Kenya Power will distribute at least 800,000 energy saving bulbs to its customers from January 2013 in the second phase of a programme that kicked off last year, as it seeks to cut household power consumption.
The utility firm hopes to use the plan to increase its carbon credits portfolio by an estimated 35,261 tonnes every year.
Its carbon credits portfolio stands at 55,096 tonnes of carbon dioxide per year, realised from 1.25 million energy-saving bulbs distributed in the first phase in 2010/2011. It is expected to start earning the company $1.1 million every year.
Kenya Power spent $5.4 million on the first phase of the project but it is not clear how much it will spend in the second phase.
Energy saving bulbs reduce household lighting power consumption by 40 per cent, contributing to reduction in power demand and less investments in power generation.
Kenya Power has found that the 1.25 million bulbs already being used by consumers have helped the company conserve about 128 million kilowatt hours (kWh) leading to a reduction in peak demand by about 60MW, which would otherwise require $82.3 million investment in generation.
The 1.25 million bulbs given in the first phase enable Kenya Power to avoid emission of 55,096 tonnes of carbon dioxide every year.
Each tonne of carbon dioxide is counted as one certified emission reduction (CER) unit, which, for the case of Kenya Power, is sold in the international market through Standard Bank’s carbon trading arm.
Kenya Power pays eight per cent of the amount of money generated by the project as a management fee to the bank.
The 800,000 figure is lower than the 3.3 million given in the company’s latest annual report. The company had also expected to increase its carbon portfolio by 145,000 tonnes carbon credits but may manage just 35,000.
It is not clear if the reduction in the number of bulbs was influenced by the drop in the prices of carbon credits in the world market by as much as 70 per cent.
Kenya Power was to be paid for the carbon credits using the prevailing market prices that have dropped from 13 euros per CER in early 2010 when the agreement was signed, to the current prices of three euros.
The plunge is attributed to massive building-up of supply of CERs in the world market in the past 12 months because of a drop in demand due to slowing economies in Europe and the US.
But there is optimism that the prices will rebound, according to the chief executive of the Nairobi-based Africa Carbon Exchange, Tsuma Charo.
“From next year, countries like China, Brazil and India will not be allowed to sell their CERs in the European market. This will leave room for higher demand and better prices for CERs from countries like Kenya,” said Mr Charo.
Although Kenya is not a least developed country, it is expected to be allowed to access the European market through a negotiated entry and also expand market access to Japan which is already working with KenGen on its carbon credit scheme.