Several East African nations reliant on hydropower plants for their electricity supplies have been struck by catastrophic droughts. John Goss explores how one power rental company, Aggreko of the UK, is addressing East Africa’s energy gap.
Source: PEI Magazine, May 2010
The persistent drought that is currently affecting Kenya has been causing relentless shortages of power across the country. Approximately 74 per cent of Kenya’s electricity is generated by hydropower plants located in Kenya’s Tana River basin and in the Turkwei River gorge.
The country has been experiencing low rainfall for some time now as the heavy rains normally expected from March to May failed, causing a dramatic drop in water levels at many of the reservoirs that supply Kenya’s hydropower plants. This catastrophic situation has resulted in a serious decline in the country’s ability to generate sufficient power for its populace and its many water dependent industries.
This has had a disastrous effect on Kenya’s industries, as much of its exports are based on fresh produce. A lack of reliable power supplies creates havoc with the irrigation systems and temperature controls in both the massive greenhouses and cooling houses. Power is needed for pumping much needed water, in post harvest handling and in chilling before grading. In fact, many farms may be forced to close their operations if the power crisis is not solved. These widespread closures will result in many workers being laid off across the country and a decline in Kenya’s share of the fresh produce market.
A temporary power solution
Much of East Africa is dependent upon hydropower for its energy supplies. As with most of the world’s developing regions, the power demands of both Kenya’s population and industries are increasing steadily as economic and living standards rise.
In order to ease Kenya’s severe power shortages, the state-owned power utility, Kenya Electricity Generating Company (KenGen), recently awarded a temporary power supply contract worth over $30m to UK power rental company Aggreko. The contract covered all of the 140 MW of emergency power that was called for in a public tender to support Kenya’s national grid for as long as the power crisis lasted.
This temporary power supply contract for KenGen involved the installation of an additional 80 MW at Aggreko’s existing power plant in Embakasi, Nairobi and for the remaining 60 MW to be installed at a new location close to Naivasha. In fact, Aggreko is already supplying KenGen with 150 MW from its power plants in Embakasi and Eldoret.
Once this additional 140 MW is installed, the power company will be able to deliver a total of 290 MW of base-load power into Kenya's national grid. Following the deal, Aggreko immediately began mobilizing the equipment that would be needed for the new 80 MW and 60 MW power plants in Kenya from Aggreko’s regional headquarters in Jebal Ali, Dubai in the United Arab Emirates. This work will be carried out in planned phases and the commissioning of the two power plants is expected to be completed on schedule. The Embakasi temporary power plant is located next to an existing KenGen substation and is synchronized to Kenya’s national grid.
The scope of the contract award is for Aggreko to be turnkey suppliers of the power plants. The supply includes the plant’s generators, transformers, switchgear, control rooms, fuel tanks, fuel management as well as other ancillary equipment and services. As well as supplying and installing the power plants, the contract involves the commissioning plus the operation and maintenance of the Embakasi and Naivasha power plants. It also calls for a team of specialized engineers from the company to be on site day and night at the plants to ensure that the equipment is operating at peak efficiency.
A strong grasp of logistical problems in the region is a vital factor in the smooth running of supplying, installing, commissioning and operating any power plant in Kenya. The fact that Aggreko had already successfully supplied a similar temporary power plant to KenGen some years ago gave it a significant advantage when demonstrating its experience and expertise in the contract tendering process. The company has been running plants like this in Africa for many years, so they know how to apply their equipment and know what they can and cannot do.
For the two new power plants, it is essential that throughout the contract period there is a close working relationship between operating and management personnel at KenGen and Aggreko. This operational association between the two goes from daily operations through to weekly and monthly senior management meetings. This ongoing liaison between the two organizations ensures that the project runs smoothly and that everyone is in touch with events and decisions.
The contract for the temporary power supply is over a fixed period of time, which is decided by Kenyan government officials. However, should the rains come early then it is possible to negotiate an early contract termination. On the other hand, should the rains fail to materialize for even longer than envisaged; an extension of the fixed contract period can also be discussed by both parties. This two-way flexibility is one of the main advantages of power rentals.
The 140 MW temporary power plant contract with KenGen is Aggreko’s third utility contract in Kenya. Under the first emergency power supply contract, which was awarded in 2000, Aggreko provided a 45 MW at 11 kV power plant at Embakasi in Nairobi for ten months. Back in 2000, Kenya was experiencing similar drought conditions to those of today. The country faced a crippling power shortage after the failure of seasonal rains reduced or, in some cases stopped, the output of the hydropower plants. Power rationing was introduced, costing the economy an estimated $10 million a day in lost production and exports. In response, the Kenyan government, with support from the World Bank, issued a competitive tender for the emergency supply of a large temporary power plant at Embakasi in Nairobi.
In order to ease Kenya's severe power shortages, the country's state-owned power utility, Kenya Electricity Generating Company (KenGen), awarded a temporary power supply contract worth over $30m to UK power rental company Aggreko
First power within three weeks
The contract was awarded to Aggreko who supplied, installed, commissioned and operated the 45 MW temporary power plant. A comprehensive range of equipment was provided, including generators, transformers, switch gear, control rooms and fuel tanks plus other ancillary equipment. The plant’s first power supplies were provided to Kenya’s grid at Embakasi within three weeks of the effective contract date.
Engineers from Aggreko manned the power plant continuosuly to manage operations and to ensure that the equipment operated at peak efficiency. The Embakasi plant provided baseload power to Kenya’s grid continuously for ten months until Kenya’s reservoir’s had been replenished. Throughout the execution of the contract, Aggreko was able to maintain the high availability of the equipment and supplied the temporary power to KenGen’s satisfaction. In fact, 100 per cent equipment availability was maintained throughout the duration of the contract.
With so many East African countries facing economic failure during these recent years of drought, emergency power in the form of temporary power rentals were called upon to deliver much needed electricity into the grids. In Kenya, the country harnessed 100 MW of emergency power twice; in 1999 – 2001 the temporary power was supplied by Aggreko, Cummins and Duetz, then again in 2006 the power was supplied by Aggreko alone, and now the company has been called upon once more to provide much needed power for the country.
Without emergency power being brought in to supply the grid, it was estimated that the losses to Kenya’s economy over the nine consecutive months until the next heavy rains would have amounted to about $400 million or approximately 3.8 per cent of GDP.
If the estimated unit cost of unfulfilled power supply in Kenya of around $0.79/kWh, according to the 1993 Electricity Tariff Study were used, total losses to Kenya’s economy would have been in the region of $630 million, equivalent to around six per cent of GDP. The Kenyan government implemented emergency measures to address the ongoing power supply crisis that was crippling the country’s economy and hindering the delivery of power to the population. The World Bank estimated that implementing the government’s emergency power measures would have reduced the costs of unfulfilled power supplies from $400 million to $120 million at $0.50/kWh, or from $630 million to $188 million at $0.79/kWh. It was estimated that the emergency power measures cost in the region of $110 million.
Tanzania also hit hard by drought
Due to the on-going lack of rainfall between 2003 and 2006, Tanzania experienced significant declines in water in-flows to its hydropower dams, which resulted in a significant reduction of hydro electricity generation. This phenomenon was notable in the Great Ruaha and Pangani river systems. Hydropower, which was until 2001 contributing about 97.5 per cent of the energy needs in the country’s national grid system, had dropped to 50 per cent by year 2005 and by mid-2006 was down to a paltry 30 per cent of the national grid’s needs.
As the amount of water available for hydropower generation worsened in 2006, the power utility Tanesco had no option but to institute a load shedding programme in order to stretch the little available water in the hydropower dams for a longer period.
On the other hand, the government approved Tanesco’s plans to implement short-term generation projects to avoid severe energy shortages, which had serious negative consequences on the national economy.
Research by Tanesco demonstrated that the costs of temporary rental power generation for the short-term were high, however these costs were much less than the estimated costs that would be incurred by having no emergency power brought in. As a key element of this short-term plan, Tanesco signed a contract with Aggreko power rentals on 26 July 2006 to supply 40 MW of natural gas based power generation for two years.
The first phase was for a 20 MW power plant that was commissioned in October 2006. The second phase for a 20 MW plant was commissioned in November 2006. It was estimated that by leasing gas power, Tanzania had saved around $1 for every kWh of power outage averted or, in other terms, about five to ten times the cost of generating the electricity.
A study by Energy Sector Management Assistance Program (ESMAP) estimates $1 per kWh as the cost of outages in Tanzania, which is derived from earlier studies showing the cost of unannounced outages to industrial customers at $2.25 per kWh.
Uganda implements short-term solutions
The ongoing lack of adequate and reliable power in Uganda is consistently among the top five obstacles to economic stability and growth cited in the country’s private sector surveys. An independent consulting firm, Power Planning Associates estimated the cost of unserved energy in the country at about $0.39 cents per kWh. Uganda’s main source of power is from the Nalubaale and Kiira 380 MW hydropower dam complex located at the mouth of Lake Victoria. Optimum levels of hydropower output have been reduced from an average of around 270 MW in 2002, to around 120 MW during August 2006 due to low water levels in Lake Victoria.
The unrelenting and severe power shortages over recent years have been due to a number of mitigating factors. There were the delays in developing low-cost generation capacity from the Bujagali project, which was expected to start construction in 2002 and be completed by the end of 2005. Then, even when there is power, the power transmission and distribution system suffers high levels of technical losses.
Growing demands for power are another factor. Power demand in Uganda over the past several years has increased by about eight per cent per annum.
The final factor is perhaps the most significant. The water levels in Lake Victoria have decreased significantly due to prolonged drought in the region over the past three years and the consequential over usage of water for hydropower generation purposes.
The government of Uganda has implemented an interim power sector strategy that is aimed at addressing the severe electricity shortages until the proposed Private Power Generation (Bujagali) Project is commissioned in early 2011. In April 2005, the government contracted Aggreko to provide a 50 MW power plant for a period of three years. In July 2006, a contract for an additional 50 MW of power was signed with Aggreko. Both plants run on automotive diesel oil.
In addition, the Government of Uganda has tendered out a 50 MW permanent thermal plant in the form of an independent power producer that will provide thermal energy to complement other power sources over the long term. The government of Uganda is also actively pursuing cogeneration opportunities and is accelerating its renewable energy program.
Even with this additional capacity over the medium term, substantial peak and baseload shedding is expected to continue until the proposed Private Power Generation (Bujagali) project is commissioned. The power crisis forced Uganda to fully revise its economic growth forecast downwards from the 5.8 per cent forecast in 2005/06 to 4.9 per cent.
With so many East African countries facing drought, power rentals are called upon to deliver much needed electricity.
Source: PEI Magazine, May 2010