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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 Geothermal project aims to reduce emissions by generating additional renewable electricity at the existing geothermal power plant—thereby displacing electricity that would otherwise be generated by fossil-fuel-based power plants. It would increase 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. As per the PDD, this would result in a reduction of 149,632 tCO2e per year over a 7-year renewable crediting period. The CDCF would purchase about 480,000 tCO2e from the project. The site is located in the 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).

Project Photo 2

Current Context:
Power demand in Kenya has risen considerably, owing to the country's economic growth. Demand is projected to rise at an average rate of 150 MW per year. Rising demand combined with lack of investment in new capacity would entail power rationing during peak hours and unreliable electricity supply. State-owned KenGen is the major supplier of electricity in Kenya, contributing about 85 percent of all power consumed nationally. Kenya has abundant geothermal and hydro resources. However, over the past years, very little has been invested in geothermal power projects in the country due to the huge capital requirements and risks associated with geothermal exploration, the country's situation, and difficult access to commercial loans for project investments. The same is true for run-of-river hydropower generation, which faces substantial risks of rainfall uncertainty and severe droughts, as was experienced in recent years. These uncertainties and risks can influence investors' willingness to invest or extend credit. In addition, the fact that the electricity tariffs charged by KenGen are an "administered price" controlled by the government through the Energy Regulatory Commission can also deter investors. Carbon financing aims to help lower risks for investors.

Community Benefits: 
A community benefits plan targets the Masai, Luo, and Kikuyu tribes - some of the poorest communities living in the vicinity of the existing geothermal plant. These communities consist primarily of subsistence farmers 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 schools are both distant and inadequate. The community benefits plan was designed in consultation with local communities, KenGen and provincial administration experts to help identify priority water and education projects. The community benefit components include the construction and improvement of local infrastructure (i.e., a livestock water pan that can hold water for six months, six new school classrooms, and road repairs), a water pipeline extension to Maiella and to the community health center, and employment of local youth.

The implementation of the community benefit plan is progressing well, thanks to an advance payment provided by the CDCF. To date excavation of the livestock water pan 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, benefiting about 2,000 households; the construction of the three primary school classrooms at the Oloirowua Primary is near completion and the construction of the three new classrooms at Ngaambani Nursery Schools has started. In addition both the road to the school sites and the road to Maiella have been repaired to enable access of construction materials, benefitting 4,000 and 5,000 locals respectively. 34 skilled and unskilled community youth have been contracted to carry out the class room construction work. 54 local unemployed youth were hired to construct the water pipeline to Maiella.

Deliverables Description
Excavation of Olosingáte water pan for livestock A livestock water pan will be built to help store much needed water for 6 months, benefiting an estimated 40,000 livestock belonging to local individuals.
Construction and equipping of 3 classrooms at Ngambani Nursery school 3 new classrooms would benefit an estimated 250 pupils per year.
Construction and equipping of 3 classrooms at Oloriwua primary school 3 new classrooms would benefit an estimated 200 pupils per year.
Construction of a waterline from Mpya Tank to Maiella Water will be provided for the Nasaruni Health Center, and access to potable water will be improved for 2,000 households resident in the semi–arid Enoosupukia Location, Mau Division, Narok District. An estimated 20,000 people would benefit.

Time Frame: 2010-2014

Monitoring Plan:
KenGen will provide an annual report on the progress made in the implementation of the community benefits plan during the previous calendar year. The report will include a detailed description on the status of implementation of activities that create the local community benefits.


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