Environmental research

Mutunguru United Micro Hydro Project (MUMHP) stands as a success case of community power generation where involvement of local actors has helped rural community access to affordable modern energy services and explores potential to benefit from the Feed in Tariff (FiT) policy. The community set up a Community Based Organisation (CBO) in 2004 to enable them access resources and build their capacity to generate power for domestic and productive use. In 2008 with support from the United Nations Industrial Development Organisation (UNIDO) and Rural Electrification Authority (REA), MUMHP established a 35Kw generation unit as an initial phase. When completed the project will connect 1500 homesteads in the Mutunguru area to electricity as well as enable businesses to use renewable efficient energy as well as reduce dependency on high carbon emitting, low efficiency energy sources. The project is also able to benefit from the FiT as it will have met the minimum threshold. The sponsors are not able to finance the project expansion hence the need to invite investors to provide finances to implement the scale up. To achieve this there is need to undertake a number of preparatory activities and build the capacity of the community to manage the scale up. The MUMHP seeks to apply for the funding from the Global Environment Facility Small Grants Programme (GEF SGP) to undertake a feasibility study, hydrological survey and Environmental and Social Impact Assessment (E acquire water rights and relevant licences, generate technical drawings and designs, Power Purchase Agreement (PPA), set up an Energy Service Company (ESCo) and acquire a billing system. This will enable interested investors to buy a stake in the ESCo or have the community meet the requirements to interest financial institutions to finance the project through a loan. The current 20 year PPA policy and FiT rates will enable the company acquire financing to scale up power production if they are able to demonstrate the viability of the project. By transforming the CBO into an ESCo, the MUMHP will enhance its capacity to operate a profit making venture as well as create shareholding structure that will give the investors a chance to participate in the capitalization of the project. The project will be executed through hired professional services as the community does not have the necessary capacity. A project manager will be responsible for the day-to-day activities, while the community leadership supervises execution on the ground. To ensure that the interests of key stakeholders are taken into consideration, UNIDO and REA will be advisors of the community on various aspects of the project development. Periodical reports will be provided by the professionals, verified by the project manager and presented to the funding agency by the community leadership. The transformation of the CBO into an ESCo will be done with the consent of members, utilising professional services to ensure all legal requirements are met. REA will also support the ESCo to get necessary licenses and UNIDO will be the financial linkages advisory partner. The final study showing the viability of the project and requirements for the next stage will be shared to guide the community and resource mobilization consultants to develop a fundraising strategy.

Kenya