Kenya in cheaper geothermal option

Saturday August 4 2012

By STEVE MBOGO Special Correspondent

Kenya will use geothermal wellhead generators to reduce the time it takes to generate electricity from geothermal steam wells from four years to less than one year.

Geothermal wellheads are smaller power producing units that generate 5-10 megawatts (MW) of energy.

They are affordable and easy to install on top of geothermal wells, and help in early tapping of electricity while waiting for the construction of big geothermal power plants.

“Our intention is to use the wellheads to realise electricity from the wells faster. We intend to use the wellheads to generate 65 MW of electricity within the shortest time possible,” said the managing director of Kenya Electricity Generating Company (KenGen) Eddy Njoroge during the launch of the $1.3 billion Olkaria IV geothermal plant on July 23.

KenGen has been running a pilot project on geothermal wellheads, and officials said the performance is encouraging.

Experts from state-owned Geothermal Development Company (GDC) said the wellhead generator has the interventions required for Kenya’s power subsector to mitigate challenges like the delay in raising adequate financing to set up bigger plants for high power output.

They said the wellheads are crucial in providing additional power during the development of large scale geothermal resources.

Raising capital to set up bigger power plants is a challenge for the Kenyan government that has ready geothermal steam capable of generating 430MW electricity.

The unutilised steam is currently going to waste despite government investments of nearly $329 million for drilling in the past seven years.

The wellheads are also expected to be used when Kenya embarks on another round of large scale geothermal wells drilling, expected to have a steam output capable of generating 560 megawatts (MW).

Mr Njoroge says the new round of drilling will be financed by China Exim Bank.

Details of the loan were not available, although the deal will be concluded before the end of the year. KenGen and GDC aim at raising the country’s geothermal output from the current below 200MW, to 1,000MW by the year 2018.

The parties have engaged in a public-private-partnership to reduce the time it takes for government-owned corporations to secure loans needed for geothermal power plants.

Private investors have been invited to bid for the steam wells, and get a guaranteed power purchase agreement with the Kenya Power.

GDC, which is fully state-owned, has had difficulties accessing development loans because it does not have an independent financial status, which makes lenders like Chinese banks avoid direct lending to the agency.

The company’s business plan, of concessions after successful drilling, cushions it from the delayed financing risk.

However, this means the Kenyan government must spend more on drilling, in addition to the $329 million already spent.

Ministry of Energy officials say $705 million will be spent on a new round of drilling.

“Geothermal is the most viable base-load source of electricity and therefore will continue to give it priority investment financing,” said Kiraitu Murungi, Minister for Energy.