By Leonard B. Kassana and Victor Isidro
Eight countries in eastern Africa are pursuing the development of at least six small hydro projects. These projects will provide electricity required to power the processes involved in tea production.
Among success stories in the Eastern and Southern African region of the world, the tea industry can be regarded as remarkable. The tea industry has steadily contributed to the economies of the countries of East and Southern Africa over the past several decades, providing stable employment and revenues. In Kenya and Burundi, for instance, tea accounts for 20 percent of total national exports. Tea companies in Kenya, which produce the highest volume of tea in the region, employ approximately 800,000 people and affect the lives of another 3 million. These numbers represent about 10 percent of the country’s total population. Kenya’s tea industry reached a milestone just a few years ago when the Mombasa Auction in Kenya became the world’s largest tea auction.
Needless to say, the tea industry plays a significant role in shaping and sustaining the growing economy of East and Southern Africa. Today, however, the tea sector is embarking on another challenge. This challenge moves the tea companies beyond merely producing tea to also generating the electricity needed to power the tea production process.
Faced with the increasing costs of production in light of rising oil prices in the world market, the tea industry sees itself at the forefront of developing the largely untapped, but tremendous, hydroelectric potential in the region.
The tea companies, working under the umbrella of the East Africa Tea Trade Association (EATTA), and in cooperation with the United Nations Environmental Program (UNEP), conceptualized and are implementing a four-year project, “Greening the Tea Industry in East Africa.” The project, established with a financial grant from the Global Environmental Facility (GEF), aims to reduce electricity supply production costs and to improve power reliability among tea companies through the development and utilization of small hydropower resources.
Small hydropower is seen as a way to reduce the dependence of tea companies on fossil-fired diesel generating sets and on costly and, at times, unreliable grid-supplied electricity. While the tea sector has not traditionally generated electricity, it is a large consumer of the costly commodity. In many cases, tea companies erect standby diesel generating sets to ensure availability of electricity to run the processes involved in tea production.
The project aims to reduce greenhouse gas emissions – a goal of GEF and UNEP – through increased investments in the development and installation of small hydropower facilities in tea areas where hydro potential is abundant.
The GTIEA project is being co-implemented by the United Nations Environmental Program (UNEP) and the African Development Bank (AfDB), which are both actively involved in environment-related programs on the African continent. The East African Tea Trade Association (EATTA) is the executing agency for the project. EATTA, which is based in Mombasa, Kenya, is a voluntary organization of tea producers, buyers (exporters), brokers, packers, and warehouses. For these groups, EATTA provides a disciplined environment in which to interact commercially as well as a vehicle for promoting the best interests of the trade in Africa. EATTA has been in operation for more than 45 years, representing tea stakeholders from 11 countries: Burundi, the Democratic Republic of Congo, Ethiopia, Kenya, Madagascar, Malawi, Mozambique, Rwanda, Tanzania, Uganda, and Zambia. EATTA operates the Tea Auction of Mombasa for all East African tea and is also engaged in tea warehousing and brokerage.
Describing the project objectives
The GTIEA project was officially launched November 8, 2007, at the UNEP Complex in Nairobi, Kenya, by Kenyan Vice President, Hon. Moody Awori. The Kenyan leader endorsed the project and pledged the support of his administration of the goals and objectives of the GTIEA project. Eight countries in the region – Burundi, Kenya, Malawi, Mozambique, Rwanda Tanzania Uganda, and Zambia – endorsed the project.
As part of the project, ten feasibility studies of potential sites are to be conducted, and six small hydro demonstration projects in at least four EATTA member countries are to be implemented. The studies and the demonstration projects are to be used to build confidence and develop the expertise of the tea sector in small hydropower technology. The hope is the studies and demonstration projects also will lead to financial incentives for individual tea processing plants to move into green power generation.
Tea is an important revenue base for countries in East Africa. Yet, energy requirements for tea processing are unreliable, expensive, and emit greenhouse gases. To manage these energy costs, tea companies are working toward developing technically feasible small hydro sites in the vicinity of tea estates.
The project is an opportunity for developing an important indigenous resource which will benefit 8 million tea farmers, their families and dependents, and many different sectors in the region, including tea factories, communities, utilities, banking institutions, the manufacturing sector, government and utilities, and development partners.
Site studies under way
Initially, pre-feasibility studies of 19 potential small hydropower sites were undertaken in Kenya, Malawi, Rwanda, Tanzania, and Uganda. Ten of these sites were selected for further study. At the end of March 2008, international consulting firm Innovation Energie Developpement (IED) of France finalized comprehensive feasibility studies for two of these ten sites. The studies were supported by a development partner from the European Union, ProÄinvest Management Unit, on behalf of the European Commission. Feasibility study reports of six more of the sites are expected to be completed by the end of March 2009; completion of the reports for the final two sites is anticipated by July 2009.
Developing the largely untapped potential for small hydropower in eastern Africa is one way the tea industry plans to cope with increasing costs of tea production.
Using these ten reports, the best six sites will be selected, at which small hydropower stations will be constructed as demonstration projects, culminating in the installation of 10 mw of capacity.
Beyond the initial four-year phase, the project is expected to stimulate a total installation of 82 mw of small hydropower capacity.
Through the project management office created to oversee the implementation of the GTIEA project, activities are being carried out to provide support to small hydropower development and to promote investment. These activities are expected to lead to:
- Investment confidence among investors, project developers, and financing institutions;
- Enhanced technical capacity for designing and constructing small hydropower and for fabricating associated equipment;
- Successful models for private-public participation in rural electrification through small hydropower;
- A regulatory environment conducive to small hydropower and to rural electrification; and
- Establishment of a viable standard power purchase agreement for small hydropower.
Benefits and opportunities
The project offers substantial benefits and opportunities to various sectors. Aside from the projected reduced production costs for tea companies and factories, the reliability and efficiency of operations of small hydropower systems are seen to further benefit the tea sector and the communities at large.
The Honorable Moody Awori, vice president of Kenya, pledged support for the Greening the Tea Industry in East Africa project. Through the project, tea companies in eight East African countries plan to install as much as 82 mw of small hydropower.
For example, the small hydropower projects will contribute toward the electrification of the communities surrounding the tea estates. This contribution to the region is vital, where as much as 90 percent of the population in some areas have no access to electricity. In addition, when a tea factory or company develops its small hydropower resource, the expensive-to-operate diesel generating sets can be put on standby. This will further reduce costs and minimize greenhouse gas emissions. And, reliable and efficient electricity systems will enable tea companies and factories to maintain steady tea processing operations.
The local generation and distribution utilities can possibly co-invest in the development of viable small hydropower systems, or purchase excess electricity from the tea companies.
Tea companies developing hydropower potential can contribute toward meeting targets set by East African governments of developing additional sources of clean, renewable electricity.
Tea is an important revenue base for countries in East Africa, having contributed substantial export earnings for many years. However, energy requirements for tea processing are costly, representing half or more of the expense of tea production. Present sources of electricity for the tea factories are, in many instances, unreliable, expensive, and greenhouse gas intensive. The alternative of small hydropower can provide a clean, reliable, and indigenous source of renewable energy while reducing tea production costs. A number of technically feasible small hydro sites exist in the vicinity of many tea estates. Development of this potential will result in reduced tea production costs for the tea companies as well as additional revenues from the sale of surplus power. Development of small hydro also will play a significant role in rural electrification for communities surrounding tea estates.
Mr. Kassana may be reached at East African Tea Trade Association, GTIEA Project Management Office, Tea Trade Center, Nyerere Avenue, P.O. Box 85174, Mombasa 80100 Kenya; (254) 41-2228460; E-mail: [email protected] gtiea.org or [email protected] Mr. Isidro may be reached at [email protected]
Leonard Kassana is associate director of hydropower and training for the GTIEA Project. Victor Isidro is a former director of the project management office for the East African Tea Trade Association’s Greening the Tea Industry in East Africa (GTIEA) Project.