GVEP: Determined to be the solution to the problem of poor electricity supply a community in Central Kenya opted to start its own mini hydro project. After some false starts, this venture is progressing thanks in part to GVEP’s support in overcoming obstacles and pitfalls.
In recent years, steps have been made towards liberalisation of Kenya’s energy sector, allowing for greater opportunities in developing local energy projects. According to the May 2012 draft of Kenya’s National Energy Policy, small hydropower potential is estimated to be 3000MW of which only 30MW has been developed. Independent developers can play a significant role in realising the high potential for small hydro projects. While national policies are becoming more accommodating of such projects, challenges still remain including meeting financial costs and acquiring technical and business know-how. Despite such obstacles, there are demonstrated privately-driven efforts to make power generation a reality for those living without access.
Thiba Mini Hydro Project (MHHP) was founded in 2002 as a community initiative for the purpose of generating electricity for its 800 members located in Kirinyaga District, two hours away from Nairobi. This is an area, in the highlands of Central Kenya, where less than 15% of households have access to electricity. Since its inception, Thiba’s members have spent approximately KSh 13 million (~ US$152 000) – most of which they have raised themselves. Designed to accommodate three turbines, Thiba currently has only one which does not function properly. “We had a big problem of infrastructure breakdowns that we are working on to fix” says Kariithi Chuma, Thiba’s current chair.
Acknowledging its growth potential, Thiba was awarded with a grant of KSh 1.2million (~ US$15 000) in late 2010 through the Clean Energy Challenge, a contest organised run in partnership with the BiD Network, GVEP and with funding from Barclays PLC. In addition to the grant, Thiba has been able to gain support from the Rural Electrification Agency, which is in the process of helping it set up the distribution network – wire poles, step up and step down transformers and treated wooden poles.
The Project has so far connected 160 of its members’ households. However, in order to meet its objectives, the project needed to expand its power generating capacity. As it often happens though, the main obstacles to expansion for projects of such scale are the lack of access to capital, technical knowledge and business planning skills.
GVEP has been implementing various programmes in East Africa that seek to tackle all these issues. “Credit to the private sector plays an important role in growing the renewable energy sector,” says Simon Collings, GVEP’s Chief Operating Officer. “It appears that the low volume of lending to energy entrepreneurs in developing countries is not due to lack of funds by the banking and microfinance sector but lack of knowledge of the renewable energy market.” Over the last two years, GVEP has been training financial institutions on developing loan products for renewable energy enterprises. It has also initiated a loan guarantee scheme to increase the availability of credit for the sector.
As for technical and business support that the Thiba management needed, GVEP commissioned a report that included a situation analysis, an expansion feasibility study for up to 300 households, a financing assessment, an investment plan, and a sustainability and management assessment. The study also focused on opportunities for productive use of excess power and governance.
The findings in the report indicated that in spite of the community’s best efforts, the project was not being operated efficiently. The identified challenges ranged from equipment that was in disrepair, such as the turbine and rotting wooden poles, to insufficient voltage. In addition, as a community-run project, the governance structure was hindering swift decision-making and there was also a lack of qualified staff.
Once the study was carried out, GVEP discussed a plan of action with Thiba’s members. Kariithi explains, “We have since registered as a limited liability company, structured our management and looked at ways of implementing the technical advice received.”
“We hope that by the end of July, the turbine will be fully functional and we will have managed to reach at least 200 households. Eventually we aim to offer power to commercial ventures in the area such as grinding mills, chicken incubators, chaff cutters and tea-buying centres – the main agricultural activities common to the area,” adds Kariithi, stressing that they want the basics to be running optimally before any further ideas of expansion are explored. He says, “There will be a benefit for domestic users because they won’t have to worry about long interruptions. Children will be able to study, homes will be well-lit.”
“As we generate power for the community, it will also be an economic gain for the area,” says Kariithi, as he points out that the Thiba hydro project will be able to offer a more competitive connection fee and monthly electricity rates compared to the national supplier.
With an encouraging outlook for the future and some expert technical and business advice, Thiba Mini Hydro Company Ltd looks set to power its way to sustainability.
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