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Nov 18, 2011

International finance key to unlocking Kenya’s geothermal potential

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Kenya will be banking on international lenders to raise a staggering $17-billion to finance the exploitation of geothermal energy sources.

Kenya Electricity Generating Company (KenGen) MD Eddy Njoroge tells Engineering News in an interview that Kenya’s target of generating 5 000 MW from geothermal sources by 2030 will only be realised if international financiers partner with the East Africa nation.

“We want to explore cheaper sources of electricity. Geothermal power production is less costly compared with thermal, hydro or even wind. The challenge we have is raising the funds for constructing the geothermal plants and that is why we need international financiers to partner with us,” he says.

He adds that, in the next five years alone, KenGen will require at least $4.5-billion to implement projects with the capacity to generate 1 200 MW from geothermal wells in the Olkaria and Menengai fields in the Rift Valley.

KenGen has awarded the contract for the construction of a 280 MW geothermal project to a consortium of Tsusho Corporation, of Japan, and Hyundai Engineering & Construction, of South Korea.

Njoroge says with energy demand in Kenya expected to increase at an average of 8% a year, only massive investments in geothermal will end Kenya’s chronic power shortages.

“Geothermal will help us mitigate the inconveniencies of a power crisis precipitated by overreliance on hydro and will result in the cost of power coming down,” he says.

In recent months, Kenya, East Africa’s biggest economy, has witnessed an unprecedented surge in the cost of electricity owing to declining water levels in rivers generating electricity.

Electricity generation from hydro sources has been scaled down to 29% and generation from thermal has increased to 57%.

Njoroge says Kenya’s national installed capacity stands at 1 616 MW, with a peak demand of 1 200 MW, which is expected to surge to 15 000 MW by 2030.

“We anticipate this new capacity to be from geothermal, thermal, wind, coal and imports,” he states.

The 280 MW Olkaria geothermal power project will consist of two power plants of 140 MW. It is being funded by the Japan International Cooperation Agency, the French Development Agency, the European Investment Bank, the World Bank, the Germany Development Bank and KenGen.

The plant, which will be the biggest geothermal plant in Africa, will be built in 27 months and is expected to be fully operational in 2014.

KenGen is Kenya’s leading electricity generator, producing 75% of the electricity consumed in the country.

To date, Kenya has managed to exploit a mere 280 MW of geothermal power in Olkaria, although it has identified more than 14 high-potential sites along the Rift Valley with the capacity to generate between 7 000 MW and 10 000 MW.

Edited by: Creamer Media Reporter
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