Africa’s Power Trip


Africa’s Power Trip

 

By Kerry Dimmer


The potential of clean energy economies is big news in Africa because most of the continent’s nations have an almost clean slate, as well as abundant natural resources, from which to develop such strategies. Not only does booting up sustainable clean energy repower a country, it also benefits the region through significant job creation.

Such is the case in East Africa, a huge region of 20 nations comprising Burundi, Kenya, Rwanda, Tanzania, Uganda, Djibouti, Eritrea, Ethiopia, Somalia, Mozambique, Madagascar, Malawi, Zambia, Zimbabwe, Comoros, Mauritius, Seychelles, Reunion, Mayotte and South Sudan.

The World Bank’s Practice Manager Sudeshna Ghosh Banerjee described it as “blessed with every possible natural resource from which to harness power, be that hydro, biogas, solar or thermal.” She pointed out to Breakbulk that in unity, the region could easily reach the point of having surplus energy.

“This region could set the example for the entire continent in terms of how to get electricity to households and enterprises, particularly Kenya as it is currently keeping abreast, through its power projects, with the pace of population growth and the resulting demand for access,” Banerjee said.

Kenya is the largest geothermal producer in Africa, producing some 675 megawatts, which equates to just under a quarter of its needs, confirms Banerjee’s colleague, energy economist Mariano Salto. “East Africa is also unique in that it is one of the top 10 geothermal producers in the world in terms of installed capacity,” Salto added.

Ten years ago, Kenya was producing some 60 percent of its energy from geothermal. Current production is 45 percent, but despite the decline there has been relative stability in the supply and cost of power to consumers.

 

Untapped Power Reserves

It’s said that Kenya has only tapped into some 10 percent of the geothermal energy it could produce, with the potential of 10 gigawatts from reserves of steam in the Rift Valley region. An additional 10 gigawatts would double the government’s target set in its Vision 2030 development plan.

However, it is extremely difficult and expensive to undertake such projects in isolation. As Banerjee points out, no matter how impressive the end goal, you can’t look at energy resources for the sake of it. She is impressed with how Kenya, Uganda and Zambia have integrated as a community to look at potential energy resources as a “power pool” for united economic viability.

“East Africa is especially blessed with hydro potential, but there are modern renewables like solar that are also being harnessed. There is, for example, gas in Tanzania and Mozambique,” she said.

A report out of African Rift Geothermal Development Facility informs that Ethiopia, like Kenya, could generate 10 gigawatts from geothermal alone, with Djibouti, Tanzania and Uganda up to 450 gigawatts. For Tanzania this would satisfy almost half of the country’s needs, more than that for Uganda, and double that for Ethiopia.
 




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World Bank Involvement

The World Bank’s interest in the region is broad, proactively engaging with, and aiding funding of, projects and some of the technologies that embrace the capture of energy from renewable resources, like geothermal. Salto and Banerjee said there are many ways to fund energy development, without requiring direct investment, which is what the bank did recently when it approved a US$180 million loan to Kenya Electricity Generation Co., or KEGC.

“It’s a unique financial instrument,” explained Banerjee, “in that it refinances the organization’s corporate debt in terms of providing a longer repayment tenure while enjoying a lower interest rate.”

Salto confirmed that although not linked to any specific energy project, the loan will allow the KEGC to repay its loans to other financial institutions, freeing up funding for it to invest in, mainly, geothermal and wind projects. “Essentially what this does is enhance the financial sustainability of the KEGC, an organization with which we have developed a strong and robust collaboration over the past 25 years.”Kenya is not the only country benefiting from World Bank funding in the region. “We use a number of funding instruments, be that for supporting policy reforms or individual projects like the 20 megawatt Olkaria geothermal plant, or the transformative ITP program in Ethiopia,” confirmed Banerjee.

Salto added that because funding is scarce, the private sector needs to be encouraged to enter the renewable energy space. “We want to work with the private sector to bring more capital to the market so that we can maximize the impact. There is room for others to play in this space,” he said.

This is pertinent because the cost of energy is very high in Africa, which has serious implications for social development. “We do anticipate that as more renewable energy goes on stream, the lower the cost, and that will ultimately have a knock-on effect on the price consumers pay,” Salto said. “No matter what the source, power must be affordable and reliable for consumers.”

 

Cargo Industry Impacts

The project cargo industry is going to be a very important anchor in the region’s power development, not just because it can play an integral role in the delivery of energy projects. Crucially, it will also be a consumer, Banerjee pointed out.

“Understanding that the level of industrial growth is not that of Asia, the region still has good financial viability, and with a reliable power supply, we can expect expansion of all industries across the board, that in turn will require cargo services.

“Low-cost energy will also benefit cargo players from the point of view of being able to deliver a better service at a lower cost to their customers. The key here though is to work closely with government, and avail of the bidding opportunities,” Banerjee noted.

Staying close to government is something that Express Shipping and Logistics East Africa Ltd., or ESL, has been doing since its establishment in 2001. Florence Tuei, ESL’s country sales and marketing manager, said that the company has a number of active bids for various renewable energy projects.

“We recently handled geothermal out-of-gauge project cargo as ship agents at the port of Mombasa and look forward to many more such projects in the short term,” Tuei said.

“The Kenyan/African shipping environment usually involves international forwarding, so most of the suppliers quote or bid on cost and freight terms. As an international forwarder we lose out, therefore, on handling international freight forwarding work.”

Bids ESL has made relate to freight forwarding from ports in China, India and parts of Europe for project cargo, general cargo, dangerous cargo, bulk and breakbulk. “We are also bidding on customs clearance and transportation as well as warehousing and distribution,” Tuei added. “Outside of our headquarters in Mombasa we also have operations in the Tanzanian ports of Tanga, Mtwara, Dar es Salaam and Zanzibar. We are also expanding to the Port of Lamu in Kenya, Bagamoyo in Tanzania, and into Mozambique. We also have a representative office in China.”

ESL makes use of the Kenyan government’s Integrated Financial Management and Information System procurement portal. When a bid is successful, an online notification is posted on the site.

As the leading shipping services provider in East Africa, with operations well established at Mombasa, ESL provides integrated end-to-end logistics services that are customized to meet customer needs.

 

Offering Logistics Solutions

Local project cargo logistics specialist Kenfreight is headquartered in Mombasa, with supporting offices in the region, in Uganda, Rwanda, Burundi, Tanzania and South Sudan. It secures agency contracts for several large global freight forwarders including GEODIS Industrial Projects, Scan Global, and JAS Air & Sea.

To serve those global forwarders, Kenfreight has invested heavily in certifications and equipment, confirmed Paul Bletterman, its group managing director. “We’ve ramped up with an aim to serve the current and expected oil and gas, power generation and infrastructure projects inclusive of over US$3 million into specialized heavy-lift fleet alone,” he said.

The investment has been worth it, according to Bletterman. Kenfreight recently secured what he referred to as the most challenging out-of-gauge project ever in East Africa: the Kinangop Wind Farm. “The transport of more than 120,000 cubic meters, comprising 269 extreme out-of-gauge pieces, required extensive planning from the start, with engineering drawings, detailed route survey, construction of specialized tower clamps and a fleet of highly specialized trailers.”

The Kinangop Wind Farm has 114 tower sections of up to 53 meters, with 38 nacelles of 58 meters, and 117 blades, each 40 meters long. The company was also involved in the development of six new power stations around Nairobi. “We delivered 400 20-foot-equivalent-unit containers and six 165-meter transformers on 16-line modular trailers,” Bletterman said.

 

Kerry Dimmer is an award-winning freelance journalist, focused on African business affairs.

Image credit: Kenfreight

 

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