Transcript CLIENT NAME TITLE Description Date

EcoSecurities Group Ltd.
Environmental Finance Solutions
Olkaria III Geothermal Baseline, Kenya
October 22nd, New Delhi
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Olkaria III Geothermal Project, Kenya
51 MW geothermal project connected to Kenyan grid
Expected output of 411 GWh per annum
Located on the Southern side of Lake Naivasha, in the Rift Valley Province of
Kenya
Project developers - Ormat International Inc.
Kenya ratified the Kyoto Protocol in August 1994
Geothermal power is on the Kenyan Government’s ‘positive’ CDM project list
Construction is expected to commence January 2003
Expected first period of delivery is last quarter of 2004
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GHG Sources and Sinks and Project Boundaries
Emissions
Project case
Baseline scenario
Direct on-site
Emissions related to the production of Emissions related to the production of
power
power
Indirect on-site
None expected
Direct off-site
Transport of construction materials - Transport of fuel to the plant – excluded
excluded
Distribution and transmission losses –
Distribution and transmission losses – excluded
excluded
Indirect off-site
None expected
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Kenyan Electricity Grid
Kenyan grid has a capacity of just over 1000 MW
2/3 of this is hydro-electricity
Drought over 3 consecutive seasons led to serious power shortfalls in 2000,
leading to the installation of emergency power projects (predominantly diesel)
Also multilateral credit withdrawn in 1992, delaying the implementation of
projects
Consequently, Kenyan Government encouraging:

IPPs

Indigenous energy sources

Diversification away from hydro
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Kenyan Least Cost Expansion Plan
The plan recommends hydro, diesel and geothermal additions and:

The closure of the Kipevu 75 MW fuel oil fired plant from 2005 IF
committed projects come online.

Diesel will act as a stop-gap if additional generation is not implemented
as anticipated

The Expansion Plan recommends contract extensions up to 2019 for
existing PPAs (includes 105 MW of emergency diesel)

Plans to import 120 MW from 2006 (20 MW from Uganda, 100 MW
from South Africa)
Olkaria III will NOT displace capacity additions planned to come online, or
imports of electricity from Uganda and South Africa
If any of the capacity additions do not go ahead (including Olkaria III) then
existing thermal capacity will continue to be used
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Baseline Scenarios
Baseline Scenario 1: Continued operation of the 75 MW fuel oil fired Kipevu
plant
CEF 777 tCO2/GWh
Baseline Scenario 2: Continued operation of diesel plants (total of 105 MW
under stop-gap PPAs)
CEF 849 tCO2/GWh
Baseline Scenario 1 was chosen because plant already belongs to Govt, does
not require additional PPA to continue operating, most conservative.
Project Scenario: Implementation of 51 MW geothermal project
CEF 143 tCO2/GWh
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Calculating Emission Reductions
Baseline Emissions per year = Total
Project Electricity Output (GWh)
Project Emissions per year = Total
Project Electricity Output (GWh)
X
X
Kenya grid CO2 emissions factor
(777tCO2/GWh)
Project CO2 emissions factor (143
tCO2/GWh)
Annual baseline emissions = 411.3 GWh *
777 tCO2/GWh = 319,581 tCO2
Annual project emissions = 411.3 GWh *
143 tCO2/GWh = 58,816 tCO2
Baseline Emissions over crediting lifetime
(10 years) = 319,581 tCO2 * 10 = 3.2
million tCO2
Project emissions over crediting lifetime
(10 years) = 58,816 tCO2 * 10 = 588,160
tonnes tCO2
Therefore total emission reductions =
2.6 million tCO2 over 10 years
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Environmental and Socioeconomic Impacts
Environmental
Socioeconomic
An EIA was conducted and approved
by the relevant authority. The EIA
covered:
Increased energy security
Reinjection of geothermal brine: not
hazardous
Gaseous pollution: no significant risk
posed
Seismic activity: Reinjection of fluids
will minimise seismic risks, EIA states
increased risk minimal
Reduced use of foreign exchange for
purchasing petroleum products
Increased employment opportunities
Improved infrastructure such as roads
Increased income and standards of
living
Capacity building and technology
transfer benefits
Visual impacts: All located at one site,
impact minimal
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Conservative baseline
Oeko model CEFs used for baseline scenario, assumed good operating
conditions. Kipevu commissioned in 1977.
Emissions deducted in the project case, evidence to suggest these emissions
would have been emitted in the baseline case.
Although baseline scenario 1 chosen, it is likely that the project will displace
some diesel generation.
Evidence from tester phase to suggest the project will operate at a higher
capacity than anticipated.
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Thank you!
Belinda Kinkead +44 (0) 1865 202 635
[email protected]
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