Toyota to build Sh40 billion geothermal power plants

Japanese trading firm Toyota Tsusho Corp and Hyundai Engineering Co of South Korea have won the bid to build new geothermal plants worth Sh40 billion, cementing Japan’s involvement in Kenya’s geothermal power generation.

They will build a new 140-megawatt (MW) plant and expand the capacity of another to 185 MW, up from 45 MW— setting the stage for cheaper and more reliable power supply.

The consortium beat four other bids that included Japanese Mitsubishi Corporation—which was involved in an earlier geothermal plant in Olkaria. Rival Chinese firms are showing interests in building geothermal power plants in Kenya.

“These projects mark the beginning of Kenya’s journey to transform its energy sector and put the country on the path to green economic growth,” said Prime Minister Raila Odinga during inking of deal in Nairobi Monday.

Geothermal capacity in the area will rise to a total of 430 MW from the current 150 MW by April 2014, when commercial operation is expected to start in what will help curb the increased use of expensive, but cheaper to install thermal power.

Expensive power

Currently, Kenya has power generating capacity of about 1,100 MW, with hydro-power accounting for about 44 per cent. But lack of water due to droughts has recently decreased operations, prompting the country to turn to expensive fuel-driven generators to match the rising demand for electricity. The fuel generators have helped lift electricity prices 65 per cent since the start of the year.

Kenya has potential to produce 7,000 MW from geothermal power and is targeting production of at least 5,000 MW from it by 2030. The green energy projects will help KenGen earn hundreds of millions from carbon credits as it goes heavy on renewable power. Kenya has potential to produce 7,000 MW from geothermal power and is targeting production of at least 5,000 MW from it by 2030.

The increased activity in geothermal generation look set to renew the rivalry between Japan and China for infrastructure projects in Kenya.

China is heavy in road and airport construction, but is keen to get a piece of the power sector and recently signed a memorandum of understanding with the Kenya government to drill 80 geothermal wells, with funding expected to come from the Chinese Exim Bank.