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Joint Small Hydro and Cogeneration Projects Launch and Capacity Building Workshop


8th November 2007 at UNEP Headquarters Complex, Gigiri in Nairobi, Kenya


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Joint Small Hydro and Cogeneration Projects Launch and Capacity Building Workshop

The Project launch is organized by the United Nations Environment Programme Division of Global Environment Facility Coordination (UNEP-GEF), the African Development Bank (AfDB), the East African Tea Trade Association (EATTA) and the Energy, Environment and Development Network for Africa (AFREPREN/FWD).

Date: 8th November 2007

Venue: UNEP Headquarters Complex, Gigiri in Nairobi, Kenya

The follow-up and Capacity Building Workshop on Financing Cogeneration and Small-Hydro Projects in the Sugar and Tea Industry in East and Southern Africa is organized by Renewable Energy and Energy Efficient Partnerships (REEEP), EATTA and AFREPREN/FWD.

Date: 10th and 11th November 2007

Venue: Panafric Hotel, Nairobi

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This Project Launch is expected to be graced by His Excellency, the President of the Republic of Kenya, the Vice President of the African Development Bank and the Executive Director of UNEP. Other dignitaries include African Energy Ministers, Permanent Secretaries, Directors of national power utilities, regulators, representatives of key bilateral and multilateral funding agencies and banking institutions. Also in attendance will be experts in energy, electricity, environment, engineering, technology, finance, economics, private sector, universities and research centres, as well as civil society representatives. Over 500 participants are expected to attend the meeting.

Introduction - Projects' Briefs

The Small Hydro for Greening the Tea industry in Eastern and southern Africa Project

The ‘Small Hydro for Greening the Tea industry in Eastern and Southern Africa’ Project (http://greeningtea.unep.org) is expected to directly or indirectly benefit over 8 million people including tea farmers, workers, and their dependents in Eastern and Southern Africa through the installation of small hydro electricity generation stations in the region’s tea industry - a principal source of convertible currency for the region’s countries. In addition to reducing greenhouse gas emissions, the small hydro power installations will reduce the tea industry’s energy costs, enhance global competitiveness of the region’s tea industry and increase the share of global tea revenues flowing to the region’s tea farming community as well as provide opportunities for extending clean electricity to rural communities.

Project priority target countries that have endorsed this small hydro initiative include Burundi, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda and Zambia. With an initial target of 10MW of small hydro, this project is expected to stimulate 82MW of small hydro capacity in the region as well as set the stage for the development of an indigenous and vibrant small hydro design, manufacturing, operation, maintenance and investment industry in the Eastern and Southern African region.

The Cogen for Africa Project

‘Cogeneration for Africa’ is an innovative and first-of-its-kind clean energy regional initiative funded by GEF - set to run for 6 years from mid 2007. The initiative is co-implemented by UNEP and AfDB and executed by AFREPREN/FWD. Cogeneration for Africa will build on the success of cogeneration in Mauritius, which currently meets close to 40% of the country’s electricity needs. It seeks to significantly scale up the use of efficient cogeneration systems initially in seven Eastern and Southern African countries (Kenya, Ethiopia, Malawi, Sudan, Uganda, Tanzania and Swaziland).

The Cogeneration for Africa project will work with promising and profitable ago-industries with a solid track record and that have demonstrated commitment to expanding their cogeneration investments in Africa. Notable agro-industries that are expected to actively participate in the project include private-sector-owned and profitable sugar companies as well as private sector entities involved in agro-processing industries such as pulp and paper, forest products, palm oil, ground nuts, sisal and rice.

‘Cogeneration for Africa’ is designed to promote wider use of efficient cogeneration options in Africa and eventually stimulate over US$ 300 million of cogeneration investment in the region. It will also work with policy makers to expand clean electricity sales from cogeneration plants to the national grids of the region which will, in turn, deliver substantial socio-economic benefits at local and national level as well as expand the clean energy industry in the region. Adoption of cogeneration has several attractive benefits for different stakeholders, namely:

Sugar Factories and other Agro-Processors and Forest Industries: Presently, the world sugar prices have continued to decline. Many agro-products and forest industry products are facing similar world market price declines. In addition, European Commission sugar support price mechanisms that have, in the past, been enjoyed by many African countries, are now being wound down. By adopting efficient cogeneration technology, agro-industries such as sugar factories as well as forest industries can minimize the risks associated with declining commodity prices by selling surplus electricity to the national grid thus realizing a lucrative and, often, more stable revenue stream.

Smallholder Farmers: For smallholder farmers such as those growing sugar cane, sale of electricity to the national grid by the sugar factory can also provide an additional source of revenue. An innovative revenue sharing system in the sugar industry of Mauritius has even the smallest sugar farmer to benefit from sale by sugar factories of of surplus electricity to the grid.

Governments/Power Utilities: Manyu sub-Saharan African countries have experienced major power supply shortfalls largely due to drought-related hydropower crises. This has been compounded by the high cost of oil which dramatically increases the cost of procuring emergency oil-fired power plants . Cogeneration in agro-industries and forest industries can contribute to addressing the on-going African power supply shortfalls by bringing on stream new power generation capacity that is significantly lower cost than many of the oil-fired emergency power plants that are currently being used in many African countries. Many of these potential cogeneration plants are located at the edges of national grids and would thus assist in reducing transmission losses as well as improved power grid stability.

Local Investors and financing institutions: Cogeneration power plants required by most agro-industries and forest industries in the region are generally small to medium scale in size - ranging from 5MW to 50MW. Consequently, the investment needed is often within the capability of both local investors and local banks.

Local Communities: As most agro-industries and forest industries with cogeneration potential are located in remote rural areas, they provide a good opportunity for expanding rural electrification. This would enable the rural communities to enjoy the benefits of electricity such as improvements to health care facilities and schools as well as enhancing potential for agro-processing facilities such as milk coolers and maize mills.

Key Activities of the Project:

  • Developing and enhancing the capacity of project developers, technical service providers and local manufacturers of modern and efficient cogeneration systems.

  • Mobilizing financing for cogeneration projects.

  • Demonstrating the commercial, technical, economic and environmental benefits of modern and efficient cogeneration systems in a number of new cogeneration plants and enhancing the confidence in the region’s cogeneration market.

  • Promoting more favorable policies and institutional arrangements that support cogeneration.

Expected Key Outcomes:

  • During the initial six years, Cogeneration for Africa is expected to lead to the development of 40MW of modern and more efficient cogeneration capacity as full-scale promotion projects (FSPPs)

  • By the end of the six years, Cogeneration for Africa is expected to have set the stage for accelerated cogeneration investments through the promotional projects. Another 20MW of cogeneration projects in the pipeline will be directly supported through the provision of advice, services and training.

  • Beyond the initial six-year phase, Cogeneration for Africa is expected to stimulate a total installation of an additional 200MW of cogeneration capacity in the medium to long term

Renewable Energy and Energy Efficiency Partnerships (REEEP) - Financing Cogeneration and Small-Hydro projects in the Sugar and Tea Industry in East and Southern Africa is another regional initiative covering Ethiopia, Mozambique, Tanzania, Uganda and Zambia (http://www.afrepren.org/reeep/) . The initiative seeks to analyze, understand and build capacity for addressing the challenges associated with lending to the Tea and Sugar industry for sustainable renewable energy investments, and enhance networking among financial institutions interested in financing these sectors. It links with 2 ongoing UNEP/GEF projects, on Greening the Tea Industry in East Africa (small hydro), and Cogen for Africa (bagasse cogeneration).