Last week, the African Development Bank (AfDB)-managed Sustainable Energy Fund for Africa (SEFA), committed a $992,000 grant to support the development of a 7.8MW hydropower project in Kenya.
Hydropower project model
According to the Bank, this project is designed using standard run-of-the-river technology, however, it includes an innovative community ownership structure, where financial returns will also accrue to members of the Mutunguru community in Central Kenya, mainly due to a shareholding structure where communities actually receive a fixed small share of the project’s profits.
“This additional financial benefit is expected to translate into significant economic and developmental impacts in the project area, particularly in terms of socio-economic empowerment and job creation.
“This significant community ownership and support makes it deserving of the SEFA intervention as a model to be considered in future Bank operations,” stated Gabriel Negatu, AfDB’s Director-General for East Africa Regional Development and Business Delivery Office.
Delivering bankable support
According to the Bank, SEFA provides:
- Legal support for setting up appropriate community arrangements
- Financial advisory
- Support to lenders’ due diligence
- Support to environmental and social impact assessment
- Institutional and management capacity building
The AfDB’s Africa Climate Technology Centre (ACTC) will also contribute to the institutional and management capacity building for the community, the AfDB added in a statement.
"This project will contribute to Government of Kenya objectives of expanding on-grid generation capacity, in particular through harnessing indigenous renewable capacity," the Bank noted.
Patrick Kimathi of the Mutunguru Hydroelectric Company Ltd affirmed: “The Government of Kenya considers small hydro a top priority given the wide resource availability, baseload properties and ease of integration into the grid.
“Through building capacity of local communities to own and manage commercially viable grid-connected small hydropower projects, we support implementation of the Feed in Tariff Policy in Kenya to increase access to clean, affordable and sustainable energy.”
The project is fully aligned with the AfDB’s strategic goal to support inclusive and green growth by promoting access to clean, modern, reliable and affordable energy services in rural areas; and is well aligned with the Energy Policy as well as the strategy for the New Deal on Energy, by promoting energy access and renewable energy technologies.