Markets & Finance

Geothermal power firm Ormat to add 24MW by next year


Geothermal power production at Menengai. Ormat Technologies plans to add 24MW to the national grid by next year. PHOTO | FILE

Geothermal power firm Ormat Technologies plans to add 24 megawatts of electricity to the national grid by next year when it completes construction of a new unit at Olkaria.

Ormat which is generating geothermal power at its Olkaria III power plant amended the 20-year power purchase agreement with electricity distributor Kenya Power to allow it generate 134 megawatts (MW) from the current 110MW after work on the additional unit is complete.

Ormat will add the 24MW once it expands Olkaria III by setting up a fourth power plant next year.

“Ormat’s Olkaria geothermal complex provides clean, reliable and firm power to over 200,000 Kenyan households, increasing the complex by an additional 24MW will further benefit the Kenyan people. We see Kenya, with its progressive renewable energy policy as an important market for us and where we will continue to explore additional projects,” Ormat chief executive Isaac Angel said.

Ormat has gradually been expanding power generation at its Naivasha-based plant.

In February, it added a third plant that brought an extra 26MW into the national grid. The first plant produced 48MW and the second plant added 36MW.

Ormat will continue adding more power plants at Olkaria which will help reduce the average installation costs for the power firm.

“The synergies that derive from adding units to the existing complex allow smaller plants to be a cost effective and provide the additional power that the country needs in record speeds,” said Mr Angel.

Ormat has partnered with other energy firms to produce geothermal power.

The Nevada-based firm recently partnered with Symbion Power and Civicon, a subsidiary of infrastructure firm TransCentury, to produce 35MW in Menengai, Nakuru.

READ: US power firm in shortlist for Menengai plants

The power will be sold to Kenya Power under a 25-year agreement.

Geothermal power is one of the renewable energy sources that are expected to quicken the achievement of the government’s ambitious plan to generate 5,000MW in the next three years.

State-owned Geothermal Development Corporation (GDC) has said that it will generate an extra 110MW by December 2015.

GDC will drill steam wells in Menengai which will then be harnessed by three companies that will sell the power to Kenya Power.

Analysts say that more geothermal power is expected to offer a reprieve worth billions to customers.

“The addition of the geothermal power from Menengai will see the country save an extra Sh42 billion after switching off the diesel-powered plants. Three independent power producers Sosian Energy, Quontum East Africa and Orpower 22 (Ormat’s local subsidiary) will generate a combined 110MW from the Menengai geothermal sites in Nakuru,” said analysts at Standard Investment Bank.

GDC has invested Sh18 billion in drilling for this project.

KenGen added 52.5MW to the national grid in November, part of the 280MW Olkaria power project.