Energy Management

Workshop,

Africa Carbon Exchange.

Sizing Renewable Energy Systems

for Different Facilities and

Translation to Carbon Credits

Presentation

1. Introduction to Viability Africa2. Overview of Existing EE Regulatory

Framework in Kenya3. Scalability of RE systems for Carbon

Credit financing4. Industrial EE and RE and Climate

Financing Opportunities5. Domestic EE and RE and climate

financing Opportunities 6. Case Studies

Viability Africa, LLC’s overriding objective is to operate as the

leading development and financial advisory firm for clean

technology projects and ventures across East Africa. Viability Africa

will support investments that exhibit economic, technical,

environmental, and social viability and sustainability. The growth of

our team will focus on the recruitment and development of East

Africans seeking to become the future business and political leaders

of their country and region. Our Founders have committed to

reinvesting a significant portion of the company’s earnings to ensure

the company will have long-term sustainability and impact, and to

solidify Viability Africa as a resource available to the market for

years to come as the clean technology sector grows in relevance

and impact across East Africa.

Our Vision

Viability Africa, LLC

Carbon Energy Environment

• Asset Development• Transaction Management• Asset Monitoring

• Feasibility Studies• Project Financing• Financial Advisory• Project Management

• Environmental and Social Impact Assessments

• Environment Audits

Founded in 2009, Viability Africa has headquarters in Nairobi, Kenya with near term expansion plans to establish offices in Dar esSalaam, Tanzania. Our current portfolio crosses a number of countries in sub-Saharan Africa and includes a diverse range of innovative technologies and solutions.

Presentation

1. Introduction to Viability Africa

2. Overview of Existing EE Regulatory Framework in Kenya

3. Project Components for Success

4. Venture Components for Success

5. Accessing Finance through Voluntary Carbon Markets

6. Case Studies

Overview of Existing EE Regulatory Framework in Kenya

1. Existing Statutory Provisions

2. Ministerial Directives, Policies and Regulations

3. Implementation Record

4. Comparison to other Jurisdictions

5. Need for a more powerful RE/EE Lobby?

Existing Statutory Provisions

• The Energy Act 2006– Calls for the Minister (Cabinet Secretary) to promote RE

by formulating national strategy for research, providing a working RE framework, promotion of RE specific technologies, promotion of local RE manufacturing,

– Calls for the Minister (Cabinet Secretary) to develop a national EE programme which includes standardization using KBS, awareness creation, strengthening consultation, financial assistance including financial incentives for EE

– Factories and Buildings – Specific provisions allowing the ERC in Consultation with the Minister (Cabinet Secretary) to direct EE measures with sanctions for non compliance

Ministerial Directives, Policies and Regulations

Sector Specific Requirements and Programmes

• 2004 – Sessional Paper No.4 on Energy

• Energy (Solar Water heating) Regulations 2010

• National Energy Policy – Third Draft – May 11 2012

• Establishment of the Centre for Energy Efficiency and Conservation (CEEC)

The three instruments have varying implications either generally or specifically as is the case for the solar Hot Water heating regulations.

Implementation Record

The various initiatives have realized the following results:

• KAM-GEF programme resulted in energy Savings of 1,800 GWh

• Estimated GHG savings of 5.2 million tonnes of CO2e.

• Increased uptake of Solar Hot Water Heaters since regulation passed even before it fully comes into force with an estimated demand of 65,000 units per year and Kenya’s status as a world leader in units sold per head.

• Increasing awareness amongst industry players on the need for increased EE measures

Comparison to Other Jurisdictions

1. Germany - 3 pillar approach1. Reduced energy Demand on Buildings and minimum 20% RE in

Energy Mix

2. Financial Incentives for buildings at Federal , Regional and Municipal levels

3. EE awareness including pilot programmes, and issuance of Energy Performance Certificates (EPCs)

Results: – 2006 - 2009, One million buildings refurbished

– 400,000 highly efficient buildings constructed

– 240,000 per year in the sector created per year

– 27 billion euros distributed in loans and subsidies between 2004 and 2009, for a total investment in building efficiency of nearly 54 billion euros

Need for a more powerful RE/EE Lobby?

What is needed:

1. Increased standardization for EE and RE technologies coming into Kenya

2. Support for local manufacture and assembly

3. Strengthen legislation around implementation of the existing legislations

4. Encourage tax rebates/ alternative incentives around EE for industrial and

commercial premises

5. Train local experts and local skills

Scalability of RE systems for Carbon Credit financing

1. Carbon Markets

2. Case Studies of Existing Projects

3. Costs and economic realities

Carbon Markets

• CDM - Market opportunities post 2012

• Gold Standard VCS and other trading schemes – Price consideration against sustainability

• Project development considerations– Additionality

– Sustainability

– Consultant costs vis-à-vis profitability

– The opportunity in consolidating efforts under PoAs

Case Studies

• Kenya has 14 registered CDM – Standalone projects –90% are RE based

• Project activities which qualify for carbon crediting:– CFL Lighting

– Energy Efficiency at Industrial Facilities

– Electricity distribution and transmissions

– EE measures on commercial buildings

– and commercial plants

Case Studies

1. Domestic Energy Efficiency

1. The Paradigm Project

2. Aqua Clara Foundation

3. Triple Quest

Costs and Economic Realities

• Consultancy

• DOE/ Validation

• Miscellaneous expenses – LSC etc

• Registration fees

Voluntary Carbon Case Study: Safe Water Team Kenya

• GS 1124• Implementation of 2,000 water filters in rural households in Siaya and

Bondo (Nyanza, Kenya). One year rollout implementation timeline, goal to establish the area as a distribution hub for future projects.

• Project Registered• Prepayment Model

o First payment at Registrationo Project Milestones o Carbon and Implementation Costs

• Scalable Modelo Three Micro-Scale PoA (Central America, East Africa, West Africa)

• Took Time to Developo 10 Months Registrationo 6 Months Transaction

Voluntary Carbon Case Study: AquaClara

• GS 1068

o Entrepreneur based model with tens of thousands of biosand filters set to be installed. AquaClara manages the supply chain to ensure the entrepreneurs have access to a sustainable source of input requirements as well as marketing and education resources. Focus is in Rift Valley area but targeting numerous communities in Kenya.

• Large Scale Project

• In Validation

• Transaction Closed (Forward Agreement)

o Fixed Pricing, Upside Potential

o Forward Sale Structure

Voluntary Carbon Case Studies: Lessons Learned• Transparent Relationship

o Developer – Buyero Consultant – Developero Consultant – Buyer

• Realistic Expectationso Timelines always seem to be overaggressiveo Costs are difficult to anticipateo Maintain Conservative Approach

o Tonnageo Costs

• Communication

Questions?

Nathan PM Gachugi

Project Manager

Viability Africa, LLC

www.ViabilityAfrica.com

Nathan.Gachugi@ViabilityAfrica.com