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The East African : Dec 12th 2015
38 The EastAfrican BUSINESS DECEMBER 12-18,2015 ENERGY: AMERICAN FIRM AGREES TO ADD 55MW TO THE GRID More electricity as KivuWatt adds 25MW, Symbion signs methane deal REG is expected to save huge amounts of money that it used in pu≥chasing elect≥ical powe≥ f≥om independent p≥oduce≥s By KABONA ESIARA The EastAfrican R wanda’s efforts to generate electricity from methane gas in Lake Kivu are starting to yield results with its installed capacity set to increase to 186MW this month when 25MW is added to the national grid. The national demand of electricity is 105MW. The first phase of the KivuWatt power plant, which is at the pilot stage, has already added 22MW to the grid as part of the 25MW it is to generate in the first phase before embarking on the remaining 75MW to make it 100MW. And now, Symbion Power Lake Kivu Ltd, an American company, last week signed a contract to generate 55MW. Symbion is the second independent power producer to invest in the methaneto-power plant after KivuWatt signed a concession. “The country has enough power,” said John Bosco Mugiraneza, the chief executive officer of the national electricity utility Rwanda Energy Group (REG). “Should any incident that disrupts power generation occur, there will be no load-shedding.” Lake Kivu contains an estimated 55 billion cubic metres of naturally occurring methane gas. The total power generation potential of this resource has been conservatively estimated at more than 500 MW over 40 years. The government also owns Kibuye Power 1 (KP1), a 3.5MW methane-to-power plant that was used as a pilot project to prove to investors that the methane gas in Lake Kivu can be used in power generation and there is technology to support investment in clean, affordable and reliable energy sources. Significant drop in tariffs The investments at Lake Kivu are expected to result in a significant drop in electricity tariffs. Power prices went up in September by 35 per cent with residential consumers now paying Rwf182 (0.24 US cents) per unit and industries Rwf126 (0.16 US cents) per unit. Residential and industrial consumers used to pay a uniform Rwf134 (0.17 US cents) per unit. The increment was largely attributed to higher costs of generation amid rising demand. REG is also expected to save huge amounts of money that it used in purchasing electricity from independent power producers and on subsidies on power costs to keep final tariffs affordable. By June, Rwanda was generating 51.8MW from diesel generators and spending $37 million annually in subsidies to make power affordable. The cost of electricity from the independent power producers’ thermal plants is 0.33 US cents per Kwh, which is the most expensive option. Minister for Infrastructure James Musoni said the 0.8 US cents per kWh feed in tariff that the government negotiation team got was a good deal in a market where the industrial electricity tariff is 0.18 cents. Symbion’s tariff is also cheaper than the 0.12 cents at which fellow American company KivuWatt is selling its power to Rwanda’s energy utility company. “The people who negotiated the power purchase agreement with KivuWatt on behalf of the government did not have experience; that’s why they settled on that high price,” a REG official told The EastAfrican. “Phasing out the heavy fuel plants is to be gradual as affordable and reliable electricity sources are developed,” said Mr Mugiraneza. With the breakthrough in commercial methane-to-power technology, Mr Mugiraneza is optimistic that ongoing projects on Lake Kivu will add to the targeted power generation capacity. Paul Hinks, the Symbion Power CEO, has promised to deliver the new project much earlier, saying the firm would use its savings to fund the project should lenders take too long to release the funds. “We shall start the work without waiting for the financial close and we expect to bring on the 14MW much faster than specified in the power purchase agreement,” said Mr Hinks. “Probably, 18 months from now. “We ask the lenders for debt financing for the project to speed up their efforts so that we can accelerate delivery of the power to the people of Rwanda.” In a competitive tender, Symbion was granted the right to develop a 55MW methane gas-to-power plant on Lake Kivu under a 25year concession. The production facilities will have two primary elements: A gas extraction and processing plant and an onshore gas-fired power plant. The sole offtaker for the project is REG. The base load power generated The KivuWatt working platform on Lake Kivu in Western Province of Rwanda. Picture: File EFFORTS TO PRODUCE POWER FROM METHANE 2006: The Rwandan government hires Ludan Engineers, an Israeli firm, to design the KP1 experimental methane-to-power plant in Lake Kivu. 2007: Ludan’s design fails to produce electricity and the firm is sent packing. The government also falls out with erstwhile partner Dane Associates over mismanagement of pre-project finances. 2008: The government takes over the project. A Rwandan engineer, Alexis Kabuto, redesigns the plant and successfully produces 0.5MW. from this domestic resource by Symbion will help to stabilise electricity supply and help to bring down the overall cost of electricity. The implementation of the project will follow a modular deployment of four offshore extraction barges and corresponding onshore processing 2009: Design of the KP1 is improved, increasing the plant’s installed capacity to 3.5MW, which is fed into the national grid. 2009: The success of the project attracts KivuWatt Ltd, a subsidiary of CountorGlobal, an American firm, to sign a 25year concession agreement for 100MW methane-to-power deal. 2015: Symbion Power Lake Kivu Ltd, an American energy firm, signs a 55MW concession deal with the Rwandan government to generate power from methane gas. facilities, each using established gas industry technologies. Now that the power purchase agreement (PPA) is in place, design and procurement for the project have begun. After achieving financial close, Symbion expects the first 14 MW to become available in 15 months, and the full 50 MW to be commissioned in 36 months. Utility fi≥ms in bid to ≥educe powe≥ losses By JAMES ANYANZWA The EastAfrican EAST AFRICA’S utility firms are working to reduce power losses through transmission and distribution as the region inches closer to a grand plan of power sharing to ensure reliability and cost savings. The East African Power Master Plan (EAPMP), which was developed in 2003, recommended the establishment of a power pool to facilitate power trade and joint leastcost power development planning. Partner states are now implementing programmes to develop a regional power exchange market and accelerate interconnection. Kenya and Uganda have embraced ambitious measures to control technical (transmission) and commercial (distribution) power losses and thus conserve energy, protect revenues and save consumers from possible rises in tariffs. “Distribution losses are a concern to every utility and, if not addressed, erodes company revenue and negatively impact on electricity pricing,” said Selestino Babungi, managing director of Uganda’s Umeme Ltd. Mr Babungi said energy losses manifest themselves in two forms: Technical, through the configuration of the network; and commercial, mainly through power theft or billing anomalies. “Our network studies estimate the technical losses at around 13 per cent, with commercial losses at about six per cent,” Mr Babungi told The EastAfrican. “Umeme has been moderately successful in reducing losses over the past 10 years. “At the commencement of the concession in 2005, the losses were in the range of 38 per cent but we had achieved a sustained reduction to 19.2 per cent as of June 2015.” Umeme seeks to drive down energy losses to 15 per cent by 2018. Kenya hopes to cut losses through transmission and distribution to as low as nine per cent from 17.5 per cent as Kenya Power loses about Ksh1 billion ($9.64 million) of its revenues annually on each percentage point loss in power. The two nations are banking on technology. Kenya Power has procured a Ksh46 million ($443,519) software — Energy Balance Module (EBM) — and installed a fully fledged department to detect power losses occurring along the transmission and distribution lines and provide appropriate interventions. Umeme is focusing on increased investments to optimise its network. It has also rolled out prepaid meters to over half of its domestic consumers and introduced smart metering for medium and large power users to reduce commercial power losses. Other means include simplification of new connections, intensification of network audits and implementation of technological solutions such as ebilling and mobile money payments.
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