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New grants support further geothermal development in East Africa

Out-Law News | 20 Feb 2014 | 2:32 pm | 1 min. read

The African Union’s infrastructure and energy commissioner has said new agreements will be signed next month for geothermal development projects in Kenya and Ethiopia.

Elham Ibrahim said five grants have already been awarded under the Geothermal Risk Mitigation Facility (GRMF) for East Africa, which encourages public and private sector support for geothermal development.

Ibrahim was speaking during this month’s ministerial session of the second high level meeting of the Africa-EU Energy Partnership (AEEP) in Addis Ababa.

GRMF grants amounting to $22 million have already been awarded to five projects in Kenya and Ethiopia, Ibrahim said. However, she gave no details about the agreements to be signed in March.

GRMF was established by the African Union Commission, the German Federal Ministry for Economic Cooperation and the EU-Africa Infrastructure Trust Fund – through the German government-owned development bank KfW Entwicklungsbank.

In 2012, GRMF said it had about $62 million available for cost share grants. A ‘developer manual’ provides detailed information about the facility, including how to apply for funding.

AEEP is one of eight partnerships under the ‘EU-Africa Joint Strategy’, which was established in 2007.

Meanwhile, US companies are also being encouraged to enter East Africa’s rapidly-expanding geothermal market. In 2012, the US Agency for International Development and the Geothermal Energy Association (GEA) launched the US-East Africa Geothermal Partnership, which is implemented by the US Energy Association.

In October 2013 Reykjavik Geothermal, whose Icelandic geothermal expertise is backed by US investors, signed a deal with Ethiopia to build a 1,000-megawatt geothermal power plant, Africa's largest, in the volcanically-active Rift Valley. The company said that, when complete, the project will be Ethiopia's biggest foreign direct investment, run by its first privately-owned utility.

Renewable energy expert Jeremy Chang of Pinsent Masons, the law firm behind Out-Law.com, said: "East Africa has vast geothermal potential, with Ethiopia and Kenya having an estimated 17 gigawatts of unrealised geothermal capacity. The AEEP represents one of several important international initiatives, providing financial support to public and private investors seeking to develop East Africa's significant renewable capabilities.

“The GRMF's financial assistance at the expensive exploratory stage of geothermal projects has already assisted in kick-starting five projects in Kenya and Ethiopia and there is likely to be a number of further cost share grants awarded in the near future, with only one third of the $62 million made available for grants so far being committed," he said.