An American group has suggested that the Lamu coal plant should be cancelled for ample and justifiable reasons. The Institute for Energy Economics and Financial Analysis (IEEFA) which is based in Cleveland said in a report that the general cost of developing the plant was exorbitant, and that other energy sectors will be negatively affected.
The group in its analysis estimated that electricity from the plant once completed would actually cost 10 times more than the amount the project developers have put forth. The group said that the current ‘realistic’ price of coal will mean electricity from the plant will cost KES 75 (USD 0.75) per kilowatt-hour on average.
The report said that the current pricing estimates are based on outdated costs of imported coal and ‘optimistic assumptions of how much electricity the plant will generate’.
The group also noted that the development cost of KES 202.6 billion (USD 2 billion) was too high, noting that the power purchasing agreement would require payment of at least KES 36.5 billion (USD 360 million) in annual capacity charges even when the plant doesn’t produce any power.
The group reckons that the coal plant will be a setback to the giant strides taken by Kenya in the development of clean energy which includes geothermal, and wind energy, with plans on course for harnessing solar energy.
The Lamu coal plant is developed by the Amu Power Co. and is projected to produce 1050 megawatts of electricity. It is 51% owned by Nairobi-based Centum Investment co., and is backed by General Electric Co.’s so-called Ultra-Supercritical Clean Coal Technology.
Photo: A coal plant in Kentucky, USA