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OrPower receives Sh18bn for geothermal complex

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Olkaria geothermal plant. US energy firm OrPower 4 has borrowed Sh18.5 billion for the development of the 100 megawatt Olkaria III geothermal power complex in Naivasha. Photo/FILE

Olkaria geothermal plant. US energy firm OrPower 4 has borrowed Sh18.5 billion for the development of the 100 megawatt Olkaria III geothermal power complex in Naivasha. Photo/FILE  Nation Media Group

By ALLAN ODHIAMBO

Posted  Monday, November 12   2012 at  20:48

In Summary

  • Energy ministry statistics show that installed wind energy capacity to the grid was 5.45MW as at December 2011 and a further 20MW is expected to be commissioned by year-end.
  • The 300MW Lake Turkana wind power project is expected to be commissioned in 2014.
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US energy firm OrPower 4 has borrowed Sh18.5 billion for the development of the 100 megawatt Olkaria III geothermal power complex in Naivasha.

The money was received at the weekend as part of a Sh26.06 billion loan from the Overseas Private Investment Corporation (OPIC), an agency of the US government, through Ormat Technologies, Orpower 4’s parent company.

“The remaining amount of up to $45 million (Sh3.78billion) of tranche II of the OPIC loan is expected to be drawn over time prior to the commercial operation of the Olkaria III expansion mid next year,” the company said.

Under terms of the loan, another $45 million (Sh3.78 billion) could be borrowed if Orpower 4 chooses to construct an additional phase of up to 16 megawatt (MW). The project aims to provide reliable and cost-effective power to Kenyans.

“The OPIC support for these projects enables us to obtain long term cost-effective project financing, improve their economics, and strengthen our balance sheet,” said Dita Bronicki, Ormat’s chief executive officer.

Kenya has embarked on renewable power generation projects in a bid to reduce dependence on unreliable rain-fed hydroelectric, and thermal, power.

The country’s peak electricity demand has risen to about 1,200 Megawatts, compared with 780 Megawatts in 2002, driven by economic growth.

KenGen produces 1,141 Megawatts and the rest is generated by independent power producers, which mostly rely on renewable energy such as wind power. Kenya is the first African country to drill geothermal power, tapping the vast steam energy in the Rift Valley region.

Estimates by the Energy ministry show that up to 7,000 MW could be generated from geothermal sources.

The government is targeting to produce at least 5,000 Megawatts of power from steam by 2030. Although expensive to drill initially, geothermal is over time more reliable than both hydro and thermal power which are prone to vagaries of weather and high international fuel prices.
Kenya Electricity Generating Company (KenGen) in September invited bids for the development of geothermal power plants with a capacity of 560MW.

The company plans to develop the power plants in phases of 140MW each at Olkaria under a joint venture arrangement in which successful bidders will build and later transfer the facilities back to KenGen after 10 to 20 years. In February, KenGen said it planned to raise $12 billion to build six geothermal power plants to produce 585 megawatts by 2016 as it pushed to diversify its power sources.

Apart from geothermal, the country is also eyeing wind and coal power to boost energy reserves. Several wind power projects have been rolled out including those by KenGen in Ngong area.

Energy ministry statistics show that installed wind energy capacity to the grid was 5.45MW as at December 2011 and a further 20MW is expected to be commissioned by year-end.

The 300MW Lake Turkana wind power project is expected to be commissioned in 2014.

aodhiambo@ke.nationmedia.com