IEEFA update: Kenya and Bangladesh can turn to renewables as coal plans stall

Renewable energy is increasingly cheap, quicker to build, and can improve energy security

SYDNEY  ̶  Recent decisions by the World Heritage Committee of UNESCO and the Kenyan courts will delay planned coal-fired power projects in Bangladesh and Kenya.

A June 2019 draft decision by the World Heritage Committee’s advisory body states that Bangladesh’s Sundarbans Reserve Forest should be placed on the “in danger” list due to the impacts of nearby coal-fired power developments. The decision further requests that coal plant development be stopped until a Strategic Environmental Assessment is carried out.

Meanwhile, on 26 June, a Kenyan tribunal cancelled the environmental licence for the Lamu coal power project. The developers will need to complete a new environmental impact study with community involvement, if they wish to proceed.

FORTUNATELY, RENEWABLE ENERGY IS GAINING MOMENTUM IN KENYA AND BANGLADESH and provides a better alternative for both countries.

IEEFA has produced briefing notes highlighting the progress of renewable energy in Kenya and Bangladesh – two nations that are currently planning or building new coal-fired power plants adjacent to designated World Heritage sites that have now been delayed.

IEEFA considers new coal projects in these countries as both unnecessary and unwise given the progress of renewable energy technology and the expected continued price declines and efficiency increases of this technology going forward.

The latest capacity statistics released by the International Renewable Energy Agency (IRENA) confirm that developing and emerging nations are leading the rollout of renewable energy.

Almost two-thirds of all new power generation capacity added globally in 2018 was from renewable energy technology.

Asia and Africa led the way in renewable energy capacity growth in 2018

After the Oceania grouping of Pacific nations, which saw renewable capacity increase 17.7%, it was Asia and Africa that led the way in renewable energy capacity growth in 2018. Asia saw its renewable capacity increase 11.4% whilst African renewable capacity rose 8.4%.

KENYA HAS THE POTENTIAL TO BECOME A RENEWABLE ENERGY LEADER IN AFRICA – it is already the continent’s geothermal power leader.

In addition to its excellent solar resources, Kenya’s location in the Great Rift Valley also means that it has significant wind and geothermal potential, some of which is already being utilised to the nation’s benefit.

Kenya saw its renewable power capacity increase by 22% in 2018, led by a wind power expansion that has made it a wind energy leader on the continent.

Kenya’s Lake Turkana wind farm is the largest in Africa at 310 megawatts (MW). Since coming into operation, it has been replacing ageing and expensive diesel generation.

Replacement of diesel has been cited as a key reason determining the need for the Lamu coal-fired power project in Kenya. However, newer and ever-cheaper technology has beaten coal to it. A recent IEEFA report found the proposed Lamu coal plant will hinder Kenya’s economic growth, not support it.

A succession of new utility-scale solar plants are under development in Kenya

Another 100MW wind farm in Kenya has recently reached financial close. In addition, a succession of new utility-scale solar plants are under development in Kenya as the cost of solar power drops across Africa.

The latest Sub-Saharan record-low solar tariff was achieved in Zambia in April 2019 at US$40/MWh. Power from the proposed Lamu coal plant would cost far more.

The African Development Bank (AfDB) recently financed the 40MW Kopere solar project in Kenya.

In March 2019, the President of the AfDB, Akinwumi Adesina, noted that renewable energy will be key to driving economic development in Africa whilst addressing climate change, stating that “the future is renewable energy and as the head of the African Development Bank I should not be investing in the past, I have to be investing in the future.”

A May 2019 German Solar Association report found that Africa’s high solar potential means the continent could install up to 173GW of solar by 2030, up from 5GW in 2018.

MEANWHILE, IN BANGLADESH, RENEWABLE ENERGY IS NOW GAINING MOMENTUM AFTER HAVING PREVIOUSLY FALLEN BEHIND the progress achieved across the rest of Asia.

In October 2018, the nation’s first truly utility-scale solar plant was commissioned. The impetus has continued ever since with multiple agreements signed for the building of further solar power capacity.

Parties to these agreements include the World Bank, the Asian Development Bank and proponents from Saudi Arabia and the United Arab Emirates.

Bangladesh has invited bidders for wind power projects totaling around 150MW

Wind power is also making progress in Bangladesh following a 2018 U.S. National Renewable Energy Laboratory (NREL) study that demonstrated significantly more wind power potential than previously thought. Bangladesh’s Power Development Board has consequently invited bidders for wind power projects totaling around 150MW.

A continued rollout of renewable energy in Bangladesh will quickly see prices drop well below the calculated required tariff for the Rampal coal-fired power plant of US$99/MWh after tax, interest and dredging subsidies.

With electricity demand in Bangladesh growing fast, renewable energy represents an increasingly advantageous option that can improve energy security and lessen the economic burden of coal and LNG imports.

Bangladesh and Kenya’s energy security are at key turning points. With their coal power plans delayed, both countries can better serve growing electricity demand by turning to quick-to-build and increasingly cheap renewable energy.

Simon Nicholas ([email protected]) is an IEEFA energy finance analyst.

Related articles:

IEEFA report: The Lamu Coal Plant will hinder, not spur, economic growth in Kenya

IEEFA update: Coal is failing to bring relief to Bangladesh’s electricity system

IEEFA Asia: Bangladesh can transition its energy markets onto a lower-cost, sustainable pathway

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