A subsidiary of Naivasha-based horticultural company VP Group (formerly Vegpro) is seeking regulatory approval to become Kenya’s first biogas electricity producer to supply the national grid.
Beginning next month, the independent power producer (IPP) hopes to produce and supply electricity from a 2.6 megawatts (MW) plant located in the 800-hectare Gorge Farm near Lake Naivasha, using crop waste such as spent and rejected vegetables, maize stovers and cut off rose flower stems.
Biojoule Kenya, the firm behind the Sh591 million ($6.5 million) electricity project, has signed a power purchase agreement (PPA) with Kenya Power to supply 2MW to the grid — enough to power about 8,000 households.
The Patel family, which owns VP Group, has a 50 per cent stake in Tropical Power — the owners of Biojoule Kenya. The investment is part of the family’s quest to diversify VP Group’s revenue sources, and cut electricity and fertiliser costs.
“We have a good supply of feedstock from crop waste out of which we plan to open a new business line,” said Johnnie McMillan, the managing director of Tropical Power.
“We aim to connect to the grid by the end of March once the Energy Regulatory Commission ratifies our power purchase agreement,” he said.
Biojoule will become Kenya’s tenth IPP to supply electricity to the national grid, but the first to use biomass to generate such a large amount of power.
Cummins Power Generation plans to set up a 10MW biomass power plant in Baringo, which will use the toxic Mathenge shrub to generate electricity.
Electricity from the biogas plant at the Gorge Farm Energy Park will be sold to Kenya Power at a cost of Sh9.16 (¢10) per kilowatt-hour (kWh), nearly a third of the cost consumers pay for thermal power (Sh25.23 per kWh).
“Biojoule’s PPA has been completed and sent to ERC for approval,” Kenya Power managing director Ben Chumo told the Business Daily.
Kenya Power gets hydro-generated power from State-owned Kenya Electricity Generating company (KenGen) at Sh3.10 per kWh while geothermal power costs an average of (¢8) Sh7.50 per kWh.
Injecting biogas power to the national grid deepens Kenya’s quest to diversify its energy basket and help cut over-reliance on hydropower which is susceptible to weather changes and thermal power, which is expensive.
The biogas technology has so far been confined to generating power for domestic use, especially by households that have invested in dairy farming and have enough cow dung.
Mr McMillan said what remains after supplying the 2MW to the national grid (200-600kW), will be sold to the VP Group farm in Naivasha at a 10 per cent discount on the bulk tariff price.
CfC Stanbic Bank provided $3.25 million (Sh297 million) or half the money needed for the Biojoule project while the remaining half came in the form of shareholder equity from the Patel family and unnamed British investors.
Besides generating electricity, the biogas process will produce 35,000 tonnes of bio-fertiliser per year, a nutrient-rich substance that will be used for top dressing at Gorge Farm.
“Output from the biogas digestion process will be used as natural fertiliser in the farm, displacing 20 per cent of synthetic fertiliser, which is a huge saving,” said Mr McMillan.
Furthermore, hot water from the biogas plant will be recovered and used to heat the greenhouses at Gorge Farm as well as the nearby Finlays’ Dudu-tech laboratory, a facility that develops biological control pest control solutions.
VP Group, previously known as Vegpro Group, deals in rose flowers and fresh produce and has farms in Kenya, Ghana and Ethiopia. The biogas plant requires 50,000 tonnes of feedstock annually to generate power, translating to about 120 tonnes of crop waste per day.
The expansive Naivasha farm produces about 23,024 tonnes of fresh feedstock per year, and will source for additional crop waste from Van den Berg Roses, a neighbouring flower farm.
Tropical Power said the biogas project has a payback period of 5.5 years, underlining the lucrative nature of Kenya’s electricity market which offers investors foreign currency denominated tariffs and 20-year power purchase agreements.
“The investment is very secure because Kenya Power has never defaulted on payments,” said Mr McMillan.
The Biojoule plant uses a process dubbed anaerobic digestion, where the biomass waste is digested by micro-organisms in the absence of oxygen to produce biogas.
The biogas is then combusted in a combined heat and power engine to produce electricity and heat. The Gorge Farm plant was built in 12 months and was completed last month.
Biojoule’s plant will be connected to the Kenya Power substation located 200 metres away near the DCK shopping centre, along the Moi South Lake Road. British firm Clarke Energy and General Electric supplied the two biogas engines used in the project.
“The key opportunities we see are for biogas, landfill gas and sewage gas. All of these technologies can be potentially deployed in Kenya,” said Alex Marshall, group marketing and compliance manager at Clarke Energy.
The Liverpool-based engineering firm reckons that Kenya can exploit biomass sources such as municipal waste, crop residue and human waste to generate electricity.
Test results showed that the waste material from Gorge Farm had a high calorific value, enough to generate methane that is equivalent to burning five million litres of diesel per year.
Kenya has five diesel-powered IPPs, including emergency power firm Aggreko, Tsavo Power, Iberafrica Power, Rabai Power and Thika Power who supplied electricity to Kenya Power in the year to June 2014.
Other IPPs include OrPower 4 with an installed capacity of 110 MW of steam power, Mumias’ 26MW from bagasse, Imenti Tea Factory with a small hydro plant (0.3MW) and Gikira Hydro’s 0.514MW plant in Nyeri.