US energy firm Ormat Technologies has commissioned another unit within the Olkaria III complex, pushing its overall generating capacity to 139 megawatts (MW) and boosting the country’s quest for sufficient supply.
Ormat said it had reached the commercial operation phase of plant 4 which adds 29MW of geothermal power to be sold to Kenya Power under a 20-year power purchase agreement.
“With the commissioning of plant 4, the 140 MW Olkaria III complex will provide clean and reliable electricity to over 250,000 households in Kenya, supporting the government’s 2030 vision to increase generation capacity,” Isaac Angel, Ormat CEO said.
He added: “We are proud to be part of Kenya’s efforts, and view this facility as a key component of our geographic expansion strategy. Now that we have the commercial terms in place, we will continue to evaluate the feasibility of future expansions of the Olkaria III complex as well as other prospects to support our growth in Kenya.”
The firm has implemented a multi-phased development strategy in Olkaria III with the first phase of plant 1 having commenced operation in 2000 and the second phase in 2009. Ormat’s plant 2 started production in 2013 and plant 3 in 2014.
The firm financed the first three plants with a $310 million (Sh31.66 billion) debt facility provided by the Overseas Private Investment Corporation (OPIC), the US government’s development finance institution.
Plant 4 was financed by Ormat equity which is covered under insurance policy from MIGA, a member of the World Bank Group, to cover its exposure to certain political risks involved in operating in developing countries.
Statistics show that the demand for electricity in the country hit a record high last year as companies expanded their operations and more homes and schools were connected to the national power grid.
Power consumption rose to 1,569 MW last October — the highest level yet in the country’s history — from a peak of 1,512 MW the previous year, according to the Energy Regulatory Commission (ERC).
The country’s peak power demand has steadily grown from 1,463 MW in 2013, according to the ERC data, signaling the pace of economic activity among users.
Although initially expensive to drill, geothermal is over time more reliable than both hydro and thermal power which are prone to vagaries of weather and high international fuel prices.
The country injected 280 MW of geothermal power to the grid in the second half of 2014, lifting installed power generation capacity to 2,294 MW and exerting downward pressure on power bills.