Three new investors have won licences to tap the vast geothermal resources that will secure the country’s growing demand for electricity.
The three–Africa Geothermal International Limited, WalAm Geopower Inc and Marine Power Generation are to exploit a minimum capacity of 210 megawatts at Longonot, Suswa and Akiira Ranch sites which have been confirmed by the Geothermal Development Corporation (GDC). Steam exploitation has traditionally been around Olkaria, Menengai and Eburru areas.
“All the three companies are past the initial stages of surface exploration, having set the initial exploratory drilling sites.
Two of the companies have undertaken the Environmental and Social Impact Assessment studies while the third has initiated the process,” said Energy Assistant minister Mahmoud Mohammed as the opening of the geothermal conference in Nairobi.
Present geothermal prospects are at Olkaria , Menengai and Eburru but only about 202MW have so far been developed in Olkaria. This consists of KenGen ( 150MW) at Olkaria I and II, Power IV (48MW) and some four megawatt by Oserian Development Company, a flower firm for own use. The conference seeks to mobilise private international finance and multilateral finance and restructuring to raise budgetary resources required for harnessing the untapped 7,000MW potential in the country.
Recently, the Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution gave Kenya $310 million (about Sh31 billion) to increase the generating capacity of the OrPower IV geothermal plant from 48 megawatts to 100 megawatts.
“Doubling the capacity of this geothermal plant is an important step forward for Kenya’s economic growth, as well as for the global shift to a lower carbon economy,” said OPIC President and CEO Elizabeth Littlefield in a statement.
Ormat Technologies designs, builds, owns and operates geothermal power plants in the United States, Nicaragua, Kenya and Guatemala. As at February 2011, the company had installed generation capacity of 553 MW.
Energy policymakers are keen to attract investment in the country’s extensive geothermal resources in order to reduce reliance on hydroelectric power and provide clean energy.
“We have developed proposals for financing of the sector by the Energy ministry and the Treasury. More funding is needed to open up the Bogoria and Silale areas,” said Mr Mahmoud at the opening of a geothermal conference in Nairobi.
Funding hiccups have limited work to these areas with a total production of just 22 per cent of the total power generated. The Government says it is considering financing under the Public Partnerships Framework .
Public power generator KenGen is drilling at southern Rift parts of Olkaria said it is also considering options to fast rack exploitation of the resource in Olkaria.
“We are looking at options like Direct Foreign Investment, vendor financing, PPPs and IPPs as well as BOT options,” said KenGen managing director Edward Njoroge.
The state owned Geothermal Development Company (GDC) has been concentrating the drilling at the central Rift area of Menengai while efforts to open up other frontiers in especially North Rift before handing them over to investors alongside KenGen.
Upfront/ drilling of wells – estimated at $8.5 million (about Sh850 million) accounts for 30 per cent of the total exploration costs but funding hiccups has limited the work of GDC to the central Rift area of Menengai leaving out the other high potential sites in the North Rift of Bogoria and Silale areas. Drilling one well lasts two months.
Participants at the conference are urging the Government must spend more to mitigate the risks, through upfront investment. [email protected]
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
