INDUSTRIAL ENERGY EFFICIENCY PROJECT -Kenya Paul Kirai National Project Manager During UNFCCC Mitigation in COP-10 Bue

1. INDUSTRIAL ENERGY EFFICIENCY PROJECT -KenyaPaul KiraiNational Project Manager During UNFCCC Mitigation in COP-10 Buenos Aires 9th December 2004

2. Project Title Removal of Barriers to Energy Efficiency and Conservation in Small and Medium Scale Enterprises (SME) in 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 CO2 emissions

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

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.

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

7. Energy saving potential in industry • 108,200 toe per annum • 14% of industrial energy consumption • CO2 Savings 325,000 tons / year excluding wood • 602,000 CO2 tons including wood

8. Energy saving potential

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

10. Energy Efficiency & Productivity 1997-2000 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

11. Project Strategy • . Institutional Development Financial Mechanisms Capacity Building Awareness

12. Activities .

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

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

15. Energy Saving Options

16. e.g. Fine tuning – Boiler excess air control Steam Pr: 7 bar. G Flue Gases Temp: 247 Deg C %O2; 11.8 %CO2: 6.7 CO: 1100 ppm Air Temp: 30 Deg C Feed Water Temp: 85 Deg C Furnace oil Temp: Above 120 degC Boiler no.1 3000 lbs/hr Issues: Very high Excess air (90-100%) Very high flue gas temperature Very high CO percentage High FO temp Boiler efficiency: 75.4% Excess air: 120% Dry Flue gas losses: 17.8% Moisture losses: 5.2% Radiation losses: 2 % Blowdown losses: 0 Before adjustment

17. e.g. Capacity Utilization- Drying Ovens Flue gas @ 310 DegC Excess air: 15-20% Exhaust gas @ 140 DegC Damper The primer drier can accommodate 2 trolleys If size is reduced, it can accommodate 3 Filters Air Size of the drier Hot air 3500 11000 mm For the present operation, only one oven Out of 3 ovens will be sufficient Savings in IDO: 22%

18. e.g. Technology oriented - Waste heat recovery • 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 Steam to process Boiler-1 3 TPH Flue gas at 230 to 270 Deg C Steam to process Boiler-2 3 TPH Flue gas at 230 to 270 Deg C F.O Steam to process Boiler-2 3 TPH Flue gas at 280 to 300 Deg C

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

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

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 -

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.

24. EnergyAudit Conducted in April 03 Fine Tuning - Fuel Savings Lowering of energy intensities in a textile plant in Kenya

25. Challenges -

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 .

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.

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.

30. Thank You

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