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US-based firm joins steam power production in Kenya

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Power generation at Olkaria. A US-based firm is set to be Kenya’s second private steam power producer after Kenya Power inked a deal to buy 140 megawatts of steam power from the company. File

Power generation at Olkaria. A US-based firm is set to be Kenya’s second private steam power producer after Kenya Power inked a deal to buy 140 megawatts of steam power from the company. File 

By DAVID HERBLING

Posted  Monday, April 8  2013 at  17:53
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A US-based firm is set to be Kenya’s second private steam power producer after Kenya Power inked a deal to buy 140 megawatts of steam power from the company.

The Africa Geothermal International (AGIL) plans to begin drilling steam wells next year at the Longonot volcanic complex located in Nakuru County; joining Orpower 4 which is Kenya’s sole geothermal independent power producer (IPP) with an output of 48 megawatts.

The firm is expected to start commercial production of electricity in 2018 and the additional capacity will increase Kenya’s total geothermal yield by two thirds from the current 207 megawatts; heralding cheaper power for consumers.

“Geothermal, unlike other renewable energy sources such as wind, solar or hydroelectric, is not dependent upon weather,” said Kenya Power managing director Joseph Njoroge.

“It is an important step forward in enabling the country meet its Vision 2030 utilising geothermal power that is cost effective and environmentally friendly,” said Mr Njoroge when he signed the power purchase agreement with AGIL Monday.

Kenya Power did not disclose the tariff in the power purchase agreement signed with AGIL, but the Energy Regulatory Commission’s pricing guide for geothermal power is Sh7.22 (US cents 8.5) per kilowatt hour.

KenGen managing director Eddy Njoroge has previously stated that the firm will deliver its 280 megawatts Olkaria project at 6.05 per kilowatt hour.

Mr Fassine Fofana, chief executive officer of AGIL lauded Kenya’s energy regulatory framework which provides for private developers to venture into geothermal projects.

”This 140 MW PPA provides the AGIL stakeholders the off take certainty needed to advance the project and provides Kenya Power with an important addition to their generation plan,” said Mr Fofana.

Kenya has lined up a series of green power projects mostly geothermal in a bid to tilt the ratio of steam power from the current 13 per cent to a third in the next three years.

The Kenya Electricity Generating (KenGen) company is currently constructing two power plants to generate 280 megawatts of power and is currently engaging global energy firms to form joint ventures to generate a further 560 megawatts in the next four years.

Kenya plans to tap at least 5,000 MW of geothermal power to wean the country off unreliable hydropower. Blackouts happen frequently due to generation shortfalls and an ageing grid.

GDC was established in 2009 to drill wells and avail steam to power for geothermal generation to investors, hence mitigating upfront risks and capital requirements associated with steam power development.

The African Development Bank has given GDC a $124.5 million loan and a further $25 million through the Climate Investment Fund for the development of the first phase of 400 MW in Menengai.