Lamu coal plant ill advised–report

Energy experts maintain that Kenya's Sh1,050MW coal-fired power plant in Lamu remains unviable not just from an environmental standpoint but also in view of dropping global crude oil prices.  

Global crude oil prices have hit an 18–year low where benchmark brent crude plunged to below $20(Sh2,098 )a barrel on Monday.

Those opposed to the project now argue Kenya is ill-informed to invest in coal energy which in view of the high cost.  A non-renewable energy source, it also poses environmental challenges owing to the burning of sedimentary rocks with high amount of carbon and hydrocarbons.

According to the US based–Institute for Energy Economics and Financial Analysis (IEEFA), the proposed Lamu coal plant would be a “costly mistake”, locking the country into a 25-year deal that would cost consumers more than US$9 billion(Sh943.6 billion), whether the plant is generating energy or not.

High costs for imported coal render the project unviable with a tone of coal currently trading at $34.05 (Sh 3,565).

This is higher than uranium, used to fire nuclear plant, currently averaging $27.20 (Sh2,851) and Brent which yesterday averaged $22.66(Sh2,376).

The project would further lead to excess generating capacity which currently stands at 2,370 MW against an electricity demand of 1,600MW.

“This project would lead to excess generating capacity in Kenya and sharply increase electricity rates for consumers,” IEEFA director of resource planning analysis David Schlissel said.

The end project will see consumers purchase a unit at more than $22cents (Sh23.08) as opposed to the US$7(Sh7) envisioned in the project.

Currently, households and industries are paying an average of between Sh11 and Sh17 per kilowatt-hour.

This puts coal far above the government plans to reduce the cost of a kilowatt-hour to a single digit, mainly with generation from cheaper renewable energy sources.

“The original assumptions that justified the project no longer apply,” IEEFA says in a recent report.

Coal which is termed the dirtiest source of fuel is now ranked the most expensive, raising questions about why the government would be interested in pursuing the Lamu plant.

“It will be a wrong move. This is a project that I wish does not continue,” a Nairobi based energy expert, who sought anonymity due to the sensitivity of the project told the Star yesterday.

“People will not get cheap electricity from coal. If it comes now with the current generating mix, it is going to be expensive,” he said.

The energy CS and ministry officials have remained mum about the project.

Residents led by rights group–Haki Africa and deCOALonize Lamu movement remain opposed to the project.

“Studies show serious environmental degradation and catastrophic harm to humans. We don't support the project, it should be disbanded,” said Hussein Khalid, executive director–Haki Africa.

deCOALonize campaign coordinator Omar Elmawi said: “We can't wish away the environmental, climate, air pollution and social impacts from coal. It is also clear that coal is the most expensive fuel. The only rational action would be to cancel this harmful project.”

He has called on the government to focus on renewable energy mainly geothermal, wind and solar which are only clean but also cost-efficient.

“The government of Kenya needs to act in the best interest of Kenyans and not investors,” he said.

In June last year, the National Environment Tribunal revoked a license issued by the National Environment Management Authority citing among others, failure to inspect engineering systems and not considering climate change aspects.

“There was a casual approach by Nema in such a serious project, they, therefore, failed to carry out their mandate as required by law,” the tribunal ruled.

The developer, Amu Power, a consortium of Kenyan and Chinese firms, have however appealed the decision, which is currently pending at the Environment and Land Court in Malindi.

The government has been keen to switch-off costly diesel power generators in favour of renewable energy as it continues to push for universal connectivity.

Currently, electricity supply is predominantly sourced from hydro and fossil fuel (thermal) sources. The generation mix comprises 52.1 per cent hydro, 32.5 per cent fossil fuels, 13.2 per cent geothermal, 1.8 per cent biogas and 0.4 per cent from wind.