Ethio-Djibouti electric power interconnection project inaugurated

The 283km long Ethio-Djibouti electric power transmission project inaugurated on Wednesday.

The 230-kV power transmission line would enable Djibouti to import 35-megawatt of electricity from Ethiopia. Ethiopia in return would obtain up to $1.5 million a month from the power export.


The power interconnection project was inaugurated at the presence Prime Minister of Ethiopia, Meles Zenawi and President of the Republic of Djibouti, Ismael Omar Guelleh in Djibouti.


In his speech at the inaugural ceremony, Prime Minister Meles said in addition to the existing railway interconnection, Ethiopia and Djibouti are building strong road and telecom infrastructure.


He said besides the current infrastructure, agreement has been reached to connect Port Djibouti and Tajura Port (to be built soon) by constructing two modern railways.


Infrastructure ties between the two countries are exemplary for the nations in the region and beyond, Meles said.


The premium said activities undertaken so far by the two nations are remarkable, adding, more works need to be done to further strengthen the existing cooperation and economic ties between the two brotherly people.


He confirmed that Ethiopia wants to strengthen its economic ties with Djibouti.


Chief Executive Officer of the Ethiopian Electric Power Corporation, Mihret Debebe for his part said the transmission project was completed at a cost of $1.5 billion.


He said 80 percent of the finance was secured from the African Development Bank while the balance was covered by governments of the two nations.


The power transmission line is the first of its kind to have an Optical Ground Wire which can be used for telecom services as well, Mihret said.


The transmission route would also help supply 12 Ethiopian border towns with electricity.


The inaugural ceremony was also attended by higher government officials of the two nations as well as representative of the African Development Bank. 

10 firms eye power transmission master-plan contract in Oman

Wed, 05 October 2011

By Conrad Prabhu -

MUSCAT — Around 10 local and international engineering consultants are preparing to bid for a key government contract to master-plan the long-term development of Oman’s power grid.
The state-run Oman Electricity Transmission Company (OETC), which owns and operates the transmission network serving much of the northern half of the Sultanate, plans to appoint a qualified consultancy firm to undertake the master-plan study.

According to Rashid Said al Badwawi (pictured), Strategic Planning and Projects Manager, the study is indispensable to charting the scope and pace of the expansion of the Main Interconnected System (MIS) covering an estimated half a million customers.

“Unlike previous master-plan studies which typically cover five-year growth scenarios, the new study will make a long-range assessment of network growth spanning the 2014-2030 timeframe. OETC needs to be suitably prepared to respond to the transmission requirements of the country especially at a time of high demand growth, fuelled by investments in tourism, industrial and infrastructure projects,” Al Badwawi said in comments to the Observer.

Consultancy firms that have signaled a desire to participate in a competitive tender for the master-plan study contract are: Energoprojekt Entel, WS Atkins, Yas Consulting, Universal Consulting, Mott Macdonald & Company, Muscat International Consultants, Monenco Consulting, Poyry & Company, Dawood Engineering and Worley Parsons Oman. Bids open on October 17, 2011.

Al Badwawi said the master-plan study will cover a broad range of objectives. “It will look at the kind of projects envisaged in the future, network upgrades necessary in the futures, issues facing the network, and so on. With a long-range master-plan, we will also be better equipped to plan for projects that involve lengthy lead times, as well devise networks optimised for transmission efficiency, and so on. Our ultimate goal is provide better services to our customers.”

While electricity demand growth varies from year to year, demand can often surge to as much 10 per cent year-on-year, which is a steep jump for utilities anywhere in the world, says Al Badwawi. Consequently, OETC must be prepared to respond to these growth challenges by planning well ahead of anticipated demand, he stresses.

The master-plan study, the official said, will cover all of the inhabited regions of the Sultanate with the exception of Dhofar Governorate, Musandam Governorate, and areas served by the Rural Areas Electricity Company (REAC).

Asked about coverage of Duqm, which is the site of an ambitious industrial development anchored by a port and dry-dock complex, Al Badwawi said: “At the present juncture, there is no plan to cover Duqm.

However, there have been some provisional discussions, notably with the Supreme Committee for Town Planning, on extending the network to Duqm. Should the need arise to include Duqm in the master-plan study, a call will be taken at that point.”

“While this new capacity will go a long way in meeting electricity demand growth over the next several years, additional capacity will become necessary sometime thereafter, meaning that we can expect further growth in the transmission network as well.”

Courtesy of Oman Observer

New fund for geothermal power in East Africa

In 2012, a new way of funding early stage geothermal projects in East Africa will be launched to overcome a series of barriers that have traditionally constrained power sector infrastructure investment in the region.

Designed by KfW Entwicklungsbank (the German development bank) and the African Union Commission, the Geothermal Risk Mitigation Facility will provide between €20 million and €50 million to surface studies and exploration drilling of geothermal prospects in Kenya, Uganda, Tanzania, Rwanda and Ethiopia.

Investment in power sector infrastructure in East Africa has been poor, with most recent infrastructure investments dominated by the telecommunications sector. It is estimated that Africa’s power sector requires US$40.8 billion of investment each and every year, but actual investment is far below these levels due to financial, regulatory and institutional constraints.

Financial issues are characterised by limited availability of local finance, limited access to international markets due to poor sovereign credit ratings, competition for funds and project specific risks of currency exposure, high inflation and low electricity tariffs.

Investors require confidence that regulatory structures protect their investment. These include aspects such as minimum service standards, adjustment mechanisms, access to networks, entry and exit conditions for participants and investment obligations. In particular, enforcement and revision of tariffs in offtake agreements are crucial to attracting investment.

While East African governments often lack the institutional capacity to establish the necessary legal and financial conditions, power sector reforms have been initiated in many countries. Reform laws have been passed leading to unbundling of state monopolies, some privatisation, increased regulatory autonomy and greater private sector participation.

Investment in East Africa’s geothermal sector

Hydropower and thermal generation currently provide more than 95 per cent of electricity in East Africa. Years of sustained droughts have reduced the generation available from hydropower resulting in supply shortages, instigation of emergency diesel generation and increased power prices. Despite an estimated geothermal resource potential in East Africa of more than 7,000 MWe, there are currently only two operating plants, the 200 MW Olkaria development in Kenya and the 7 MW Aluto Langano plant in Ethiopia. Utilisation of geothermal resources has the potential to provide firm baseload generation for the region, improve security of supply, increase access to electricity and reduce the frequency and severity of energy price fluctuations. Many international and regional organisations, both public and private, have recognised the potential of geothermal in the region, yet progress remains slow.

Geothermal development in the region is hampered by:

• Poorly explored and understood resources 
• High up-front capital costs and long lead times 
• Limited availability of human/technical resources 
• Insufficient pricing support 
• Insufficient enabling environment for private sector 
• Inadequate regulatory framework particularly around mining and concession rights 
• Lack of specific geothermal provisions in national policy 
• Competing priorities in the energy sector, eg oil and gas 
• Competing government priorities, eg health and education 
• Geothermal fields located distant from the electricity grid 
• Limited capacity of local utilities to participate in new geothermal developments

The complications and cost of proving the size and quality of a resource mean that accurate assessments of resource potential and hence project design and specific costs cannot be determined until drilling has taken place. This can result in lead times of several years and high up-front costs to prove the resource to the point where finance for subsequent development can be secured. To address such issues, different types of risk mitigation schemes have been developed.

International experience of risk mitigation schemes

It is commonly cited that the main financial barrier to geothermal development is the high up-front investment required to drill and prove the resource in order to demonstrate that there is a potentially viable project. Geothermal risk mitigation schemes aim to remove this barrier.

The risks associated with geothermal drilling are:

• Technical drilling risk, comprising problems during the drilling process. Usually this can be covered by standard market-based insurance. 
• Resource exploration risk, the potential to not find an economically viable geothermal resource.

It is the second of these that risk mitigation schemes seek to address by providing developers with the financial security needed until completion of drilling works and successful well testing.

Risk mitigation schemes have different designs based on the physical and institutional settings, the desired outcome from the scheme and the current stage of industry development. In some cases, the objective is to stimulate commercial geothermal development in a known geological setting with readily quantifiable risks. Therefore, the emphasis is on successful production rather than innovation. In contrast, the emphasis of others is more on exploration and proof of technical concepts, so projects that test a range of geological settings are favoured.

Schemes fall into three categories: grants, loans or insurance. Loans may have differing interest rates depending on the success of the project. Some schemes are set up as a revolving fund in that successful projects replenish the fund by repaying loans, while if the projects are unsuccessful, the loans are not repaid and become a grant. Grants and insurance schemes are more favoured than loans, because of the impact on the developer’s credit rating if the loans are not repaid even where that is an intrinsic part of the risk mitigation scheme, ie loans are not repaid if the well is unsuccessful.

Some schemes provide grants for successful drilling (eg Australia), but most compensate for failure within completion of an agreed programme, eg a kind of insurance. Most schemes require a definition of failure on which payments may be made. Typically, this comprises key technical characteristics of the resource (temperature, pressure, flow, etc), which are verified during testing at completion and may be aggregated over one or more wells.

The Geothermal Risk Mitigation Facility for East Africa

The Geothermal Risk Mitigation Facility for East Africa (GRMF) was designed to stimulate early stage geothermal investments by drawing on the experience of other risk mitigation schemes, the needs of the sector and the views of stakeholders in the region.

The existing regional scheme (ARGeo) provides exploration risk insurance. The KfW GRMF seeks to broaden the reach of risk mitigation schemes, by offering an alternative for developers in East Africa and by supporting surface studies. This increases the likelihood that developers will find a risk mitigation approach that suits their requirements, which in turn increases the likelihood of successful resource development in the region.

As such, the overall design principles included:

• Availability of substantial grants to encourage competition between applicants 
• Incentives to encourage successful exploration drilling 
• Clear criteria for acceptance and grant provision 
• Simple and rapid application and assessment procedures 
• Low compliance costs

There are a number of regional benefits to ensuring that the GRMF is open and competitive. These include attracting the “best” geothermal prospects and developers; supporting the regional objectives of the East Africa Power Pool to diversify regional power supply; collection of regional information to reduce exploration risks in the future; using drilling rigs in an efficient manner and development of capabilities across the region.

The objective of the GRMF is to encourage public and private investors to develop geothermal prospects for power generation in East Africa by providing grants for two types of activity:

• Surface studies to determine the optimal location of exploration wells at the most promising geothermal prospects 
• Drilling of exploration wells at the most promising geothermal prospects to assist developers secure finance for subsequent exploration or appraisal wells

As such, the GRMF encourages developers to make every effort to exploit resources by rewarding successful drilling. Support comprises of direct grants for drilling of exploration wells whether they are successful or not. In addition, in order to provide additional incentives for resource development, the GRMF will also provide contingent grants if the developer secures finance for subsequent exploration or appraisal wells within a certain period of time after programme completion.

While the GRMF’s vision is to support East African Rift System countries, initially the facility will be a pilot and focus on geothermal prospects in Ethiopia, Kenya, Rwanda, Tanzania and Uganda due to availability of funding. It is envisaged that the GRMF will be expanded to other countries as it attracts additional funding.

The selection of a host to manage and administer the GRMF was fundamentally important as the host would be required to fulfil the needs of the funders along with internal organisational requirements in the areas of governance, management, process administration, technical, legal, commercial, quality assurance and auditing aspects of GRMF management.

The African Union Commission (AUC) was selected as the host given its strengths in the following areas:

• Organisational objectives and mandate to host the GRMF 
• Existing relationships with geothermal stakeholders 
• Mandate to operate in the energy and geothermal sectors 
• Alignment with Funders objectives 
• Potential to expand GRMF to all countries in the East African Rift System

The main bodies of the GRMF will be the Oversight Committee, the AUC’s Regional Geothermal Co-ordination Unit, a Technical Consultant and an Auditor.

Figure 1: Organisational structure of Geothermal Risk Mitigation Facility

Application process

The GRMF will provide grants to developers through a competitive, transparent and rigorous selection process. Applications from developers will be accepted by a specified closing date each year. Exploration drilling applications will be evaluated against criteria such as:

• Exploration experience and expertise 
• Indication of geothermal resource based on results from previous studies/drilling 
• Robustness of plans and schedules for exploration drilling 
• Value for money that costs are consistent with the market norm 
• Appropriate concession agreement, environmental and any other relevant permits in place 
• Offtake agreement or equivalent in place or under negotiation 
• Robustness of business case for development of geothermal resource and power plant 
• Likely installed capacity of envisaged geothermal power plant 
• Financial, management and organisational capability

Applications that score above a pre-defined threshold will be evaluated in more detail and may be asked to provide further information. Of these, the highest-scoring applications will be invited to negotiate the details of the grant agreement including upper limits for grants and milestones definitions included in plans for surface studies/exploration drilling.

SKM was appointed by KfW to design the Geothermal Risk Mitigation Fund.

Courtesy of  SKM

Tap Into Domestic Savings, Reduce External Borrowing – Kibaki Urges

 

President Mwai Kibaki has called for the strengthening of regional capital markets in order to boost their capacity to generate funds towards the implementation of transport and energy infrastructure projects.

Kibaki said tapping into domestic savings would reduce the perennial over-reliance on external borrowing and grants for infrastructure financing.

He noted that development of transport and energy infrastructure is a gradual process, which requires huge sums of money, and hence there is great need to diversify sources of funding, methods of ownership and management of infrastructure assets.

“One of the ways of raising funds that we have not fully exploited is the development of national and regional financial instruments. We need to move fast to further strengthen our capital markets to enable them develop products such as infrastructure bonds and municipal bonds,” he said.

Kibaki was speaking during the official opening of the COMESA-EAC-SADC tripartite and IGAD Infrastructure Investment Conference in Nairobi on Wednesday.

The two-day conference seeks to focus on the development of infrastructure in transport and energy along corridors serving the Eastern and Horn of Africa regions.

The corridors serve 11 countries with a combined population of 280 million people and gross domestic product (GDP) of US$150 billion.

Kibaki said this region has one of the lowest per capita in energy production and consumption whereas it is endowed with huge potential in terms of hydro, geothermal, gas, coal and wind.

“As a region our installed power generation capacity is inadequate to meet our needs for economic transformation of our countries,” he said.

He said creation of industrial states is a matter of necessity for the purpose of eradicating poverty.

Kibaki emphasized the need to collectively invest in generation capacity and build power grid interconnectors in order to facilitate trade in power from surplus to deficit regions.

He said there were a number of projects already in the pipeline to increase power generation capacity and to build regional interconnectors through the Eastern Africa Power Pool and the Southern Africa Power Pool.

Kibaki said Kenya’s development of the Lamu-South Sudan-Ethiopia Transport (LAPPSET) corridor is at advanced stages.

He said the country’s economic and transport corridor would open up vast parts of Kenya and stimulate economic and social development.

He said the project would also create vital links with Ethiopia and Southern Sudan thereby increasing trade and investment.

“Our common experience over the years has been the decline in the railway sector as the primary mode of transport for long distance of freight and passengers. This is despite the fact that railways are the most cost effective mode of transport over long distances,” he said.

Kibaki attributed the main cause of the decline in railways transport to lack of investment in track maintenance, upgrading and deferred or poor maintenance.

He said Kenya and Uganda governments have put in place measures to revamp the Kenya-UgandaRailway line.

By James Anyanzwa, The Standard

Kenyan firm plans 61 MW wind power farm

Mon Nov 14, 2011 6:34am GMT

NAIROBI (Reuters) - Kenyan firm Kinangop Wind Park Ltd plans to generate 60.8 megawatts (MW) of electricity for the national grid by harnessing renewable wind power, it said on Monday.

The east African nation relies heavily on hydroelectric dams for power, which have proved inefficient in times of drought.

Recent back-to-back incidences of low rainfall have slashed the country's hydropower production, leaving consumers with high electricity bills after producers turned to more expensive thermal power.

"The project consists of building a 60.8MW wind power park in Kinangop in order to supply additional power to the national grid," it said in a statement.

The firm said it will apply for a power generation licence from the sector regulator on December 5.

Investors in the east Africa's largest economy are turning more to renewable sources such as wind and geothermal to help stabilise supplies of electricity.

Kenya has several wind power projects lined up for implementation including one for 300MW planned for the north of the country.

Lake Turkana Wind Power (LTWP) -- a subsidiary of Dutch wind power firm KP&P -- behind the 617 million euro project, said in March construction would start by December.

Kenya's main power producer Kenya Electricity Generating Company is already generating over 5 MW from wind in the outskirts of the capital.

Another firm, Aeolus Kenya, is in the process of implementing a 60MW wind power project to be located in Kinangop Plateau in central Kenya.

Kenya has set a target of 30,000 megawatt (MW) generation by 2030, the year in which it hopes to become a middle-income country. At present it has a capacity of 1,400 MW and is slated to install another 2,000-3,000MW within the next five years.

Courtesy of Reuters

Green Energy Has Clear Winners and Losers in 2011

By: Albert Bozzo- Senior Features Editor (Published: Friday, 11 Nov 2011 | 4:29 PM ET)

The clean, or green, energy sector is more dynamic than ever.

Not only is research and development pushing forward in so many different directions, certain technologies are evolving quickly, while others are just getting going.

Source: Aerotecture International An Aerotecture turbine near Chicago.

New investment is key in this diverse, capital-intensive sector, and despite a somewhat sluggish global economy, venture capital is finding plenty of opportunity in clean tech.

The year 2010 was a record, with $7.8 billion invested globally, according to the closely followed data of Cleantech Group.

More recently, some $2.23 billion was invested across 189 deals in the third quarter. That's 12 percent more than the previous quarter. What's more, 59 percent of those deals involved second or later rounds of financing, an indication that the companies involved were living up to expectations.

The sector's dynamism, however, may be best reflected in the gravitation of investment capital.

For the first time, energy storage received the most venture capital funding ($514 million), displacing solar ($350 million). Solar also lost the No. 1 spot in deal volume. Energy efficiency was the most popular area, with 34 funding rounds.

Energy storage (e.g. batteries) — considered something of a silver bullet — still presents sizable technological hurdles, while efficiency is now clearly the low-cost, plain vanilla version of clean tech. 

This rotation of sorts is commonplace in maturing industries. Still, to mark our annual November "Green Is Universal" Week, we decided to take a broader view — wrapping in other developments in the alternative energy sector this year — to create our "Winners and Losers" special report.

By no coincidence energy efficiency and storage, specifically electric cars, along with the booming recycling business, are our three winners.

At the same time, the U.S. solar industry is clearly one of our three losers. So is the global nuclear business. Both, unfairly or not, are linked to major negative news events: the stunningfailure of solar producer Solyndra, an Obama administration's  investment darling, and the horrific near meltdown of the Fukushima-Daiichi nuclear power plants in Japan. 

Nothing as fatal as those events struck the ethanol industry, our third loser, which is more a victim of conventional market forces and uncertainty over government incentives, a key element in the alternative  energy sector.

All three losers, however, have one thing in common — momentum has temporarily shifted against them and that's rarely good for keeping and attracting investors.

Consider "Green Winners & Losers 2011" a progress report, not a final grade. For these groups, like the alternative energy sector in general, it's way too soon for that. Dynamic, indeed. 

Courtesy of CNBC

Aggreko Halts Power Supply To The National Grid

By Our Online Team.

Aggreko PLC has halted power generation at a 50-megawatt emergency thermal power plant in Uganda because of a shortage of diesel, the Uganda electricity distribution company said on Wednesday. The diesel shortage is attributed to supply disruptions along the Uganda-Kenya import route.

Florence Nsubuga, UMEME’s outage project manager, said on Wednesday that the shutdown has reduced electricity supply to the national grid, leaving UMEME with no option but to ration power.

Uganda’s energy minister said in July that government would terminate power purchase deals it has with a number of thermal plants around December, when the first unit of the 250-MW Bujagali Hydropower Project is commissioned. The country spends at least $300 million a year to subsidize diesel-fired thermal-power plants.

Courtesy of Red Pepper-Uganda