Kenya coal plant's power could cost ten times more, group says

11th June 2019 By: Bloomberg

Electricity from a planned coal-fired plant in Lamu, Kenya might cost ten times as much as its developers suggest, according to an energy group that wants the project canceled.

The plant, which will require an estimated $2-billion investment, is projected to be able to produce 1 050 MW of electricity. The project is 51% owned by Nairobi-based Centum Investment, and is backed by General Electric’s so-called Ultra-Supercritical Clean Coal Technology.

Given the “realistic” costs of coal, electricity from the plant could sell for as much as $0.75/kWh on average, “more than ten times what the plant’s proponents have claimed,” Cleveland-based Institute for Energy Economics and Financial Analysis said in a report. The coal plant could also slow the East African nation’s development of renewable energy resources, IEEFA, as the group is known, said. The plant is scheduled to start marketing the power in 2024.

The current pricing estimates are based on outdated costs of imported coal and “optimistic assumptions of how much electricity the plant will generate,” according to the report. The power purchasing agreement would require payment of at least $360-million in annual capacity charges even when the plant doesn’t produce any power. “There is ample justification to cancel the entire project,” it said.

Amu Power, the developer of the project, and Kenya’s energy ministry didn’t immediately respond to text-messages seeking comment.