Out-Law News 2 min. read
25 Feb 2015, 4:36 pm
World Bank country director for Kenya Diarietou Gaye said the bank’s support for the Olkaria plant in the Rift Valley was “a key infrastructure investment in one of the largest single geothermal investment projects in the world”.
The Olkaria plant comprises the 140 MW Olkaria IV and units four and five of Olkaria I, each with a generating capacity of 70 MW. The World Bank confirmed on 23 February that the Olkaria I units were successfully commissioned earlier in the month, marking the completion of the project.
Other partners in the Olkaria project include the Japan International Cooperation Agency, the European Investment Bank, the French Agency for Development and the German government-owned development bank KfW Entwicklungsbank.
World Bank energy sector manager in Eastern and Southern Africa Lucio Monari said the bank’s work with other development partners “has helped Kenya make significant progress in increasing the supply of reliable and low-cost electricity”.
According to the bank, “geothermal power, which is generated from natural steam from the earth, some from as far as three kilometres underground, is a renewable source of energy and, unlike hydro, its output is not affected by vagaries of weather”.
In 2010, geothermal power accounted for just 13% of Kenya’s overall energy mix, according to the bank.
Through its International Development Association, the bank said it has provided funding for feasibility studies, exploration, geothermal steam development and construction of power plants. The bank’s International Finance Corporation has supported power generation by private investors, while the bank said its Multilateral Investment Guarantee Agency has provided investor risk mitigation.
The Kenya Electricity Generating Company (KenGen) said “at 7.2 US cents per kilowatt hour, geothermal energy is among the cheapest renewable sources of electricity in the country and the world”.
According to KenGen, electricity production in the country from hydropower has now been “relegated to second place” at 36%. KenGen this was largely due to lower levels of rainfall in recent months.
The International Energy Agency’s ‘Africa Energy Outlook’ report (242-page / 6.90 MB), published last year, said an additional $450 billion in power sector investment could help boost the economy in sub-Saharan Africa by around 30% in 2040. The report said geothermal was also set to become “the second-largest source of power supply in East Africa, mainly in Kenya and Ethiopia”.
It said that "unreliable power supply has been identified by African enterprises as the most pressing obstacle to the growth of their businesses, ahead of access to finance, red tape or corruption. Relieving this uncertainty helps every dollar of additional power sector investment in the African Century Case to boost GDP by an estimated $15".
Kenya’s government has recently stepped up geothermal development in new fields, including the 1,600 MW Menengai project run by the Geothermal Development Company.
Last October, the African Development Bank approved a $12.7 million partial risk guarantee (PRG) to “ease investor risk” for the initial phase of the first 105 MW of electricity to be generated by plants operated by three independent power producers at Menengai.
Separately, several grants have been awarded under the Geothermal Risk Mitigation Facility for East Africa, which encourages public and private sector support for geothermal development. Grant beneficiaries have included Kenya and Ethiopia.
US companies have also been encouraged to enter East Africa’s rapidly-expanding geothermal market. In 2012, the US Agency for International Development and the Geothermal Energy Association launched the US-East Africa Geothermal Partnership, which is implemented by the US Energy Association.
