The ever increasing cost of electricity and the rather frequent outages have resulted in industrialists and major organizations generating their own power. “Cost of power is a major concern for every industry, and we don’t see the cost of power coming down. So those who can afford to produce their own electricity are actually going for it,” said Kenya Association of Manufacturers chairman, Mr Vinal Shah.
Leading in this field are large tea and sugar estates with their own factories, cement factories and large concern such as Magadi Soda, Kenya Petroleum Refineries and Webuye Paper Mill. The choice of power generating plant varies with the location of the factory. If sited near a river then hydro power is generally the preferred option, while Mumias Sugar Company uses bagasse and factories located in cities usually choose heavy fuel oil or biodiesel. Smaller concerns may use solar energy, biogas or even wind power.
Carbon credits used in financing power projects
Financing power projects has received a boost from the sale of carbon credits. Carbon trade occurs when companies pay a fee for every amount of carbon dioxide released to the environment. The money is then used to pay other organizations that develop projects that facilitate a reduction in the release of carbon dioxide to the atmosphere. The projects include improving manufacturing efficiency to reduce the amount of electricity used, reforestation, developing energy from renewable sources and growing crops that can be processed into biofuel.
In Kenya today KenGen earns an estimated Shs442 million every year from the sale of 660,000 tonnes of carbon credits to the World Bank The bulk of the money is used for geothermal development while an additional dollar per tonne of carbon credits will be used in community development projects . The World bank Community Development Carbon Fund contributes an additional dollar for every purchase of a tonne of carbon credits to benefit communities, Carbon trading involves industrialised nations funding clean energy projects in the developing world to meet their greenhouse gases emission targets set by the Kyoto Protocol under the treaty’s Clean Development Mechanism (CDM).
Mumias Sugar Company is developing electricity from bagasse, a clean fuel, and this is estimated to generate an annual displacement of 100,000 tonnes of carbon from the environment. The company has signed an agreement with Japan Carbon Finance Company Ltd to purchase Certified Carbon Reduction Credits under the provision of the Kyoto Protocol.
Another project to benefit from carbon credits is the Lake Turkana Wind Power project which will generate 310 MW from 353 wind turbines. The African Development Bank (AfDB), a facilitator for the project has been of immense help in lining up investors and pointing out the procedures to be followed in obtaining carbon credit sales. The AfDB estimates that during the project’s 20-year life span carbon emissions will be reduced by an estimated 16 million tonnes which will generate $6 million per year to be used in financing the project and in community development projects in the Lake Turkana area.
Other companies benefiting from carbon credits are East African Portland Cement, Athi River Mining and Green Africa Foundation.