the generation of 35,000 tonnes of coal ash. In the long term, the figures will be 375,000 tonnes of coal, 1,130,000 tonnes of CO 2 and 60,000 tonnes of coal ash when the target of 110kWh per a tonne of cane in energy will be achieved (Deepchand, 2001). The wider use of cogeneration in East and Horn of African countries could yield significant environmental benefits. 2.4 Opportunity Cost of the Cogeneration Option In business, opportunity cost refers to the cost of the best forgone alternative. In this section, we will the opportunity cost of investing in cogeneration rather to large scale hydro electricity generating units to supplement available power from the national grid national grid. As we will see, investment in cogeneration units looks more attractive and worth considering in the East and Horn of African than promoting/relying on large scale hydro. According to Karekezi and Kimani, (2003), benefits from cogeneration option make it attractive for adoption in the East and Horn of Africa. Firstly, large scale hydro stations are not linked to the incremental growth in demand of the power sector. This could lead to over-capacity in generation, which is expensive for the economy. Cogeneration is, on the other hand, well suited to match the annual incremental growth in demand as they are modular in nature, which is usually relatively modest (less than 20 MW per year in many Eastern and Southern African countries). Secondly, large scale hydro development is generally a high-tech endeavour, which requires heavy capital investment, both of which effectively dissuades local investors. For instance, during the power crisis of 2000 in Kenya prompted by the drought which adversely affected large scale hydro, it prompted the government to expensively import diesel generators to bridge the electricity demand gap created by drought that affected HEPs. In contrast, cogeneration plant on the other hand, involves technology that can easily be locally managed. In addition, the capital requirements are modest as they are an integral part of the agro-industries. Furthermore, acquiring modern cogeneration equipments means entire refurbishment of the agro-industry for higher productivity of the primary product. Thirdly, large-scale capital-intensive thermal/diesel-based IPP developments invariably attract the politically connected rent-seeking class. The controversial coal-based IPP deals in Zimbabwe involving YTL and in Tanzania involving IPTL are classical examples of the disarray that the rent-seeking class can cause. There is, therefore, a case to examine smaller IPPs, such as cogeneration plants, which are less capital intensive and provide ideal entry points for local participation in a privatised electricity industry. In many African countries, power sector reforms appear to have alienated local private investment in the power sector. Current trends indicate that, in the medium-term, the exit of the state from the electricity industry would effectively hand over the entire electricity industry to non-national operators. In the long-term, this is likely to be an unsustainable arrangement. Without significant local involvement, it is possible that reforms may be reversed in the future mainly because there would be no significant local stakeholder group. In addition, a well thought-through strategy for local participation could provide the basis for developing sophisticated local cogeneration industry. The amendments of the Electricity Act, a direct result of power sector reforms, have created opportunities for the establishment of independent power distributors (IPDs). Although cogenerators are reluctant to venture into the electricity distribution business (for the simple reason that electricity generation is what they do best), there are opportunities for bulk sale of electricity to IPDs for onward retailing. This could lead to the establishment of mini-grids that would provide electricity to the rural population, in the sugar belts, that the national utilities have 39

40 failed to reach. The low-tech and modest capital requirements of mini-grids could provide an ideal entry point for local involvement in the power sector. The drought that affected the majority of the hydro-dependent Eastern and Southern African countries, during the period, served as a wake-up call for urgent diversification of the region s sources of electricity generation. In Kenya, for example, the negative impact of the drought forced the Kenya Power and Lighting Company to agree to purchase 2.5 MW of surplus power from Mumias Sugar Company. This sugar company and others in the sugar belt had, in previous years, failed to persuade the utility to buy their surplus power. It should, however, be noted that drought could also affect cogeneration, due to reduced sugarcane yield. Diversification of sources would only work, if the cogeneration industry were not located in the same climatic zones as the hydro power station. This is the case in Kenya. 40

41 Chapter 3.0 Key Conclusions 3.1 Technical viability This study has demonstrated that achieving 5% from cogeneration is viable, based on the theoretical potential. Table 3.1 presents a summary of technical viability assessment of the cogeneration technology in the East and Horn of Africa Table 3.1 Technical viability assessment of cogeneration in the East and Horn of Africa Country Installed Capacity Cogeneration 5% Viable (MW) Potential (MW) Tanzania* Kenya 1, Uganda* Ethiopia Key *Quantified residue from sugar factories only Sources: Gwang ombe, 2004; Yuko et al, 2004; Kamese, 2004, Engorait, 2004; Wolde-Ghiorgis, 2004 From the table, technically available cogeneration potential is higher than the 5% target. indicating that cogeneration option is viable in the short run. Table 3.2 present the details of technical viability in depth Table 3.2 Technical Viability of Meeting the 5% Electricity Target From Cogeneration Country Installed capacity required to meet 5% target (p.a.) (MW) Current installed capacity from Cogeneration (MW) Balance required to meet the 5% Target of national generating capacity Tanzania Kenya Uganda Ethiopia Source: AFREPREN, 2003; Yuko, 2004; Kamese, 2004; Gwang ombe, 2004 % Balance required to meet the 5% Target of national generating capacity As shown in previous table 3.2, based on the current installed cogeneration capacity countries in the region only need to obtain less than one half of the current installed capacity so as to achieve the 5% target. This however does not include the internal power requirements for the agro-industries. Therefore, there is need to set a higher electricity installation target to first achieve internal self-sufficiency before exporting the surplus to the national grid. From various country study findings discussed in chapter 3, technically the 5% target seems feasible. Logically, technical potential can be assessed in three ways: waste potential, skill and expertise and requisite technology in agro- processing industries Waste availability/potential Sugar cane trash that can be available for cogeneration include tops, leaves and bagasse. Usually, tops and leaves are left in the sugarcane fields like manure whereas bagasse is the by-product available after shredding the cane. The amount of trash in the cane depends on the cane variety, age, soil and weather conditions. Three of the most extensively planted varieties include SP , SP , and RB72454 that can be harvested at three stages: 1st, 3rd and 5th. Table 3.3 below presents average sample results for sugarcane waste (tops, dry and green leaves) as the supplementary fuel to increase the power -generating capacity of sugar mills 41

42 Table 3.3: Sample Results From Various Sugar Cane Varieties Variety Stage of cut Productivity in stalks (t/ha) Dry trash (t/ha) Trash/stalk ratio (%) SP st * rd th SP st * rd th RB st * rd th Average * year-and -half old cane Source: Macedo etal, This approach of using sugar cane trash is aimed at implementing projects of large conventional cogeneration systems in the mills fuelled only with sugar-cane residues. In the East and Horn of Africa, cogeneration of electricity from sugarcane waste is only available between 6 and 9 months during any calendar year. In addition, sugar production largely depends on rain fed production. This prompts electricity distribution utilities to charge higher tariffs in order to cater for the off-crop season when the agro-industries do not generate electricity. This is a barrier that needs to be addressed in order make cogeneration an attractive option. However, significant amount of electricity can be generated during this period from irrigated plantations and this can minimise the use of costly electricity generation using fossil fuels thermal power plants. Countries of the East and Horn of Africa can emulate the irrigation option that has been practiced and proved successful in other countries such as Malawi, Zambia, Zimbabwe and Sudan (Karekezi and Ranja, 1997; Deepchand, 2001) Harvesting and cane recovery in the East and Horn of Africa is not technologically advanced due to the lack of mechanized harvesting methods practiced in other regions of the world. This includes the use of whole cane harvesters and chopped cane harvesters. Cane stocks are harvested manually before being loaded to the waiting trucks for haulage (See Figure 3.1 below). In addition, from the country study findings, most of cane out growers are small scale holders who do not have reliable access to appropriate farm inputs to augment their farm output to increase trash availability. This is due to lack of access to appropriate credit financing mechanisms. Above all, cogeneration initiatives are not centralized resulting in failures to capture the benefits from largescale operations. Figure 3.1 Current Inefficient Cane Harvesting and Haulage Method in the East and Horn of Africa 42