Kenya has permitted the largest Chinese manufacturer of rock drilling equipment to explore and build geothermal power plants in the country.
Kaishan Group secured the green light to drill steam wells in the Suswa south-Magadi-Shompole steam fields, in Narok County.
The group made the disclosure in its regulatory filings at the Shenzhen Stock Exchange and was reported by Chinese newspaper Global Times.
The company said the licence gives it the leeway to sink exploration wells in the area for up to three years and subsequently proceed to construct and operate power plants.
Currently, US-based Ormat Technologies is the only private investor that owns and operates geothermal power plants in Kenya through subsidiary Orpower. The State-owned power producer KenGen which runs a number of steam power plants.
Building geothermal power plants comes with heavy upfront costs due to the expensive drilling of wells to tap steam underground, but the energy source is cheaper and more reliable in the long run.
It costs about $5 million (Sh515 million) to generate one megawatt of geothermal power, according to experts.
A steam well takes about 60 days to drill, reaching depths of up to 3.5 kilometres.
Kenya is currently ranked the ninth largest producer of geothermal electricity in the world and the leader in Africa with a capacity of 630 megawatts, according to Renewables Global Status report 2017.
In Kenya, the Geothermal Development Company (GDC) is mandated to drill exploration wells in search of steam on behalf of investors to derisk the venture before handing the steam wells to power producers who pay for the steam, in return.
The GDC sells geothermal steam to power producers such as KenGen for conversion to electricity. It operates seven drilling rigs.
Other investors, however, have opted to go it all alone in the whole value chain from exploration to development.