Power demand in Kenya is rising considerably due to the country’s economic growth. This rising demand, combined with insufficient investment in new generation capacity, could result in blackouts during peak hours and unreliable supplies of electricity.
The country has abundant geothermal and hydropower resources, but investment in new geothermal exploration has been constrained by substantial capital requirements and investment risks.
In electric power generation, Kenya Electricity Generating Company (KenGen) is the leading company, supplying about 80% of all power consumed nationwide.
KenGen has a total of six registered Clean Development Mechanism (CDM) projects under United Nations Framework Convention on Climate Change (UNFCCC), which includes; Olkaria II Geothermal Expansion, Olkaria IV Unit 1 & 2, Olkaria I Additional Unit 4 and 5, Redevelopment of Tana Hydropower project, Optimization of Kiambere Hydropower project and Ngong Wind 5.1 MW.
To increase the capacity of Olkaria II Geothermal Power Plant, KenGen added a third power generation unit with a capacity of 35MW to the existing plant.
According to World Bank Group, this geothermal expansion project earned carbon credits under CDM and was registered with the UNFCCC in December2010.
CDM allows developing countries, with emission-reduction commitments under the Kyoto Protocol, to implement emission-reduction projects. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one ton of CO2, which can be counted towards meeting Kyoto targets.
KenGen is set to earn about Sh118 million in the next seven years from Olkaria II CDM Project, after UNFCCC recently made a decision, to renew the expansion of the power plant’s CDM Project.
According to the Star, KenGen’s CEO, Rebecca Miano said that with the estimated CER of 78,640 metric tonnes of CO2 equivalent per annum, KenGen expects 550,480 metric tonnes of CO2 equivalent, with potential earnings of KSh118 million, based on a conservative market value of USD 2/tonne of CER during the extended period, up to 2024.
She further stated that, the project contributes towards greenhouse gas (GHG) emission reductions, by displacing fossil fuel-based electricity in the Kenyan grid with clean geothermal power.
The project will contribute to national sustainable development, by providing clean energy, which ensures improved environmental quality, positive health impacts, and increased productivity.
While the sale of the CERs generated by the project will boost the production of clean energy in the country, communities living near the company’s installations will also benefit from projects funded by carbon revenues.