Sustainable Energy OptionsAfrican Case Examples of What Works &

Possible Interventions for Parliaments

Opposite ends of Spectrum: Small scale and improved biomass cookstove example from Kenya (perceived as an access option to more efficient option) & more advanced large-scale cogeneration experience in Mauritius

Brief Discussion of Case Studies: Key achievements and results

Policy lessons learned: Could provide basis for Parliament’s interventions.

Improved Efficient Charcoal Kenya Ceramic Jiko (KCJ)

Adaptation of a clay-line bucket stove design from Thailand

Reduces charcoal consumption by 30-50%

In use in over 80% of urban households in Kenya (16% of rural homes) - cumulative production now over 15 million

Fully self-sustaining using locally produced materials and skills – generated jobs & new enterprises

KCJ in use in Uganda, Tanzania, Malawi, Ethiopia, Sudan, Zambia, Rwanda, Burundi & Senegal & being introduced in Burkina Faso, Mali, Niger, Ghana and Madagascar

KCJ – Policy/Strategy Elements Good Data Base: Ministry of Energy/Beijer

Institute Survey, NGOs and research institutes

Micro-level de-regulation: Government allowed informal sector space/freedom and did not attempt to over-regulate. Eased up on taxes and licenses

Provided Minimum Infrastructure: A simple shed and basic sewage amenities. Access to electricity & public lighting would transform the KCJ industry.

Training & Adaptation Research Support: Most of required technologies in public domain with proven experiences in Asia and Latin America. Modest training and research support to adapt technologies to local conditions is all that is needed.

Policy Lessons LearnedCould Provide Basis for Interventions by

Parliament

Importance of Small-Scale/Informal Manufacturing/Assembly Sector: Can account for up 30-40% of jobs. In absence of formal sector employment growth, often only major source of jobs for rapidly growing pool of unemployed youth. Less troublesome than informal trading sector. Resilient sector which relies on local demand – can survive political instability, economic downturns

Micro-Deregulation: Avoid over-regulation. Need protection from sometimes overzealous/capricious city employees. Can be brought into tax net with simple one-time annual estimated turnover tax.

Secure location & basic amenities is often sufficient: Official site, shed and basic sewage plus access to electricity is often all that is needed.

Where Micro-Deregulation Has Worked

Nepal: A robust small hydro/micro-hydro local industry that has survived instability and civil war

Thousands of micro-hydro installations: Provide shaft power for grinding grain during day and electricity for lighting during the night.

Micro-Deregulation of micro-hydro industry: Below a certain threshold (up to 1MW), require minimum licensing, can set own tariff that is negotiated with users.

Now grown to major sector with a micro & small hydro capacity (including units under construction) of close to 100MW

Cogeneration in Sugar Industry Most sugar industries in eastern and southern

Africa currently practicing co-generation for own use (using bagasse – a waste byproduct) but very limited power exports to grid

Sugar industry directly or indirectly impact on 4-7 million people in Western parts of Kenya

Sugar mills found in most Africa countries (Uganda, Tanzania, Sudan, South Africa, Swaziland and many West African countries)

What works in sugar industry can often be replicated in other agro-industries (agriculture & agro-industries can account for over 50% of a typical sub-Saharan Africa country’s GDP)

Cogeneration in Sugar IndustrySugar prices in the region facing

long-term decline (not withstanding recent increase in prices arising from greater interest in ethanol as replacement for increasingly costly oil) – cogeneration attractive as it offers alternative revenue stream

In Mauritius, power sales revenue for sugar millers recently exceeded that from sugar

Cogeneration in Mauritius Model Example for Regional Replication

Successful in sale of power to the grid

Accounts for close to 40% of a 725MW national generation capacity (of which 25% bagasse)

Began with smaller installations (1.5MW - 5MW, now installing 70MW plants)

Others

Sugar Industry

Power Generation – Mauritius 2004

Policy Measures Installed Capacity (MW)

GWh generated

Year Total B&C Total B&C %

1979 Prior to Sugar Sector Reform 159 27 355 - -

1985 Sugar Sector Action Plan 226 44 392 103 26.3

1988 Sugar Industry Efficiency Act 252 42 549 106 19.3

1991 Bagasse Energy Development Programme

294 42 738 124 16.8

1997 Blue Print on the Centralisation of Cane Milling Activities

370 53 1252 148 11.8

2001 Sugar Sector Strategic Plan 660 246 1657 711 43

2006 Multi-Annual Adaptation Strategy for Sugar Sector

725 242 1923 725 38

2015 Target to be reached - 354 3015 1100 56

Policy Measures for Promoting CogenerationCogeneration in Mauritius

Sugar Sector Reform initiatives & Bagasse Energy

Year Policy initiatives Emphasis on

1985 Sugar Sector Action Plan

Bagasse energy policy evoked

1988 Sugar Industry Efficiency Act

-Tax free revenue from sales of bagasse and electricity

-Export duty rebate on bagasse savings for firm power production

-Capital allowance on investment in bagasse energy

1991Bagasse Energy Development Programme

-Diversify energy base

-Reduce reliance on imported fuel

-Modernise sugar factories

-Enhanced environmental benefits

Cogeneration in Mauritius

Sugar Sector Reform initiatives & Bagasse Energy

Year Policy initiatives Emphasis on

1997

Blue Print on the Centralisation of Cane Milling

Activities

Facilitate closure of small mills with concurrent increase in capacities and investment in bagasse energy

2001 Sugar Sector Strategic Plan

-Enhance energy efficiency in milling

-Decrease number and increase capacity of mills

-Favour investment in cogeneration units

2005

Roadmap for the Mauritius Sugarcane Industry for the 21st Century

-Reduction in the number of mills to 6 with a cogeneration plant annexed to each plant

Cogeneration in Mauritius

Energy PricingPower mode Power

PlantPrice – Rs (us

¢)/kWhYear Characteristics

Intermittent - 0.16 (0.6) 1982 Price frozen since 1982

Continuous Medine 0.55 (1.9) 1982 No change in price since 1982 –no changes brought to the plant

Continuous 6 PPs 1.05 (3.7) 1997 44% of kWh price indexed to changes in oil price and the other 56% is fixed

1.40 (4.9) 2000

Firm FUEL coal - 1.63 (5.7)

bag. - 1.56 (5.5)

1985 Invested in new equipment

Indexed to coal price

Firm DRBC coal - 1.53 (5.4)

bag. - 1.46 (5.1)

1998 Invested in second hand equipment

Indexed to coal price

Firm CTBV both - 1.72 (6.0) 2000 Indexed to coal price, cost of living in Mauritius, foreign exchange rate fluctuations

Cogeneration in Mauritius

Cogeneration Feed-In Tariffs in Mauritius

0

1

2

3

4

5

6

7

1982 1982 1985 1997 1998 2000 2000

Year

Price (US ¢)

Revenue Sharing Share Ownership Of Cogen Plants

Firm Corporate sector 51% Strategic Partner 27% SIT (Small planters/workers) 14% State Investment Corporation 8%

Continuous Corporate sector 80% SIT (Sugar Investment Trust) 20%

Equitable sharing of ownership of and revenue from cogeneration ensures even smallest low-income farmer gets a portion of revenue

In turn, leads to exceptionally strong & consistent policy support

Key Policy Lessons & Possible Interventions by Parliament

OK to start small (Mauritius started with 1 to 2 MW units) which allows a learning experience and sorting out the kinks. Can set an initial target of up to 5% installed capacity. Higher prices can be justified on basis of importance of diversity, elimination of transmission costs & increased through rural electrification – over time prices can come down with the right incentives

Easier to convince Governments/utilities to act. Thereafter, it is possible to expand exponential and initiate large initiatives.

Feed-in tariff is key in promoting co-generation as it provides a strong signal to private sector and financing institutions

Not wise to leave it only to Regulators. Parliament can play an important role.

An important addition to feed-in tariff is a standard “Power Purchase Agreement (PPA)” between agro-industry and power utility. Simplifies negotiations (which can take as long as 7-10years) and removes a major barrier to co-generation investments.

Revenue sharing mechanism which ensures that large majority of population saw tangible benefits was key to maintain policy support.