1 INDUSTRIAL ENERGY EFFICIENCY PROJECT -Kenya Paul Kirai National Project Manager During UNFCCC Mitigation in COP-10 Buenos Aires 9 th December 2004

Industrial Energy Efficiency Project - Kenya 2 Project Title Removal of Barriers to Energy Efficiency and Conservation in Small and Medium Scale Enterprises (SME) in Kenya

Industrial Energy Efficiency Project - Kenya 3 Policy Objective  Overall the provision of adequate energy for growth of Kenya’s industrial sector.  Assist industrial sector reduce energy cost through energy efficiency  Increase profitability increase employment,  and reduce poverty  Reduction of CO 2 emissions

Industrial Energy Efficiency Project - Kenya 4 Expected Outcomes  Enhanced capacity at KAM to develop and promote energy efficiency projects:  Significant increase in energy efficiency investments within Industry. Up to US$ Million.  Reduction in CO2 emissions  Participation of local financial institutions:  Inclusion of energy efficiency loans in lending portfolios  Emergence of Viable Energy Service Companies (ESCOs)  Enhanced institutional capacity and national policy to promote energy efficiency

Industrial Energy Efficiency Project - Kenya 5 Kenya Energy Scenario High dependence on imported petroleum products. Represents close to 30 % of Kenya’s total import bill. Meets 90% of commercial energy demand Shortfall in hydro electricity generation resulting in increased thermal generation - Large Commercial and industrial consume 60% of electricity generated.

Industrial Energy Efficiency Project - Kenya 6 Kenya Energy scenario Wastage of energy ranges between 10% and 30% of primary energy input Little uptake of energy saving measures. Savings of up to 40% energy bills have been registered

Industrial Energy Efficiency Project - Kenya 7 Energy saving potential in industry  108,200 toe per annum  14% of industrial energy consumption  CO 2 Savings 325,000 tons / year excluding wood  602,000 CO 2 tons including wood

Industrial Energy Efficiency Project - Kenya 8 Energy saving potential

Industrial Energy Efficiency Project - Kenya 9 Benefits of Energy Efficiency in Kenya Business Level Lower Energy Costs Improve Productivity and Profitability Increase Ability to Compete in regional and Global Markets Corporate responsibility Country Level Reduce Foreign Exchange Expenditures Strengthen the Industrial Sector Keep and Create Jobs Contribute to Poverty reduction Lower environmental impacts

Industrial Energy Efficiency Project - Kenya 10 Energy Efficiency & Productivity Energy Intensity: Energy consumption per GDP PPP in 1995 $ Intl Source : IEA, Energy Balance of OECD and Non- OECD Countries; Copyright (c) 2003 World Resources Institute

Industrial Energy Efficiency Project - Kenya 11 Project Strategy. Awareness Capacity Building Financial Mechanisms Institutional Development

12 Activities.

Industrial Energy Efficiency Project - Kenya 13 Awareness and information  Seminars and energy auditing workshops thoughout the country  An industrial energy efficiency network covering 8 sectors and analysing energy intensities, offering bechmarks, training and energy audits.  Developed and distributed information on energy efficiency and conservation  Launched and energy mangement award which has attracted great interest  Results of 5 demonstartion projects documented and disseminated

Industrial Energy Efficiency Project - Kenya 14 Capacity building …  Training material acquired and adapted to local requirements  Training in energy management – over 1000 industry personnel, government officers and consultants trained  Specialized courses –  Energy audit training  International Certified Energy Manager (CEM) programme carried

Industrial Energy Efficiency Project - Kenya 15 Energy Saving Options

Industrial Energy Efficiency Project - Kenya 16 e.g. Fine tuning – Boiler excess air control Boiler no lbs/hr Furnace oil Temp: Above 120 degC Air Temp: 30 Deg C Feed Water Temp: 85 Deg C Steam Pr: 7 bar. G Flue Gases Temp: 247 Deg C %O2; 11.8 %CO2: 6.7 CO: 1100 ppm Boiler efficiency: 75.4% Excess air: 120% Dry Flue gas losses: 17.8% Moisture losses: 5.2% Radiation losses: 2 % Blowdown losses: 0 Issues: Very high Excess air (90-100%) Very high flue gas temperature Very high CO percentage High FO temp Before adjustment

Industrial Energy Efficiency Project - Kenya 17 e.g. Capacity Utilization- Drying Ovens Filters Air Damper Hot air Exhaust 140 DegC Flue 310 DegC Excess air: 15-20% The primer drier can accommodate 2 trolleys If size is reduced, it can accommodate mm 3500 Size of the drier For the present operation, only one oven Out of 3 ovens will be sufficient Savings in IDO: 22%

Industrial Energy Efficiency Project - Kenya 18 e.g. Technology oriented - Waste heat recovery Boiler-1 3 TPH Boiler-2 3 TPH Boiler-2 3 TPH F.O Steam to process Flue gas at 230 to 270 Deg C Flue gas at 280 to 300 Deg C Recover Waste heat from the flue gases FG temp can be at 170 Deg C Hot water may be generated For use in process Savings potential: 1.2 million KSh per year (6%) Investment: 0.6 million KSh Pay back: 6 months

Industrial Energy Efficiency Project - Kenya 19 Activities…. Overcoming financial barriers Participation of local financial institutions,  Production of an investors guide,  Seminars for banks and industry CEOs  Financial Engineering courses, 6 courses carried out.  Working to establish Energy Service Company Demonstration projects  Over 6 project implemented  Monitoring and verification protocols devloped  Case studies developed and disseminated

Industrial Energy Efficiency Project - Kenya 20 Activities.. Institutional Strengthening and Sustainability  Trained a group of professionals at the Kenya Association of Manufacturers and outside to continue with energy efficiecny activities beyond the projects  Built some capacity on energy efficiency at ministry of Trade and industry and, the Ministry of Energy

Industrial Energy Efficiency Project - Kenya 21 Activities.. Institutional Strengthening and Sustainability  Worked with government to review energy policy and ensured inclusion of energy efficiecny in all aspects of the new policy  Working to establish Energy Efficiency Bureau at government level and a standards and labeling programme  Initiated collaboration with the utilities and the electricity regulator to entrench energy efficiecny in their palns and operations

22 Results -

Industrial Energy Efficiency Project - Kenya 23 Results in industry  Over 250 manufacturing industries involved in the project through training, energy audits etc.  In 2003, 28 industries surveyed had invested US$ 1 million in energy efficiency measures  Average payback period was 1.2 years  In 2004, all industries involved are expected to have invested close to US$4 million in energy efficiency with commensurate CO2 savings.

Industrial Energy Efficiency Project - Kenya 24 EnergyAudit Conducted in April 03 Fine Tuning - Fuel Savings Lowering of energy intensities in a textile plant in Kenya

25 Challenges -

Industrial Energy Efficiency Project - Kenya 26 Challenges  Uneven trade practices – e.g. counterfeits, Dumping of goods  Skeptism and Lack of confidence among industry on energy efficiency technologies and approaches  Fixation on energy tariffs and shifting of burden to government  Low Involvement of CEOs – perception as technology based or too expensive  Size of projects too small to interest banks

27 Lessons.

Industrial Energy Efficiency Project - Kenya 28 Lessons  Public initiated programmes - with social and/or environmental objectives – can attract private sector participation if linked to economic and business motives of private sector.  Sound institutional framework and the participation of top management in private sector are fundamental to the success.  Initial Skeptism and suspicion overcome by conscious effort to build confidence.

Industrial Energy Efficiency Project - Kenya 29 Lessons cont…  A Flexible and predictable approach is essential in dealing with private sector. Time is of essence.  Access to information and capacity building necessary to ensure successful introduction and adoption of new approaches.  Demonstration projects and experience sharing are powerful tools for increasing adoption and replication.

Industrial Energy Efficiency Project - Kenya 30 Thank You

Industrial Energy Efficiency Project - Kenya 31 GEF-KAM Industrial Energy Efficiency Project Budget Support from GEF and UNDP Executing Agency The United Nations Office for Project Services (UNOPS). The Ministry of Trade and Industry (MTI) through the Kenya Association of Manufacturers (KAM). Implementing Agency