Starting a business takes risks, more so when you venture into power generation, which is dominated by deep-pocketed investors.
But Francis Ngunjiri is one Kenyan who dared to swim with the sharks and take on big firms in the energy sector. He owns a mini hydro plant that feeds power to the national grid.
The 63-year-old has signed a power purchase agreement with Kenya Power to supply 0.6 megawatts of electricity, raking in about Sh2.3 million per month.
Using water from a small river right in his backyard in Gaikundo in Nyeri County, Mr Ngunjiri has put a mark on the sector and his community. To him, success is not in the massive profits that come with the energy sector but breaking the monopoly of big players in the energy sector.
For years Kenya’s energy sector was dominated by a few corporations, locking out small local entrepreneurs.
However, after massive lobbying from private players, the government adopted the feed- in tariff (FIT) in 2008.
An uphill task
The FIT is a policy instrument that makes it mandatory for energy companies that operate the national grid to buy electricity from renewable energy sources at a pre-determined price.
This was the cue for Mr Ngunjiri to start chasing after his dream of producing electricity. Having served as an engineer in the government and for private firms for over 20 years, the technical aspect of the project was not a hurdle.
Mr Ngunjiri was a lead engineer for Kenyan military airfields and also has experience working in the Energy ministry as a consultant and technical director.
Why not build my own?
“I have all the technical know-how and experience in building and designing these plants. Why not build my own?” he posed. With the initial cost for setting up the plant standing at a staggering Sh280 million, Mr Ngunjiri had an uphill task of looking for money. Many who heard his idea thought he was delusional and that old age was catching up with him.
He had to quit his job to focus on the project, which at first didn’t seem promising. “Even if I failed others would see my ideology and maybe take it up,” he said.
His lifetime savings were not enough to fund the project. He was eventually forced to mortgage his house — which did not raise enough either.
“A project like this requires a lot of money and I was not sure where to get it so I started selling off my property. I had to achieve my dream even if it meant selling all I had,” he said.
Efforts to get bank loans also failed as they were doubtful of the venture’s profitability. Fortunately, his exposure and engagement with foreign and local proprietors and parastatals in the field opened the door to grants and loans.
“They saw that it was a bankable idea and having worked with them previously was an additional win for me,” said Mr Ngunjiri.
The next big hurdle was acquiring land along a river, considering the fact that setting up a dam would spread water to people’s farms.
This meant that he had to buy portions of land from up to 80 farmers in the area with the hardest challenge being convincing them to give up their land.
“To make sure that the communities also benefited from the project, I had to incorporate them into the company,” said Mr Ngunjiri. With this plan every person who gave up land became a shareholder in the venture and was entitled to a share of the profit from the sale of power.
The next step was to put up a dam and tunnel to divert water from River Gikira to the plant.
The water is now dropped at high velocity through two big pipes and used to turn two turbines, which generate 310 kilowatts of electricity each.
The power is then transmitted to two converters then fed to the national grid through a substation in Othaya. The small hydro power plant now generates 0.6MW of electricity, earning him ¢10 per kilowatt hour.
This amount of electricity is enough to power about 2,400 households. Othaya’s population is 18,943, according to the Kenya Population and Housing Census, 2009.
The project employs 150 people, 15 of them on a permanent basis — mostly technicians and engineers.
Besides employment, the station is a hub of knowledge for students in nearby institutions who visit it for practical lessons. Mr Ngunjiri also uses the plant to teach technical skills to local youth and mentors those seeking to be engineers.
He is also looking to set up two other renewable energy plants in Nyeri which will produce up to 15MW of electricity.
One of them will be a hybrid solar and wind power plant to produce 5MW while the other will be a hydro plant producing 10MW.
He said that Co-operative Bank had agreed to fund the 10MW project.
“The first one was a success and an example to anybody who wants to challenge big firms,” he said.
Mr Ngunjiri said that his main goal is to create renewable energy and see to it that the fuel adjustment levy is removed from power bills.