Economy

KenGen seeks Sh8bn for power plant

Summary

  • The State-owned firm said the 70 megawatts (MW) project is valued at Sh18.2 billion but it can only raise Sh10 billion.
  • Kenya has already tapped the Olkaria1 plant and is producing 140 MW of geothermal energy from units 4 and 5.
  • The planned project comes just weeks after KenGen connected 280MW of geothermal power to the national grid between August and December last year.

Electricity generating firm KenGen is seeking Sh8.2 billion to construct an additional geothermal unit at the Olkaria1 plant to shore up the country’s installed power.

The State-owned firm said the 70 megawatts (MW) project is valued at Sh18.2 billion but it can only raise Sh10 billion.

Kenya has already tapped the Olkaria1 plant and is producing 140 MW of geothermal energy from units 4 and 5.

“We are looking for a direct loan. We have some financing of up to Sh10 billion but require about Sh18.2 billion,” KenGen managing director Albert Mugo said without offering details on the likely financial arrangement the firm is eyeing.

The planned project comes just weeks after KenGen connected 280MW of geothermal power to the national grid between August and December last year.

The geothermal energy year comprises of 140MW from Olkaria IV plant and a similar capacity from Olkaria I units 4 and 5 which President Uhuru Kenyatta launched last week.

Mr Mugo said securing the remaining funds will set the stage for project implementation.

“As soon as we get that we will be advertising for that project,” he said.

KenGen is targeting to inject another 560MW of geothermal power to the national grid in the next four years, which could offer further reprieve for consumers in the form of lower power bills.

READ: KenGen targets 560MW of more geothermal power

Mr Mugo said an additional 15 MW is expected in May from geothermal wellheads – smaller power producing units that are installed on top of geothermal wells and help in early tapping of electricity- while waiting for the construction of big geothermal plants.

The additional geothermal power has helped cut electricity bills by about 30 per cent since August following the drop in the fuel surcharge from Sh7.22 per kilowatt hour (kWh) in July to Sh2.51 this month.

The share of electricity generated from geothermal plants in October for the first time surpassed that of hydro plants.

READ: Geothermal extends market share lead over hydro power

Data provided by KenGen shows that geothermal power accounted for 51 per cent of electricity bought by households and businesses in December, up from 14 per cent the same month in 2013. The share of thermal power dropped to 10 per cent from 37 per cent.

However, even though the additional cheaper power has cut electricity costs by nearly a third since August, households have seen little changes when a 13-month comparison is done due to the higher tariffs awarded to Kenya Power last year.

KenGen last week released a report showing Kenya is among the global leaders in geothermal power production.