Kenya Plans Geothermal Projects to Counter Problems of Drought-Hit Hydropower

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Increasing the generation of electrical power from geothermal sources has become an increasingly attractive option to the East African country of Kenya, as the country suffers from uncertainty in its hydropower supply. Recurrent dry and drought conditions can cut the hydropower generating potential to a mere 300 megawatts (MW). Kenya has untapped geothermal resources of about 1,200 MW in the East African Rift Valley, which is estimated to have a total potential of between 7,000 MW and 10,000 MW in geothermal production.

The country has a peak power demand of 1,200 MW, suppressed by a total available power generation capacity of only 1,320 MW, thin electrification and the lack of a comprehensive distribution network. In the total national power capacity, hydropower contributes a possible 728 MW, but only when conditions are right. When hydropower generation is low, there are severe power shortages. This results in the use of diesel-fueled emergency power generators, which causes the cost of electricity to rise.

Currently, only 265 MW is generated from geothermal sources in Kenya, but plans are now being promoted by the state power utility Kenya Electricity Generating Company (KenGen) (Nairobi, Kenya) to produce 1,260 MW of geothermal power through 2018, with the Olkaria fields contributing 700 MW, and the Menengai fields contributing 560 MW.

The investment needed to produce the geothermal total is estimated to be $4.5 billion. The target is to cut the contribution of hydropower, which is currently 54% of the total, to 28%. Thermal power will be reduced to 18%, and geothermal will contribute about 50%. KenGen is looking to earn carbon credits from the clean energy plan. The government-owned Geothermal Development Company (GDC) will assist with two rigs to be hired out to private companies for well drilling. More than 14 geothermal prospecting sites have been identified.

To encourage project investors who have been wary of hitting dry wells, the government is considering a risk mitigation fund whereby beneficiaries will pay only 40% of the cost of a dry well. It is hoped that this will fast-track the prospects of drilling programs and the development of power plants.

KenGen will compete with China's Great Wall Company, which has had a drilling program in Kenya since 2005 and has drilled 25 wells and has a contract to drill a further 26 wells. The contract is backed by a $50 million loan to the Kenyan government from the Export-Import Bank of China. The average cost of each well drilled by the Great Wall Company is $6.5 million, whereas the GDC has told the EastAfrican newspaper that it estimates that the cost could be brought down to $3.5 million per well.

Kengen is currently working on the Naivasha Olkaria I and IV geothermal projects, which will add 280 MW to the nation's power supply when completed in 2013. In the same area, the Naivasha Oserian flower farm uses 4 MW of captive geothermal power to heat 50 hectares of green houses. This is a major foreign-exchange earner for Kenya. The flowers are harvested one day and flown to European markets for sale the next day--the greenest of talisman projects for Kenya's clean geothermal drive.

View Project Report - 84000016

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.