NAMA: NAMA for accelerated geothermal electricity development in Kenya

Title: NAMA for accelerated geothermal electricity development in Kenya
DescriptionOfMitigationAction: Kenya launched its National Climate Change Action Plan (NCCAP) in 2013, in which accelerated geothermal power development was identified as a mitigation option that has large greenhouse gas (GHG) emissions reduction potential and highly positive co-benefits. Kenya’s short-term ambitions for geothermal are outlined in the 5,000+ MW in 40 months initiative launched by the Government of Kenya (GoK) in 2013. This initiative aims to generate bring online approximately 1,500 MW of new additional geothermal capacity by 2017 from the current capacity of approximately 200 MW (MoEP, 2013). In the longer term, Kenya’s Vision 2030 states an ambition of 50000 MW of installed geothermal capacity by 2030. Although there is significant ambition and political will, reaching the short, medium and even long-term geothermal ambition will be a major challenge. According to the Business As Usual (BAU) scenario defined in the NCCAP, geothermal power will continue to expand to approximately 2500 MW by 2030 (NCCAP, 2012). This falls well short of Kenya’s stated ambitions. If the geothermal sector fails to deliver new capacity in a timely manner, Kenya is likely to prioritise alternative options. Recent discoveries of petroleum, coal and natural gas indicate that fossil fuels likely will increase in the electricity generation fuel mix. As high carbon intensity power sources, this would put the Kenya power sector on a high-carbon development pathway. There is, however, an accelerated growth scenario for geothermal power development in the NCCAP, which this NAMA intends to support. This accelerated growth scenario foresees significant up-scaling in private sector investment, as well as new actors (developers and Independent Power Producers [IPP]) entering the sector. In the scenario, the private sector will need to cover approximately 40-50 % of the required USD 20 billion investment to reach the 5,000 MW goal, compared with the historical 10-15% level (NCCAP, 2012). The BAU scenario in the NCCAP analysis identified two main constraints to the accelerated scenario: capital limitations of current (largely publically owned and financed) geothermal developers active in Kenya, and the limited number of private sector developers.   In recent years, Kenya has already undertaken significant steps to support the transition towards the accelerated scenario (the ‘transformation’), including the establishment of the Geothermal Development Company (GDC) that seeks to promote development of geothermal with large private sector participation. However, engagement with Kenyan stakeholders, international IPPs and developers, potential investors and development banks indicated that significant gaps remain in the support for geothermal development. What are the gaps and how is the NAMA designed to support on-going efforts to transform the Kenyan geothermal sector? Three main gaps in the efforts to support increased private participation were identified during a sector analysis performed through a multi-stakeholder consultation process that began in September 2012 and continued for over 16 months. These three gaps include an inadequate risk / return profile for IPPs and other developers, a need for targeted technical assistance focused on commercial and financial aspects in the short and medium term, and a potential human capacity gap for large up-scaling of the sector in the medium and long term. The NAMA aims to address the gaps in the existing and on-going effort to transform the sector through new, complementary, ‘low-regret’ actions. The NAMA proposes four specific components: Financial 1) Risk mitigation instruments –Three sub-components are proposed for the early stage risks: Provision of contingent grants,  complemented by a drilling risk insurance, and a Long Term Risk (LTR) guarantee. Financial 2) Premium payment mechanism –A premium payment mechanism would entail disbursement of a pre-defined additional income per MWh to increase financial attractiveness on specific fields for a limited period. Capacity 1) Technical Assistance Facility –A Technical Assistance Facility (TAF) will provide advisors , training, secondments and workshops addressing IPP integration, mobilising finance and expediting environmental and social approvals. Capacity 2) National Geothermal Capacity Building Programme - The NAMA will support a National Geothermal Capacity Building Program that undertakes training, research, mapping, planning and database development. The new, complementary components of the NAMA, in the short and medium term, will directly target an estimated 820 MW of geothermal developments of the 1500 MW outlined in the 5000MW+ in 40 months initiative. They will also indirectly  support achievement of the longer term ambitions in the long term. In terms of greenhouse gas (GHG) mitigation potential, the NAMA will contribute to directly abating approximately 3.77 MtCO2e per year in 2020. Sustainable development co-benefits of the NAMA include improved energy security through increased domestic supply, GDP growth through lower energy prices and increased employment. Climate resilience will be improved insofar as the electricity supply will be less dependent on hydroelectricity, and thus less exposed to changes in precipitation patterns due to climate change.
EntityName: Lead agency: Ministry of Energy and Petroleum
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EntityContactPerson1: Chief Geologist, Geoexploration department |Managing Director, Geothermal Development Company(GDC)|Ag. Director, Climate Change Secretariat
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EntityPhone1: +25420310112 Ext. 22180| +254202427536|
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EntityEmail1: cg@energy.go.ke|md@gdc.co.ke|fmohamed@environment.go.ke
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YearsForCompletion: 15
UsedCurrency: USD
AmountOfFinancialSupport: 288300000
CommentsOnFinancialSupport: Phase  1: 7.8 – 10.5 million USD /Phase 2: 172 - 278 million USD Phase 1: Grants / Phase 2: Grants, convertible equity, concessional loans Phase 2 volume and nature of support to be determined in detail in phase 1. 
AmountOfTechnicalSupport: N/A
CommentsOnTechnicalSupport: N/A
AmountOfCapacityBuildingSupportText:
AmountOfCapacityBuildingSupportChoice: selected currency
CommentsOnCapacityBuildingSupport: Financial support required to deliver capacity support has been translated into financial support and included in point F.1.1. <a></a><a>Phase 1: 5 FTEs per year, 1600 man/days technical support</a><a name="_GoBack"></a> Phase 2: 28 FTEs per year 
FinancialSupportRequired: Yes
TechnologicalSupportRequired: Yes
CapacityBuildingSupportRequired: Yes
OtherNAMA:
UNParty: Kenya
CoveredGreenhouseGases: CO2
AttachmentDescription:
Item Status: Published
NAMADeveloper: unfccc\bothe-palisoc
NAMAApprover: unfccc\bothe-palisoc
SecretariatNAMAAssignVerifier: unfccc\nama-av
SecretariatNAMAVerifier: unfccc\jwilliams
Publishing date: 2/21/2014
NAMAId: NS-83
ConversionRate:
GeneralComments:  Other relevant stakeholders: KenGen; Energy Regulatory Commission; Kenya Power; The National Treasury Kenya; Ministry of Devolution and Planning; Private developers; Technical and financial development partners; International organisations
StartYearOfImplementation: 2014
EstimatedFullCostOfImplementation: 4250000000
EstimatedIncrementalCostOfImplementation: 1300000000
EmissionReductionsAmount: 3.77 (2020)
EmissionReductionsUnit: MtCO2e/yr
EmissionReductionsComments: Based on 820 MW directly supported by new NAMA components, however NAMA likely to indirectly support further MW beyond 2020, and thus greater emissions reductions.
OtherIndicatorsComments: Greater MW online of geothermal compared with BAU, Average electricity prices, Number of permanent jobs created, Number of private sector firms engaged in geothermal electricity generation, Changes in wildlife population numbers, Loss or change of plant species, Number of temporary jobs created, Number of community members relocated, Number of people with access to electricity, Amount of electricity generated, Percentage of geothermal in the national energy mix, Development process duration - amount of time to achieve key steps in development process (i.e. reduction in lead time)
CommentsOnFullCostImplementation: 3.315-4.250 billion USD equivalent to total costs of 820 MW of additional geothermal above BAU
CommentsOnIncrementalCostImplementation: 1.3 billion USD (includes components seeking additional support and non-supported ‘domestic’ components)
TechnologyNSSI: Geothermal energy
TypeOfActionNSSI: National/ Sectoral goal
SectorNSSI: Energy supply
TypeOfRequiredCapacityBuildingSupportNSSI: Institutional level; Human Capital
TypeOfRequiredFinancialSupportNSSI: Grant; Concessional loan; Equity
OtherRelevantInformation: The NCCAP reaffirms that increasing the share of geothermal power can provide low-cost base load generation while facilitating economic activity and development, such as increased access to energy. These are key aspects with regard to supporting Kenya’s ambitions to become a middle-income country by 2030 through the provision of reliable, affordable and sustainable energy. In particular, geothermal power generation will play a key role in reducing the current reliance on hydropower, thereby improving climate resilience.
RelevantNationalPolicies: 5000+ MW in 40 months initiative (2013), Ministry of Energy and Petroleum Government of Kenya (2007). Kenya: Vision 2030. Nairobi: Ministry of Planning and  National Development and the National and Economic Council, Office of the Prime Minister. <a href="http://www.vision2030.go.ke/">http://www.vision2030.go.ke/</a>  Ministry of Energy (2012). National Energy Policy – third draft. Nairobi: MoE. Government of Kenya (2012). Kenya’s Climate Change Action Plan. Available at: http://www.kccap.info/. Government of Kenya, Ministry of Energy (2011). Updated Least Cost Power Development Plan. Nairobi 
Approval Status: Approved

Created at 2/21/2014 12:58 PM by Milan Klima
Last modified at 8/28/2015 3:42 PM by System Account

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