Sahanivotry Small Hydro Power


Overview

  • Reference: P-MG-FAB-002
  • Approval date: 05/07/2007
  • Start date: 04/10/2007
  • Appraisal Date: 30/09/2006
  • Status: OngoingOnGo
  • Implementing Agency: HYDELEC MADAGASCAR
  • Location: SAHANIVORY REGION

Written by Youssef Arfaoui

Hydropower is Catalyst for Madagascar’s Power Sector and Carbon Market

For over two years, the privately-owned and operated Sahanivotry Hydro-Electric Power Plant in Madagascar has been helping the country meet its significant and growing power needs reliably and in a cost-effective, environment-friendly manner. So much so that it recently earned the right to sell carbon credits through the Clean Development Mechanism (CDM). It is the first registered CDM project in Madagascar, and one of only 48 projects registered in Africa.

“The ability to sell certified emission reduction (CER) credits is the icing on the cake of an already successful venture,” said Hydelec president, Andre Fillet. “The increased revenues will bolster profitability and allow us to lower tariffs to end-users. It is an added incentive to invest in renewable energy,” he explained.

Not that Hydelec needed convincing. The group has documented that the costs of generating electricity through hydropower are far lower than operating thermal power plants that produce equivalent amounts of electricity. Hydelec is currently constructing another hydropower plant at Maroantsetra (1.2MW) and preparing four other projects across the country with capacities ranging from 1.25 to 20 MW.  

The African Development Bank, which provided half of the €13 million needed for the Sahanivotry plant’s construction in 2007 and 2008, guided Hydelec through the rigorous CDM registration and issuance process.

“One of the main obstacles to Africa’s participation in CDM is a lack of experience and technical skill to pursue the opportunity,” said Youssef Arafaoui, AfDB Senior Energy Expert and Task Manager on the Sahanivotry project. “Part of the Bank’s commitment to supporting Africa on a low carbon, green growth path is helping countries and companies navigate the complexities to tap the carbon market.”

Hydropower improving lives

The Sahanivotry Plant is Madagascar’s first privately owned and operated hydro-electric power plant and the first hydropower plant to be built on the island since 1982. Located on the Sahanivotry River 30 km south of Antsirabe in the province of Antanarivo, the hydropower plant has an installed capacity of 15 MW and an average gross electricity generation of 90 GWh. Since 2008, it has been producing 10% of the island’s total supply of electricity.

The hydropower plant feeds the Antsirabe and Antanarivo grid, which in turn, feeds the regional grid of Antananarivo, Madagascar’s capital. The people living in the towns supplied by these grids used to be plagued with chronic power cuts and load shedding. A more reliable supply of electricity has had a profound affect.

Jean Pierre Bisiaux, the Ibity cement factory manager, equated power outages with lost work time. “Now the factory is producing at capacity, and our workers can count on a steady paycheck,” he said.
“I have been able to provide better for my family since setting up my workshop,” said carpenter Henri Rakotosolofo. “We never used to go outside after dark,” said mother Mamy Raveloson. “Lights at night mean a safer environment to interact, study, and even conduct business into the evening.”

Model worth repeating

According to Mr. Arfaoui, other African nations and private investors are taking notice of the Sahanivotry plant.  “This is a small-scale project that has immediate impact on people’s lives and solid return on investment,” he stated. “It is exciting because it can be replicated in other African countries with hydropower potential.” The fact that it has earned CDM registration makes the Sahanivotry model all the more attractive, he added.

In fact, the Bank has collaborated with UNEP under its Small Hydro for Greening the Tea Industry initiative to implement several other small hydro programs in east African nations, including Burundi, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda and Zambia. The Bank has also supported their CDM registrations.

Other AfDB interventions that have benefited from the Bank’s CDM support include the Buseruka small hydropower plant in Uganda, the West Kenya co-generation project in Kenya, the Lake Turkana wind farm Kenya.

Defined in Article 12 of the Kyoto Protocol, the CDM allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one ton of CO2. These CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol. 

Key contacts

M'PENG BAYOI Daniel Constant - OPSD4


Costs

Finance source Amount
ADBEUR 5,174,020
Co-financierEUR 6,898,693
DeltaEUR 48
TotalEUR 12,072,760