Responding to Power Sector Problems:

The Cogeneration Option

Reliance on Hydro in East Africa

Kenya - 2007

Hydro 57%

Geothermal 10%

Thermal

33%

Tanzania - 2008

Hydro 52%

Thermal

48%

Years of Significant Drought (D)

Country 1999 2000 2001 2002 2003 2004

Burundi D D

Djibouti D D

Eritrea D D D D D D

Ethiopia D D D D D D

Kenya D D D D D D

Rwanda D D

Sudan D D D D D

Tanzania D D D D D

Uganda D D D D D

0.000.501.001.502.002.503.003.50

Hydro Electric Power Generation in Kenya

Hydroelectric Power Generation (Billion Kilowatt hours)

Source: IEA, 2008

Drought

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Hydro Electric Power Generation in Tanzania

Hydroelectric Power Generation (Billion Kilowatt hours)

Source: IEA, 2008

DroughtDrought

Oil prices Nov ’07 – Nov ‘08

• Period of high oil prices coincided with drought in the region

• Drought affected hydro-power generation• Response option from Governments:

– Use expensive emergency thermal generation to meet rising demand

Status of Emergency Power Supply

Country

Date Contract Duration

Emergency Capacity

Percentage total installed capacity

Estimated annual cost as % GDP

Drought Related?

Rwanda 2005 2 years 15 48.4 1.84 Yes

Uganda 2006 2 years 100 41.7 3.29 Yes

Tanzania 2006 2 years 180 20.4 0.96 Yes

Kenya 2006 1 year 100 8.3 1.45 YesSource: Eberhard and others ( 2008 )

$ $

Impact of Inadequate Power Supply

• Un-reliable supply of electricity (Fluctuating voltage damages electrical appliances)

• Increase in cost of electricity production– Emergency power generators

charge up to 25 UScents – over 100% increase in tariffs

– Increase in production costs and cost of products to end users

– Long term impact of increased cost of production to power outages could be loss of jobs, especially for low income earners

$

Response Options

• Impossible to predict drought and volatility of the world petroleum prices, diversifying electricity generation sources is the best response option

• Need to look at other energy options to reduce impact of drought related power deficits

• Cogeneration – one of the key response options

Cogeneration Potential in East and Horn of Africa

Countries

Cogen potential as % of total Installed national power generation Capacity

from all sources

Ethiopia 4.3%

Kenya 13.9%

Malawi 23.7%

Sudan 20.8%

Swaziland 144.5%

Tanzania 11.1%

Uganda 15.2%

Recommendations for fast tracking cogeneration – Mauritius

model• Standard Power Purchase Agreements (PPAs)

could contribute to the success of renewable based power generation in the region

• Allowing agro-based industries that benefit a large proportion of the population to participate in exploiting local energy resources

• Explicit renewables targets which should be realistic, home-grown and local

• Predetermined feed-in tariffs for renewable based electricity generation

Feed-in Tariff: Kenya

• Feed in tariff policy for Kenya published• Open to first 400MW after which likely to be

reviewed

Source Power plant capacity (MW)

Firm power Tariff (US cts/kWh)

Non firm power tariff (US cts/kWh)

Small hydro

<1 12.0 10.0

1-5 10.0 8.0

5-10 8.0 6.0

Wind <50 9.0 -

Biomass <40 7.0 4.5

Feed-in Tariff: Tanzania

• Tariff recently announced by regulator - EWURA

Category Period Tariff (US cents)

Standardised average small power purchase

NA 12

Seasonal adjusted Aug - Nov 10

Jan – Jul & Dec 14

Feed-in Tariff: Uganda

• Tariff mentioned in the energy policy documentTime of use Year 1-6 Year 7-20

Peak (1800-2400hrs) (US$/KWh) 12.00 8.00

Shoulder (0600-1800hrs) (US$/KWh) 6.00 4.50

Off-Peak (0000-0600hrs) (US$/KWh)4.10 4.00

Average Tariffs 7.03 5.25