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KenGen plans 14 temporary steam plants in two years

Summary

KenGen plans to build 14 temporary geothermal plants with a combined capacity of 65 megawatts (MW) by 2014 after completing the piloting of a 5MW portable station late last year. 

KenGen is stepping up production of electricity from portable geothermal plants in a move that is set to boost the country’s power supply and raise the company’s earnings.

KenGen plans to build 14 temporary geothermal plants with a combined capacity of 65 megawatts (MW) by 2014 after completing the piloting of a 5MW portable station late last year. 

Construction of a typical geothermal plant takes between four to 10 years, but portable plants commonly known as wellheads take about six months.
The development of cheaper plants means that the country will come to rely less on thermal power, prone to the vagaries of high international prices; and rain-fed hydroelectric dams.

“First, it will allow early generation to give Kenyans power quickly before putting up conventional plants that take eight to 10 years to implement,” Eddy Njoroge, KenGen’s managing director said in a statement. “In this way, we are able to meet current supply-demand needs as we invest to safeguard future supply.” Kenya is the first African country to drill geothermal power, tapping vast reserves of steam energy in the country’s Rift Valley region, which remains geologically active.

The country has the potential to produce 7,000MW and is targeting production of at least 5,000MW by 2030.

Geothermal Development Company (GDC), formed in July 2009 to spearhead exploration of geothermal steam, earlier said it would sell steam to KenGen, which will in turn use wellhead generators instead of a conventional power plant, to convert it into power.

Wellhead generators enable producers to make electricity as soon as a well is operational, instead of waiting to put up a power plant, which normally would take about five years.

“With this concept, in the next two years, we should be able to generate 200MW before even the main power plant has come on line and that way we should be able to do away with emergency power that we have been using whenever we have poor hydrology,” GDC managing director Silas Simiyu  said in an earlier interview.

It costs $0.18 (Sh15.30) per kWh to produce electricity using medium speed diesel and about $0.07 (Sh5.95) per unit from geothermal, says GDC
GDC plans to drill at least 300 other wells in the next four years, which it will hand over to independent power producers.

KenGen’s net profit grew 35.6 per cent to Sh2.8 billion in the year to June and its share price has gained 23 per cent to Sh9.55 over the past six months.

KenGen’s geothermal capacity stood at 158MW out of 1, 231 MW it generated in the year to June.

In September, KenGen invited parties to submit bids for the development of 560MW geothermal power plants as the firm races to increase its share of power generated from renewable sources like wind.

It’s power generation from hydro stood at 812MW or 65.9 per cent of electricity that the State-owned firm generated in the year to June.

Wind power stood at 5.1MW and thermal at 256MW.
The company said it planned to develop the power plants in phases of 140MW each at Olkaria, in the Rift Valley, under a joint venture arrangement in which successful bidders would build and later transfer the facilities back to the firm after 10 to 20 years.

Increased urbanisation and industrial activities have seen the country’s electricity demand outstrip supply, forcing injection of expensive thermal power.

Kenya’s installed electrical capacity now stands at 1,708MW against peak demand of 1,221MW.

Electricity demand is expected to grow dramatically by 2030. The government envisions total electricity capacity to hit 17,764MW by 2030 to meet a projected peak demand of 15,066MW by that time.

The cost of energy is a key factor in Kenya’s inflation levels and policy makers have identified geothermal power as an avenue to deliver cheap power and sharpen the country’s competitive edge.

KenGen’s market share grew to 75 per cent from 70.7 per cent a year earlier and 53.1 per cent in 2010, according to Kenya Power’s financial statement.

The statement also shows that Kenya Power, the sole buyer of bulk power, bought electricity worth Sh21 billion, meaning that the independent producers posted sales of Sh5.1 billion given KenGen’s revenues of Sh15.9 billion. 

At Sh5.1 billion, the independent power sellers saw their revenues drop from last year’s Sh5.9 billion and Sh9.6 billion in 2010.

KenGen installed plants with additional capacity of 52.5 megawatts while some that were upgraded mid last year like the 120MW gas-driven Kipevu plant and Tana Hydro reported full year of operation.

The shifts in market share have cut the earnings of the independent power producers by 46 per cent over the past two years and lifted KenGen’s net profit and dividends.

KenGen’s net profit grew 35.6 per cent to Sh2.8 billion on increased sales, which rose to Sh15.99 billion from Sh14.3 billion. The company’s share price has gained 23 per cent to Sh9.55 over the past six months.

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