Why Lamu coal plant faces limited options

By GEORGE WACHIRA
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Summary

• A coal energy chapter in Kenya would essentially be facing closure, a victim of an irreversible global drive towards decarbonised energy.
• The Lamu coal plant caught many by surprise in respect of timing, location, energy-type, and the sheer size of capacity.
• It has been a short but controversial history.

Last week GE, an American company engaged in power generation technologies, abandoned greenfield coal-fired power projects, and by implication this includes the new-build coal power project at Lamu where GE is involved in technology provision. While existing coal power projects around the world are likely to remain operational for as long as they are economically viable, investments in new-build coal projects have become “do-not-touch” projects due to environmental sustainability issues.

The GE decision is a belated step to get out of a fossil fuel energy segment that is already under immense pressure from environmental lobbies, shareholders, and credit financiers.

The company has stated that it will now focus on renewable power generation business, a strategy that has become the new “green” norm around the world. In fact, the company is already involved in a renewable energy 100 megawatt(MW) wind power project in Kajiado County.

Unless the Lamu power investors clinch alternative technical partnerships, it can be correctly assumed that the coal project is unlikely to continue. And this would permanently remove coal from the matrix of Kenyan energy mix, since the Kitui coal deposits already look like they are destined to forever remain in the ground.

Yes, a coal energy chapter in Kenya would essentially be facing closure, a victim of an irreversible global drive towards decarbonised energy.

The Lamu coal plant caught many by surprise in respect of timing, location, energy-type, and the sheer size of capacity.

It has been a short but controversial history. In 2010, I was in the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor project feasibility study team, and in planning a 120,000 barrels per day refinery at Lamu, we had to find a home for surplus fuel oil from crude oil processing. This is how we decided to locate a fuel oil fed power plant adjacent to the planned refinery. We also argued that future discoveries of natural gas from Lamu area could fuel the power plant. The power plant at Lamu was therefore predicated on a refinery, which is currently not likely to take off.

Then came the ambitious 2013 power generation plan to install 5,000 MW generation capacity by 2016, arguably advised by anticipated major economic transformation. Ambitious because seven years to date , the demand has not exceeded 2,000 MW. The 2013 generation plan had two coal-fired power plants of 960MW each, one at Kilifi using imported coal, and the other in Kitui using locally produced coal.

Then out of the blues in 2013/14, a 1000 MW coal power project at Lamu was announced (to be located on the site earmarked by the LAPSSET study) with plans to import cheap coal from a nearby African country.

The first debate to emerge on the 1,000MW plant was that the plant capacity was surplus to Kenya’s real power demands, and that it would crowd-out already planned renewable geothermal power production. This argument has remained valid to this day. Then came local environmental concerns regarding impacts of particulate emissions on local biodiversity. However, what finally caught up with the project was the global debate to move away from heavy fossil fuels to reduce carbon dioxide emissions.

The Lamu power investors can switch their investment model from coal to wind power, an opportunity I am sure GE partners will readily embrace. And the wind plant can indeed be in the vicinity of Lamu. This would be a win-win investment formula for the investors, the economy, and the climate. The fast-developing battery storage technologies will sort out the wind intermittency issues to permit stable power inputs into the grid.

Whereas oil and gas resources can justify longer relevance in global economies, coal is finding it exceedingly difficult to sustain credible debates on continued use when ready renewable alternatives exist. Even in Kenya we have lately seen the government take a very neural stand on coal, whether Lamu or Kitui, letting the stakeholders and environmental lobbies fight it out in public- a very politically correct approach.

Kenya has already achieved a high proportion of renewable energy in its energy mix, and it is unlikely it will permit dilution of this achievement with coal.