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Kenya: Olkaria II Geothermal Expansion
(Community Development Carbon Fund)

UNFCCC Reference No.: 3773

Project Photo 1

Project Description:
The Kenya Olkaria II Unit 3 Geothermal project was designed to expand the generation capacity of an existing geothermal plant that was built in 2003. The expansion was financed as part of a larger World Bank Investment Project: "
Kenya: Energy Sector Recovery Project (ESRP)", which supports power reform and efficient expansion of power generation capacity in Kenya to meet the economy’s projected demand. The Olkaria II Unit 3 power plant expansion was completed in 2010 and has increased the capacity of the existing geothermal power plant by adding a third generator of 35 MW, exporting an average annual generation of 276 GWh to the Kenyan national grid. The site is located in Hell's Gate National Park, approximately 132 kilometers northwest of Nairobi. The geothermal plant is owned and operated by Kenya Electricity Generating Company Limited (KenGen).The project was registered as a CDM project in December 2010 and is reducing emissions by generating additional renewable electricity —thereby displacing electricity that would otherwise be generated by fossil-fuel-based power plants. As per the Project Design Document, this is resulting in a reduction of 149,632 tCO2e per year over a 7-year renewable crediting period, which commenced on December 4, 2010. The CDCF is purchasing about 480,000 carbon credits from the Kenya Olkaria II Unit 3 geothermal power plant project.

Project Photo 2

Current Context:
Power demand in Kenya has risen considerably, owing to the country's economic growth. Rising power demand combined with lack of investment in new capacity could entail power rationing during peak hours and unreliable electricity supply. KenGen, a parastatal company, is the major supplier of electricity in Kenya, contributing about 80 percent of all power consumed nationally. Kenya has abundant geothermal and hydro resources. Although in recent years, new geothermal activities have been developed in Kenya, this was not the case back in the early 2000s when there was little new investment in geothermal power projects in the country due to the huge capital requirements and risks associated with geothermal exploration, the country context, and difficult access to commercial loans for project investments.

Community Benefits: 
A Community Benefit Plan (CBP) targets the more vulnerable communities living in the vicinity of the existing Olkaria II Unit 3 geothermal plant, who depend mainly on farming and livestock for their livelihoods. People in these communities typically travel over four hours a day to fetch water and attend school. The CBP activities were designed in consultation with the beneficiary communities, KenGen, regional Chiefs and local councils to help identify priority needs.

The CBP components include employment of local youth and the construction and improvement of local infrastructure: a livestock water pan that can hold water for six months; six new school classrooms; a water pipeline extension to Maiella and to the community health center.

The implementation of the CBP is progressing well, thanks to an advance payment provided by the CDCF and contributions from the KenGen Corporate Social Responsibility Program, working in close collaboration. The water pan for livestock has been completed; approximately 500 people and 5,000 livestock are benefiting daily. The installation of the 10 km water pipeline from Mpya water tank to Maiella and the community health center is also complete, and benefits about 2,000 households. The construction of the three primary school classrooms at the Oloirowua Primary and three new classrooms at Ngaambani Nursery Schools are both near completion. 30 skilled and unskilled community youth have been contracted to carry out the class room construction work. 106 local unemployed youth were hired to construct the water pipeline to Maiella.

 



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