The Kenya Power and Lighting Company (KPLC) has entered the carbon trading market to tap reduced carbon dioxide emissions from its operations and further diversify its income streams.
The power firm will this morning sign a deal with Standard Bank of South Africa, the parent company of CFC Stanbic, to evaluate and buy its carbon credits.
The carbon credits are the product of the energy savings bulb and renewable power generation projects initiated by KPLC, which has helped reduce demand for thermal fuel that emits carbon dioxide.
Rosemary Gitonga, the chief commercial services manager at KPLC, said the carbon credit deal will not only reduce demand for thermal electricity—which is becoming scarce due to rising demand-—but open new income streams.
“It is a win-win business for us,” said Ms Gitonga, adding that the power firm expects money from the carbon deals to start coming in next year.
Carbon trading involves the purchase of carbon credits from firms that emit less carbon dioxide, mainly from Europe and Asia, and which have exceeded their emissions limits.
Ms Gitonga said KPLC expects its first cheque from the 1.25 million energy saving bulbs it distributed freely to the market at a cost of Sh460.7 million, which saved the country 50 megawatts.
The savings helped the country reduce its demand for thermal power—whose contribution to the national grid has been rising—and which emits tonnes of carbon dioxide to the atmosphere.
Executives in the power sector are using the energy savings bulbs-—which reduce electricity demand by up to 40 per cent compared to the non-energy saving ones—to cut demand for power at a time when the country is running short of electricity.
The power firm is also betting on the renewable power generation projects such as wind and geothermal that it has initiated to rev up its carbon credits.
“We will be supplying more energy savings bulbs and tracking environmental friendly generation projects that we have played a role in establishing,” said Ms Gitonga.
Standard Bank is accredited by the United Nations to offer financing, including up front payments for credits on projects like the one pursued by KPLC.
The carbon credits will step up KPLC’s diversification drive that has seen it enter the telecom markets by leasing excess internet capacity from its fibre optic cables.
The move is another gain in Kenya’s participation in the global carbon credits market at a time when the Government is in the process of setting up the Nairobi Climate Exchange, the first carbon emission reduction units trading platform in Africa.
Mumias Sugar Company, East Africa Portland Cement Company (EAPCC), KenGen and a host of other smaller companies are among institutions participating in the carbon trading market.
Mumias, has already sold 43,0000 tonnes of carbon emission reduction units worth Sh22 million arising from its electricity generation plant that uses sugar waste to produce 35MW.
Mr Peter Kebati, the Mumias chief finance officer, said the carbon credits arose from electricity generated between May, 2009 and February this year.
“We expect a minimum price of $6.5 for every tonne and we plan to apply for new verification for the period of March to December this year,” said Mr Kebati.
Under the deal, Mumias sold its carbon credits to Japanese Carbon Finance, which will shop for buyers at the global climate exchanges.
EAPCC signed a deal to offer 105,000 tonnes to JP Morgan Climate Care while KenGen hopes to sell 177,600 tonnes of carbon annually by generating power from geothermal sources.