Centum’s Sh1.2 billion wells fail geothermal steam test

Centum-owned renewable energy company Akiira Geothermal’s (AGL) quest for steam power generation suffered a temporary blow after the two wells it sunk in Naivasha at a cost of about Sh1.2 billion failed to meet production capacity.

A geothermal field in Mengengai Nakuru. FILE PHOTO | NMG 

IN SUMMARY

  • Centum director of developments, David Njoroge, on Wednesday said Akiira plans to resume exploratory drilling near the geothermal-rich Olkaria from December as it seeks to develop its 70-megawatt project in Naivasha.
  • Mr Njoroge said Centum is banking on the latest round of exploratory drillings to get in motion the power project.
  • It costs roughly Sh600 million to sink an exploratory geothermal steam well.

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Centum-owned renewable energy company Akiira Geothermal’s (AGL) quest for steam power generation suffered a temporary blow after the two wells it sunk in Naivasha at a cost of about Sh1.2 billion failed to meet production capacity.

Centum director of developments, David Njoroge, on Wednesday said Akiira plans to resume exploratory drilling near the geothermal-rich Olkaria from December as it seeks to develop its 70-megawatt project in Naivasha.

“The two wells confirmed geothermal resource. However they were not productive enough to hook up to a power generation,” he said.

Mr Njoroge said Centum is banking on the latest round of exploratory drillings to get in motion the power project.

It costs roughly Sh600 million to sink an exploratory geothermal steam well.

“The next well we are sinking we need discharge that is sustainable that we can hook onto our power plants. We want to do the three wells first,” said Mr Njoroge.

He said the firm could ramp up its exploration activities if the planned sinking of additional three well does not lead to productive discharge.

“Depending on the productivity of the next three, we will decide how many more we will drill,” said Mr Njoroge.

The project is the first phase of the development of a 140-megawatt geothermal plant.

The Centum subsidiary signed a power purchase agreement with Kenya Power in August 2015.

It completed drilling two exploration wells and proved the existence of the geothermal resource in December 2015.

The Nairobi Securities Exchange-listed firm created the investment vehicle in 2013 to spearhead its venture into the local and regional power sector as the firm sought to diversify its business.

Earlier on Monday, Centum chief executive James Mworia said the firm had put in a lot of work into the project.

“Geothermal power development is a long lead time activity. A significant amount of work has been done,” he said.

Another Centum subsidiary, Mvuke Power Ltd, is registered in Mauritius and seeks to hold its investments in power generation and distribution.

The firm had sought to tap into a State programme to expand electricity penetration by investing in power generation and distribution.

Private investments in power generation have been dominated by foreign firms with deep pockets to finance the capital-intensive ventures such as Rabai Power Ltd owned by UK sovereign fund CDC Group.

The government also spends billions of shillings on the generation of more power and hooking a larger portion of the population to the national grid, opening opportunities to financiers, engineers and suppliers of power cables and equipment.

Mr Njoroge said the firm hopes to complete exploratory drilling by quarter three of next year and achieve target financial close of quarter four 2019.

He said the company expects to finalise the preparation of the engineering, procurement and construction contract and operation and maintenance contracts by end of next year.

“It is anticipated that AGL will commence production drilling and power plant construction for the first phase 70 megawatts in early 2020 and achieve commercial operation in early 2022,” he said.

In respect of the second 70 megawatts phase, Mr Njoroge said the firm anticipates that in it would simultaneously start the exploratory studies and drilling aiming to deliver the second phase of the project by 2024.

Akiira Geothermal’s shareholders include Mvuke Power Ltd (owned by Centum Investment Company), Marine Power Generation Ltd, DI Frontier Energy Carbon Fund (a Danish Power Fund) and Ram Energy Inc.

Mr Njoroge said as a clear show of commitment, the shareholders have to date invested more than $30million (about Sh3billion) to fund project development.

“Additionally, the project has received significant global attention and has secured the support of US development agencies and the African Union through milestone grant funding.”

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