Expansion of geothermal project

Transcription

1 MOEJ/GEC JCM Feasibility Study (FS) 2013 Final Report Expansion of geothermal project (implemented by PricewaterhouseCoopers Co., Ltd.) Study partners Project site Category of project Description of project JCM Eligibility methodology criteria Default values Calculation of reference emissions West Japan Engineering Consultants, Inc. Pricewaterhouce Coopers Kenya Olkaria region in Kenya Renewable Energy This study targets the geothermal project in Olkaria region in Kenya. Development plans are underway to construct a total of 560 MW geothermal projects by 2018 (Hereafter referred to as "Olkaria 560 MW Project.").This study assesses the applicability of the JCM to this geothermal project, develops a MRV methodology in the geothermal projects in Kenya, and prepare a draft PDD. The amount of GHG reduction calculated in this study can be obtained from the difference of GHG emissions between the conventional energy replaced by geothermal power generation and after the operation of the geothermal power generation plant starts. Eligibility criteria 1: The project to be a new installation with capacity addition of geothermal power generation located in Kenya. Eligibility requirement 2 Electric power to be supplied to the Kenyan national grid. The emission factor used in generating the reference emissions in this methodology calculates a combined margin (CM) using the operating margin (OM) and build margin (BM). In order to establish the reference emissions conservatively, the default value of BM of the emission factors shall be utilized In setting the default value, the emission factor estimated in the Kenyan power development plans and the emission factor calculated by the grid emission factor tool applied in CDM shall be compared and the lower value shall be applied. The reference emissions shall be calculated with GHG emitted from power plants connected to the grid. The first reason for this assumption is that, the power plants under this feasibility study must be connected to the grid and supply electricity to the grid. The second, geothermal power generation shall supply the electricity to the grid as a base load with the priority over the other power plants

2 Monitoring method which are mainly thermal power plants. The calculation of the reference emissions uses the grid emission factor calculation tool of CDM. Item GHG frequency method Sampling place Fugitive CO 2 Every Using ASTM At the steam field-power plant emissions of three E a or interface (Sampling at production NCG months a similar wells basis is optional.) contained in technique geothermal CH 4 Every Using ASTM At the steam field-power plant steam three E a or interface (Sampling at production months a similar wells basis is optional.) technique Combustion CO 2 Once a Fuel meter Generator installed place of fossil fuels year for electricity generation GHG emissions and [Assumption] reductions The assumption of calculation, it was assumed that all capacities of 560 MW of the power plants under study are introduced. In addition, the default value calculated in the MRV methodology is applied and for the ex post items, the conservative values is set based on the values described in the PDD and monitoring report of the most recent geothermal power generation CDM project in Kenya. [Estimated GHG emission reductions] GHG emission reductions = 2,242,134 tco2 Environmental impacts According to the PDD of the Olkaria I/IV CDM project, an environmental impact assessment was conducted in accordance with the Kenyan law and the international guidelines of the World Bank and other international institutions.. In these assessments, a study was conducted from the perspective of emission of gases, noise during the construction, water circulation, waste water, and impacts on residents. It is anticipated that the environmental impacts to be temporary and low and at an acceptable level. Consequently, the same type of study is expected to be conducted on the environmental impact assessment of this project. Project plan According to the Kenyan electric power development plan to MW Plan (2013), the operation in the Olkaria Well Head project will start in June 2014, and Olkaria I Unit 6 is planned to start the operation in June 2016 and Olkaria VI in December Steam produced from underground for geothermal power generation contains impurities, such as heavy metals and corrosive gases, and Japanese turbine

3 Promotion of Japanese technologies Sustainable development in host country manufacturers leads the world in both technology and knowhow to manufacture corrosion resistant turbines. Furthermore, the first geothermal power generator introduced to Kenya was manufactured by Mitsubishi Heavy Industries and generators from Toshiba are installed in Olkaria I and Olkaria IV, which are planned to start the operation in The track records of Japanese manufacturers are highly valued in the geothermal sector in Kenya and Japanese products are expected to be widely introduced in the future. In the global geothermal power market, Japanese manufacturers, Mitsubishi Heavy Industries, Toshiba, and Fuji Electric, have dominant shares in flash type. In addition, steams produced from underground for geothermal power generation contain impurities, such as heavy metals and corrosive gases, and Japanese turbine manufacturers are significantly leading the world in both technology and knowhow to manufacture turbines excellent in corrosion resistance. Kenya is expected to transform its current power supply system heavily depending on large hydropower plants, which is vulnerable to climate change, into the system resilient to the climate change. Through this transformation of the power supply system, it is expected that the power supply be reinforced and enable to reach off-grid unelectrified areas and the energy security can be strengthened without depending on foreign energy sources. Also the development of the geothermal industry in Kenya and the contribution to the development of the industries (such as the cultivation of flowers using the waste heat of geothermal power generation) around the Olkaria area are also anticipated.

4 JCM Feasibility Study (FS) 2013 Expansion of geothermal project (Host country: Kenya) Study Entity: PricewaterhouseCoopers 1.Study Implementation Scheme Country Entity Engaged in the Study Role Japan West Japan Engineering Consulting Inc. Technical advisory on geothermal power generation Host country PricewaterhouceCoopers Kenya Site information gathering 2.Overview of Proposed JCM Project (1) Description of Project Contents: This study targets the geothermal project in Olkaria region in Kenya. Development plans are underway to construct a total of 560 MW geothermal projects by (Hereafter referred to as "Olkaria 560 MW Project.") This study assesses the applicability of the JCM to this geothermal project, develops a MRV methodology in the geothermal projects in Kenya, and prepare a draft PDD. The amount of GHG reduction calculated in this study can be obtained from the difference of GHG emissions between the conventional energy replaced by geothermal power generation and after the operation of the geothermal power generation plant starts. (2) Situations of Host Country: Kenya is currently supplies more than 50% of its electric power from hydro power sources. However, since their output is unstable under the effect of climate changes, the cost of high consumption of fossil fuel for conventional thermal power plants has resulted in the rise in the power cost. The geothermal power generation, which has a potential to supply around 5,000 MW in Kenya, is regarded as a promising stable base load power supply that will substitute hydropower vulnerable to climate changes. As one of the pillars of the long-term policy on climate changes, the Kenya Climate Change Action Plan KCCAP has been set out in March 2013, which defines the measures taken in some key areas until 2030 to tackles climate changes. The power sector, which is one of the eight major sectors, is regarded as most important sector together with the forestry sector. As a part of climate change measures, Kenya has been promoting the CDM since projects, including four geothermal have been registered. However, CER was issued only once as of November 1, This result indicates that Kenyan parties were not able to enjoy the fruit of CDM, despite their active in the market. 3. Study Contents (1) JCM methodology development 1 Eligibility criteria The eligibility criteria set by the MRV methodology are as follows: <1>

5 Eligibility criteria Eligibility criteria 1 Description The project activity is the installation or expansion of a geothermal power plant at Kenya. Eligibility criteria 2 Net electricity generated by the project activity is delivered to Kenyan national grid system The following three points are cited as the points of the eligibility criterias: Whether geothermal power generation contributes to CO 2 emission reduction Whether the JCM project matches the geothermal power generation development plan in Kenya in the future Whether the Japanese technological superiorities can be reflected Geothermal power generation emit less CO2 per electric power in comparison with the power sources using fossil fuel 1 and results in the reduction of the CO 2 emissions of the overall grids by replacing power plants using fossil fuel by electric power produced by geothermal power generation. These facts were incorporated into both eligibility criteria 1 and 2. The project activities define a series of activities that electricity is generated by geothermal power generation and supplied to the grid. For the second point, consultation with the Ministry of Energy and Mineral Development and Geothermal Development Company (GDC) of Kenya were conducted and the content of the future power development plan was confirmed. According to the Least Cost Power Development Plan (hereafter referred to as LCPDP) 2, an electric power development plan for the next 20 years, and 5000+MW by 2016 Power to Transform in Kenya (hereafter referred to as 5000+MW Plan), a plan for the next 40 months, both the conventional power generation form in which steam is collected at power plants to generate electric power and a power generation form (wellhead power generation) in which a compact geothermal power generator is installed on a production well basis have been considered. Accordingly this methodology is intended to be applied to a wide range of the scale of power generation capacity without specifying the scale of the project. As the third point, we investigated the technological advantages of the Japanese manufacturers, the status of the project developments in Kenya, and the projected electric power supply in the future to incorporate the performance of the equipment used for geothermal power generation. The Japanese manufacturers share in the geothermal turbine market in the world is approx. 70% and the Japanese heavy electric equipment manufacturers (Toshiba, Mitsubishi Heavy Industry, and Fuji Electric) have significant competitive advantages in the market.. We studied two options: power generation systems and stable operations as the eligibility criterias by which the technological strength of the Japanese manufacturers can be assessed objectively and quantitatively. Type of power station The Japanese companies have technological superiority in the flash steam system. The presence of manufacturers that manufacture large, Ultra-Supercritical steam turbines to compact turbines is limited to Japanese companies. Geothermal turbines are positioned on an extension line of low-pressure turbines of 1 From IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation, Summary for Policy Makers (2011) URL: 2 URL: <2>

6 thermal power generation turbines from a technical viewpoint and the Japanese companies occupy a large share in geothermal power generation for flash power generation. In contrast, in binary cycle power generation, Ormat Technologies presently has dominant share in the world. However, Japanese companies also participate in the field of the binary cycle power generation. Fuji Electric also put their energy into the binary cycle power generation and has been expanding the business area of binary cycle such as commercialization of 2-MW standard generation systems, etc. In addition, companies other than the indicated above, heavy electric equipment manufacturers such as compressor manufacturers (Kobe Steel, Kawasaki Heavy Industries, IHI, etc.) have been aiming to take business opportunities. Currently, Ormat Technologies has been enjoying an exclusive market share in the world; the Japanese manufacturers have also been aiming to expand their business in the binary cycle in the future. Limitation of the eligibility criteria only to the flash steam system criteria may narrow the potential for future application of JCM in the type of geothermal power generation which a Japanese company may enter and may limit the potential to contribute to the wider application of Japan s low-carbon technology. Stable operations The stable operation of the geothermal plants is regarded as the strength of Japanese generators and turbines, in comparison with other countries similar technologies. The Ministry of Energy and Petroleum of Kenya also highly values the superior reliability of the Japanese geothermal power generation equipment introduced in 1980s which has been operating which shows high performance stably and the study investigated the possibility of including this point into the eligibility criterias. Objective assessment of, the application of the Japanese- equipment and the degree of the level of capacity factor for the projects registered as CDM were conducted. PDDs and monitoring reports were investigated to compare the results of the load factor. Out of 29 geothermal CDM projects in the world, manufacturer s names were identified in 20 cases and 14 cases are equipment of Japanese turbines and 12 cases with Japanese generators. Out of five cases (Japanese makers) where the results of the load factor have been publicized in the monitoring reports, four projects exceeded the estimated values specified in PDD. Although examples of the other countries technologies and available information are limited, the Japanese-built equipment has been delivering higher performance than initially estimated. However, geothermal power generation is influenced by various factors such as the stability of underground steam and an operation of the plants (comment from West Japan Engineering Consultants, Inc.); it cannot be stated that the Japanese technologies always achieve the capacity factor better than initially estimated. As to the Availability excluding scheduled maintenance, etc, the candidates can be narrowed down with the prerequisite to fulfil the conditions such as equipment with the track record of achieving an operating rate of XX% in most recent XX years. However, some attentions needs to be considered in the future in relation to the binary system without a robust track records of the Japanese technological In summary, a variety of types of geothermal power technologies are studied in in Kenya and that the Japanese companies can provide various options which fulfils the local needs,. The eligibility criterias shall not restrict technical aspects and leaving the room for JCM to be applied to a wide range of forms in the future. <3>

7 b. Data and parameters fixed ex ante To set the reference emissions conservatively, a default value is utilized in the calculation of build margin (BM value) in the grid emission factors. If a certain period of the same grid is targeted, the same default value can be shared between projects formed within a same period and by pre-setting the value in advance, a burden of calculating the emission factor individually can be avoided.. The default value of BM is set as follows: EFgrid,BM,y = (tco 2 /MWh) Two criterias for the calculation of BM, Kenya s electric power development plan (5000+MW Plan) and CDM s emission factor calculation tool were compared and evaluated as follows Scenario 1: Kenya s electric power development plan [Detail description] Following the consultation with the Ministry of Energy and Mineral Development of Kenya, the 5000+MW Plan was selected as one of the two scenarios to properly assess the future state of power sector. In this plan, the size of electric power generation in Kenya is estimated to increase by approx. 5,000 MW from The newly introduced plants include 960 MW coal-fired thermal power generation, 1,050 MW LNG thermal power generation, and 1,600 MW geothermal power plants by the end of For KCCAP, the long-term climate change action plan in Kenya, LCPDP formulated by the Ministry of Energy and Mineral Development and a scenario of constraints in the external capital were considered have been assumed. However, KCCAP assumes the same plan as the electric power development plan up to 2017 and it is regarded as the same plan as the contents of 5000+MW Plan. [Emission factor and Calculation method] The emission factor for Kenya s electric power development plan in scenario 1 results in (tco2/mwh). The types of power plants, the amount of power generation, and emissions in this scenario are as shown below: <4>

8 [Table Overview of Power Plants in Scenario 1] Types of power plants Capacity Power generation Emission factor* GHG emissions (Except for CDM cases) (MW) amount* (tco2/mwh) (tco2/year) (MWh/year) Go-generation (bagasse) 18 63, Geothermal 1,000 6,307, Wind power , Thermal (diesel) , ,363 Thermal (LNG) 1,050 4,231, ,898,908 Thermal (coal) 1,920 10,764, ,164,714 Total 22,952,602-11,530,987 Source: Created by us based on the 5000+MW Plan and KCCAP * The amount of power generation is calculated based on the capacity factor used as precondition in predicting the GHG emissions in the electric power field in KCCAP. The emission factor also uses those set in KCCAP. Formula: Emission factor in Scenario 1 = 11,530,987 (tco2e/year) / 22,952,602 (MWh/year) = (tco2/mwh) Scenario 2:Grid emission factor calculation tool in CDM [Description] Second scenario to properly assess the future state of power sector is, a scenario based on the CDM s Tool to calculate the emission factor for an electricity system, version 03 (hereafter referred to as the grid emission factor calculation tool ). The higher of two, weighted average of 20% of recently constructed power plants or the weighted average of emission factor in which the emission factors of five most recently constructed power plants is regarded as an estimated scenario. [Emission factor and calculation method] The emission factor in Kenya s electric power development plant in scenario 2 resulted in (tco2/mwh). The types of power plants, the amount of power generation, and emissions in this scenario are as shown below. We used the power generation data from July 2012 to June 2013 received from KPLC and the data of fuel consumption per power generation amount 3 calculated by Energy Regulatory Commission in Kenya. The target power plants are as shown below: 3 ERC Gazette notice Energy Act No of 12& Kenya Power Document 'Generating Plants- Capacity and Commissioning Dates' <5>

9 Power plants Fuels in use Comission year Power generation (MWh/year) GHG emissions (tco2/year) AGGREKO (Embakasi) Thermal (diesel) ,284,390 23,861,739 AGGREKO (Muhoroni) Thermal (diesel) ,802, ,702,967 Sangoro Hydraulic ,000,000 0 Well head Units Geothemral ,784,190 0 Eburru Geothemral ,199,842 0 Kipevu Diesel 3 Thermal (hevy oil) ,728, ,388,669 Imenti tea Hydraulic ,680 0 Ngong Wind power ,916,800 0 Iberafrica 2 Thermal (hevy oil) ,032, ,893,385 Rabai Thermal (diesel) ,067, ,478,050 Sondu Miriu Hydraulic ,000,000 0 Total 1,865,511, ,324,670 Emission factor in scenario 2 = 1,865,511,672 (tco2/year) / 837,324,810 (MWh/year) = (tco2/mwh) In consideration of the result of two scenarios above, (tco2/mwh) calculated by CDM s emission factor calculation tool which is lower than the emission factor of Kenya s electric power development plan (scenario 1) is set as the default value of the BM value to in conservative manner EFgrid,BM,y = 1,865,511,672 / 810,324,670 = (tco2/mwh) c. Calculation of GHG emissions (including reference and project emissions) 1) Calculation method of project emissions The emission of CO 2 and methane (CH 4 ) associated with the generation of geothermal steam is considered. Circulation of hot water or condensate to the underground after heat utilization or the use of low-temperature water as in the binary power generation system is not considered. [Formula] PE OE.y = M s.y.y main.co2 +W main.ch4 ain CH4 ) M s.y : annual amount of steam generation (ton/year) W main.co2 : mass fraction of CO 2 contained in generated steam (tco 2 /ton) W main.ch4 : mass fraction of methane contained in generated steam (tco 2 /ton) GWP CH4 : global-warming factor of methane (default = 21) In the project, monitoring is conducted as follows: <6>

10 [Table Project Emission Sources of Geothermal Power Generation] Emission source GHG Sampling Sampling method Sampling place frequency Fugitive emissions of CO 2 Every three Using ASTM E a At the steam field-power plant NCG contained in months or a similar technique interface (Sampling at geothermal steam production wells basis is optional.) CH 4 Every three Using ASTM E a At the steam field-power plant months or a similar technique interface (Sampling at production wells basis is optional.) Combustion of fossil CO 2 Once a year Fuel meter Generator installed place fuels for electricity generation Measurements of both cases and are prerequisite. Although Co2 is measured during the normal operation of the geothermal facilities, in most cases, CH 4 is not measured as an ordinal practices; The study considered the use of a default value for CH 4 emission for the purpose of lessening operators burden. However, in consideration of the fact that the density of CH 4 differ depending on sampling places which may change over the years, CO 2 and CH 4 are to be measured by KenGen as part of the operations of a geothermal power plant 2) Estimation of the emission reductions Estimation of reference emissions: Quantity of electricity delivered to the assumed grid CM value =4,513,152 (MWh/year) (tco2/mwh) = 2,491,259 (tco2/year) Estimation of project emissions: 249,125 t CO2e/year, 10% of the reference emissions Estimation of GHG emission reductions: 2,491,259 (tco2/year) 249,125 tco2/year =2,242,134 tco2/year [Table Preconditions for Noted Calculations] Item Value Grounds for set value CM value (tco2/mwh) (tco2e/mwh) was adopted, that is the average value of (tco2e/mwh), the pre-set BM value, and (tco2e/mwh) of the Quantity of electricity delivered to grid 4,513,152 (MWh/year) Corner Baridi Wind Farm project to which the highest OM value among the CDM projects applied for registration in Dec has been applied that was obtained by a 0.5-to-0.5 ratio. In LCPDP, the value is calculated from the assumed annual geothermal capacity factor (92%) and 560 MW, an assumed capacity. <7>

11 Project emissions 10% of reference emissions JCM Feasibility Study (FS) 2013 Final Report 10% of the reference emissions was set conservatively because the ratio between the baseline emissions and project emissions described in the Kenya CDM monitoring report, Olkaria II Geothermal Expansion Project. In this plan, the power plants are scheduled to be operated in succession and thus the effect of GHG emission reduction is expected to increase in phases. At the time of the operations of the first geothermal power plant (in 2014), the GHG emission reductions are estimated to be 86,749tCO2e/year and the emission reductions will increase following the initiation of according to the geothermal power generation. (2) Development of JCM Project Design Document (PDD) The project covered in this study is assumed to be implemented mainly by the utility company (most probably KenGen) with the power generation potential of the project. At present, the environmental impact assessment and the consultation with the stakeholders are in progress, the project is conducted according to the following policies/guidelines: 1) Environmental impact assessment In the Olkaria I Unit 4 & 5 project registered as a CDM project in May 2013, an environmental impact assessment was conducted based on the environmental regulations (2003) in accordance with the EHS guidelines of the World Bank and the IFC, and KenGen, which operates the project, has a function in place to mitigate the environmental and social impacts in all the project phases, in the area of design, construction, and operation, and the allocation of personnel responsible to develop the measures to mitigate the impacts in the respective phases. In addition, since its establishment, KenGen has incorporated the environmental management system into its business plan, and the system to identify and document the environmental and social impacts is established. 2) Identifying stakeholders and consultation The Ministry of Energy and Petroleum and the local residents of the Olkaria area are identified as a stakeholders. At the first field study, an interview was held with the Ministry of Energy and Petroleum and the important role of the project for the electricity mix of Kenya has been confirmed. Meetings were also held in the geothermal projects of both Olkaria I Unit 4 & 5 and Olkaria IV, with the participation of the respective local governments, village seniors, KenGen staff, and experts. In addition, meetings were held where stakeholders could express their comments and opinions, and comments can be received orally or in writing from residents in the relevant area. (3) Project development and implementation a. Project planning 1) Development plan The development of the project is mainly led by KenGen and acquisition of detailed information were requested to KenGen. Due to the confidentiality issues, disclosure of information from KenGen was limited and the plan was summarized (in Table 6) based on the MW Plan presented in the interview with the Ministry of Energy and Petroleum were utilized as a base of understanding the project plans. [Table 4 Plan of the power generation plants in Olkaria] <8>

12 Olkaria Plant Wellhead 1 unit Olkaria Wellhead 2 unit Olkaria Wellhead 3 unit Capa city (MW) Olkaria I unit 6 70 Olkaria V 280 Olkaria VI * 140 JCM Feasibility Study (FS) 2013 Final Report Status ~ ~ Feasibility study completed. Approved PPA. The construction of the wellhead project is in progress Feasibility study completed. Approved PPA. The construction of the wellhead project is in progress Feasibility study completed. Approved PPA. The construction of the wellhead project is in progress Feasibility study completed. Steam of about 70MW has been confirmed. Feasibility study completed. Drilling for the project is ongoing and 63 MW of steam has been confirmed - June Sep Dec Procureme Constructi nt:march on Start :Sep Aug Dec Comm Year 2017/2018* Legend :Estimated Commission date 2) Financial plan According to the MW Plan, JICA intends to utilize the remaining portion of the ODA for Olkaria I Unit 4 & 5 (existing project) to provide finance for the geothermal power generation project of 70 MW (amount unknown) and also to consider additional finance for the geothermal power generation project with the size of 140 MW. [Figure 5 Finance planning] Capacity Cost Source of Comm No. Plant (MW) (MUSD) Funds Year Status 1 Olkaria IV unit 1& EIB, AFD, KfW, WB, Equity Jun-14 Implementation 2 Olkaria IV unit 4& JICA, EIB, WB, KfW, Equity Sep-14 Implementation 3 Well head Generation KenGen 14-Nov Implementation Procurement of 4 Olkaria 1 unit JICA 2015/16 Contractor 5 Olkaria V JICA 2016/17 Financing 6 Olkaria VI PPP 2016/17 RFP Sub-Total 700 1,820 Source: MW Plan b. MRV structure The detail information of interconnected grids necessary to calculate the reference emissions is expected to be obtained from KPLC. <9>

13 [Figure 6 MRV system (proposal)] JCM Feasibility Study (FS) 2013 Final Report Provision of grid information Application for project registration Issuance of credits Joint Committee Kenya/Japan KPLC Project participants (KenGen, GDC)) validation and notification of verification results Monitoring ERC submission of the project plan document/monito ring report Third party entity in Kenya (designated by the Joint Committee) Future power generation plan Promotion measures of Japan Technical support Support for the development of MRV methodologies and PDD Japanese companies (*1) PwC (*2) (*1) In filing an application for JCM, project participants will take into consideration the utilization of technical support, Japanese scheme of subsidies for facilities, etc. It is necessary at the application stage to discuss with project participants on how to participate in the project. (*2) Since the support from the Japan side is considered necessary for the development of MRV methodologies and the project formation, it is necessary at the application stage to discuss with project participants on the support system. c. Licensing and authorization for the project To implement a geothermal project in Kenya, two permits/approvals are assumed, one in Kenya and the other in Japan. As for the former, the license to use the site and steam, environmental impact assessment, application for electricity tariff, etc. are required and the electric power utility company to operate the power plant (KenGen) applies for the permits/approvals. As for the latter, Japanese companies participating as EPC contractors shall obtain the permits/approvals in relation with normal customs clearance procedures, permission for the transportation of equipment, permission to employ local workers, etc. d. Japan s contribution In the global geothermal power market, Japanese manufacturers, Mitsubishi Heavy Industries, Toshiba, and Fuji Electric, have dominant shares in flash type. Even though other manufactures, such as GE, Alstom, and Ansaldo, have a track record, their shares are low and the number of companies capable of manufacturing axial-flow steam/gas turbines with knowhow for geothermal use is limited. In addition, steams produced from underground for geothermal power generation contain impurities, such as heavy metals and corrosive gases, and Japanese turbine manufacturers are significantly leading the world in both technology and knowhow to manufacture turbines excellent in corrosion resistance e. Environmental integrity According to the PDD of the Olkaria I/IV CDM project, an environmental impact assessment was conducted in accordance with the Kenyan law and the international guidelines of the World Bank and other international institutions.. In these assessments, a study was conducted from the perspective of emission of gases, noise during the construction, water circulation, waste water, and impacts on residents. It is anticipated that the environmental impacts to be temporary and low and at an acceptable level. Consequently, the same type of study is expected to be conducted on the environmental impact assessment of this project. <10>

14 f. Sustainable development in host country 1) Contribution to fulfil the power demand Kenya is expected to transform its current power supply system heavily depending on large hydropower plants, which is vulnerable to climate change, into the system resilient to the climate change. Through this transformation of the power supply system, it is expected that the power supply be reinforced and enable to reach off-grid unelectrified areas and the energy security can be strengthened without depending on foreign energy sources. 2) Contribution to the industries around the Olkaria area Also the development of the geothermal industry in Kenya and the contribution to the development of the industries (such as the cultivation of flowers using the waste heat of geothermal power generation) around the Olkaria area are also anticipated. g. Toward project realisation (planned schedule and possible obstacles to be overcome) During the field study in Kenya conducted in December, it was found that GDC was considering the implementation of the geothermal power generation project in the Menengai area as a JCM project. Since KenGen, which has been playing a central role in CDM project development in Kenya, also knows well about the JCM system and concept, the move toward JCM project formation is considered to be increasingly active as one of the options for project-based to mitigate the climate change. One of future challenges is to avoid double counting with the NAMA plan in the geothermal power sector promoted by Kenya s Ministry of Energy and Ministry of Environment jointly with European countries. According to the memorandum concluded between Japan and Kenya in May 2013, both governments mutually recognize that verified reductions or removals from the mitigation projects under the JCM can be used as a part of their own internationally pledged greenhouse gases mitigation efforts while avoiding double counting. 4 Even though the details of the NAMA plan in the geothermal power generation sector studied on the Kenya side are not finalized, it is indispensable to pay close attention to the policies of all related parties and take necessary measures in terms of how project participants can avoid double counting. 4 Excerpt from the Bilateral Document Concerning the Bilateral Offset Credit Mechanism between the Government of Japan and the Government of the Republic of Kenya (Provisional translation) <11>