Energy Security and Adaptation to Climate Change in East Africa and the Horn of Africa: Large Scale Hydropower vs. Decentralized Renewables

Energy Security and Adaptation to Climate Change in East Africa and the Horn of Africa: Large Scale Hydropower vs. Decentralized Renewables

Energy Security and Adaptation to Climate Change in East Africa and the Horn of Africa: Large Scale Hydropower vs. Decentralized Renewables
by
Stephen Karekezi, John Kimani, Oscar Onguru, Waeni Kithyoma
Energy, Environment and Development Network for Africa (AFREPREN) and Heinrich Böll Stiftung East & Horn of Africa
Place of Publication: Nairobi
Date of Publication: August 2012
Number of Pages: 105
License: CC-BY-NC-ND
ISBN: ISBN 9966-918-23-X

Recurrent droughts - thought to be linked to climate change - feature among the key challenges that face the economies of the East Africa and Horn of Africa region. They have serious negative impacts on the region’s power sector. Drought-induced reduction in electricity generation from hydropower has become a persistent feature in the region’s power sector. The adverse impacts of what is thought to be “climate change-related” power crises have had far-reaching and devastating impacts on both the power sectors and the economies of the countries within the East and Horn of Africa region. These impacts are expected to become even stronger in the next years; hence their consequences are likely to become ever more serious as well.

As a result, during power crises, the most common response option from governments in the East and Horn of Africa region has been to procure very high cost emergency thermal electricity to meet the shortfall in power supply.

As was witnessed in Uganda between 2004 and 2006, the reduction in water levels at Lake Victoria resulted in reduction in hydro-power generation by 50 MW and this led to the adjustment of the GDP growth rate from 6.2% to 4.9%. The country had to turn to costly thermal generators to ease the supply deficit. During this period, electricity supply was more intermittent than usual, and the price of electricity increased.

In Kenya, Tanzania and Ethiopia, drought-related power shortages and their impacts were similar to Uganda.

Tanzania announced a major power load-shedding that has adversely affected industrial and commercial sectors. In Kenya, the drought that occurred between 1999 and 2002 drastically affected the hydro power generation and in the year 2000, hydropower generation was reduced by 25% capacity. The resultant cumulative loss was variously estimated to be about 1-1.5% of the total GDP.

Kenya’s GDP is equivalent to US$ 29.5 Billion; the estimated loss during the aforementioned drought induced power crisis was about 1.45% of GDP. This translates to US$ 442 million lost which could have been used to install 295 MW of new renewable power capacity (assuming a MW installed costs US$ I.5 million per MW).

That is almost three times the installed emergency power capacity from diesel and it is twice the loss of hydro power during drought periods. If Kenya had invested the US$442 million in renewable power option the crisis could have been largely avoided.

Governments and electricity utility companies within the East and Horn of Africa region need to adopt more robust, resilient and well thought out response options for addressing drought induced power crises. A key response option is the adoption of mature renewable energy technologies that provide multiple benefits. Renewables are ideal candidates for development as complements to hydropower generation. Renewable energy options such as geothermal, small hydro, biomass cogeneration and wind are attractive since the resources are widely available in the region. These options are not only environmentally friendly but also provide additional developmental benefits such as job creation and reduction of oil import bills.

In light of the drought related problems facing the power sector in the East and Horn of Africa region, and the environmental, commercial and social benefits of the aforementioned renewable energy options, this study  calls for an urgent implementation of renewable energy options in the East and Horn of Africa region. The development of renewables can protect the region’s power from what is thought to be climate change induced drought that affects its hydroelectric power generation. It is worth noting that, although large-scale hydro is a renewable energy, it is likely to be more vulnerable to the impacts of drought than decentralized approaches.

In addition, there are additional benefits of investing in renewable energy as a precautionary measure to the drought that affects the power sector in the region. These benefits include;

  • Greater energy security through wider use of locally available and more secure renewable energy resources such as geothermal, small hydro, biomass cogeneration and wind. Some of these renewables are available even during periods of drought.
  • Higher job creation potential of renewables.
  • Poverty reduction benefits of renewables. This is particularly true of small-scale renewables that are made locally and operate on the basis of solar, thermal or animate power that can be used by local communities for income generation activities.
  • Rural development benefits of renewables. As the bulk of renewable resources are found in rural areas, investment in renewables would result in increased rural development.

To better illustrate the potential benefits of renewables, a new report provides examples of two specific renewable options with a track record of offering viable and sound alternatives to hydropower generation. These technologies are cogeneration and geothermal power.

As earlier mentioned, over the last couple decades, there have been severe droughts that affected hydropower generation in all East and Horn of Africa countries from the late 1990s to date. However, countries using renewables to diversify sources of electricity generation appear to survive the impacts of severe droughts better than those that rely almost exclusively on hydropower for electricity generation.

For example, in comparison to Uganda and Ethiopia, Kenya appears to be more resilient to drought induced power generation shortfalls. This is largely due to the fact that Kenya has a higher level of diversification of its electricity generation sources mainly through the promotion and use renewable energy such as geothermal, biomass based cogeneration and to a lesser extent, wind energy. As a result, Kenya’s electricity supply is more secure in comparison to the neighboring countries.

An important renewable that has contributed to the resilience and adaptation of Kenya’s energy sector to drought-induced power generation shortfalls is geothermal energy. Just over 10% of the Kenya’s electricity generation is from geothermal energy. During the recent droughts in the country, geothermal energy played a critical role as it continued to operate at nearly 100% availability when many of the hydropower stations in the country were crippled by the dry spell.

Mauritius provides a very good example of a highly successful use of cogeneration to limit investment in oil fired thermal generation, thereby limiting a country’s exposure high cost of oil imports, especially for electricity generation. Mauritius currently meets over 20 per cent of its electricity demand using bagasse from the sugar industry. Over the 10-year period (1993-2002), the installed capacity of the sugar industry located power plants increased from 43 MW to 242 MW with the concurrent increase in electricity exported to the grid. In the early years i.e. in 1996, 119 GWh of electricity from bagasse based cogeneration was exported to the national grid. This was achieved through investment mostly by private sugar mills implementing cogeneration technology with their own private funds. By the year 2002, co-generated electricity increased significantly with investment in more efficient bagasse-to-electricity processes and in a greater number of units, so much so that the electricity exported to the grid from bagasse increased to 300 GWh and the total electricity exported from the sugar industry rose to 746 GWh in 2002, representing about 43.5% of the total electricity exported to the grid for the island.

It can therefore be argued that renewable energy systems offer diversification in energy supply, thus strengthening energy security by broadening national energy generation portfolios. Countries with diversified energy generation sources are better off compared to those which heavily depend on centralized large-scale hydro or conventional thermal plants that use imported petroleum fuels which have a degree of uncertainty in supply and cost.

Based on the study’s findings, the following are some of the key recommendations that will assist the fast tracking of renewables based power in the East and Horn of Africa:

Institution of attractive and pre-determined feed-in tariffs and standard Power Purchase Agreements (PPAs) for co-generated power: A standard PPA can limit market uncertainty, which stands in the way of substantial investment in renewables in the region. A PPA, linked to a pre-determined standard-offer or feed-in tariff, from the national utility to purchase all energy produced by renewable energy plants can African power sector.

Innovative Financing: Innovative financing schemes should be developed by financial institutions in collaboration with project developers. Interaction between financiers and project developers could help bridge the knowledge gap on both sides – financiers would gain a better understanding of renewables while project developers would have a better appreciation of pre-requisites for raising financing for renewable energy investments. Bundling of smaller/medium sized projects would help them access funds that have minimum investment caps, and lower the upfront cost of financing.

African countries can tap into the various international and regional initiatives that can provide funding for renewable energy investments. These initiatives include: the Global Environment Facility (GEF) and the Kyoto Protocol’s Clean Development Mechanism (CDM). One drawback of the CDM, however, is its high transaction costs and specialized skills requirements that have tended to limit the participation of African countries and experts to date.

Innovative Revenue-Sharing Mechanisms: One way of ensuring support for the development of renewables is by instituting appropriate revenue-sharing mechanisms. The benefits of renewables such as biomass cogeneration should trickle down to the small-scale farmer involved in growing the feedstock. A model revenue sharing mechanism has been implemented in Mauritius, where proceeds from the sale of cogenerated electricity are shared equitably among the key stakeholders - including the small-scale farmers who provide sugar cane to the factories. Similar revenue sharing mechanisms can be used as incentives for local participation in developing geothermal resources and other renewables, and are useful for building local support for scaled-up renewables development.