American multinational General Electric’s power generating subsidiary GE Energy is planning to set up a 100 megawatt wind farm in Ngong showing growing international interest in Kenya’s lucrative electricity sector.
The power plant is expected two be in operation in two years, about the same time that the 300MW Lake Turkana Wind Power, promoted by a consortium of local investors, is set to be completed.
People involved in the project say that GE will fund the power plant whose construction is ongoing, making Kipeto Energy one of the single largest foreign direct investment in the energy sector.
“This project (Kipeto Energy) is fully owned by GE but a local firm is handling its construction,” said a source who requested anonymity because he is not authorised to speak on behalf of the American firm.
The GE Energy chief executive for Kenya, George Njenga, did not respond to our requests for comment.
Mr Njenga said in a past interview the firm had made “big steps” towards establishing a wind power farm.
Experts in the energy sector estimate that the project will cost the New York-listed company over Sh25 billion ($300 million). The venture will also enable GE to tap into the carbon trading from the generation of clean energy. A carbon credit is currently priced at Sh450 (4 euro).
Kaburu Mwirichia, the chief executive at the Energy Regulatory Commission, said he was aware that GE was establishing a wind power plant and was expecting an application for approval of the power purchase tariff.
Completion of the project would be critical in reducing the current shortfall in the country’s power requirements estimated at 20 per cent, pushing the power distributor to ration.
Kenya Power projects that demand for electricity will rise by 13 per cent annually over the next five years to highlight the opportunities in power generation in the country.
Consumption has since 2006 grown steadily at 5.1 per cent on average to wipe out the reserve capacity with peak demand of 1,188MW against the installed capacity of 1,713MW and the 200MW imported from Ethiopia.
Listed investment firm Centum has become the latest among private sector players that are either in power generation or prospecting in a bid to plug the shortfall.
The deficit, often made worse by erratic rainfall, has often pushed the electricity distributor to buy more expensive energy generated from diesel while it is the consumers who feel the weight of the additional costs.
It costs Kenya Power upwards of Sh21 per unit of electricity generated from diesel, more than seven times over the price of hydro power.
The entry of Kipeto Energy, the third largest wind plant after Lake Turkana and Aeolus (Kinangop and Ngong), highlights the growing need to shift towards clean means of generating power other than water.
Coupled with the benefits of trading in carbon credits, geothermal energy is also emerging as an important source of electricity expected to contribute over 400MW by 2015.
State-owned Geothermal Development Company estimates the country’s capacity at 7,000MW from wells in the Rift Valley. Carbon Africa, a firm involved in the exchange of carbon credits in Kenya, is already working with Kipeto and will be seeking to register the venture under the UN’s Clean Development Mechanism (CDM).
An official from the firm said that a stakeholders’ (including officials from GE) meeting has been called early next month to evaluate the environmental and social impacts of the project before it is considered clean by UN.
It is upon registration with the CDM that carbon credits can accrue to an environmentally friendly project which has limited carbon dioxide emission — the gas responsible for global warming.
A carbon credit is a tradable certificate or permit representing the right to emit one tonne of carbon dioxide, which can be sold to party that has invested in ventures that reduce the gas.