CIF approves project to expand geothermal energy in Kenya

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A project to develop a geothermal steam field at Menengai, Kenya got the go-ahead on 17 November 2011 from the governing body of the Scaling Up of Renewable Energy Program in Low Income Countries (SREP), a program coming under the Climate Investment Funds (CIF). It approved USD 25 million in grants and concessional loans which will be channeled through the African Development Bank (AfDB) along with the AfDB’s own co-financing of USD 80 million.  

Estimated at a cost of USD 746 million, the project will help meet Kenya’s rapidly increasing demand for power while diversifying sources of power supply by developing the country’s huge geothermal potential, consistent with its green growth vision. More specifically, the project aims to develop the Menengai geothermal steam field capable of generating 400 MW of power to be produced by the private sector as Independent Power Producers (IPP).

In addition to site development, the project entails building an associated transmission line that will send geothermal power from Menengai to the national grid. This will improve power reliability and stability and reduce system losses on the national grid. It will also be able to produce additional power to allow grid extension to other areas.

Expected outcomes include an increase in national electrification rates equivalent to 26 percent of the current total installed generation capacity.  It will also reduce emissions of almost two million tons of CO2 annually. Kenya’s current electrification rate is 15 percent.

Menengai is the first geothermal field being developed solely by Kenya’s newly established Geothermal Development Company (GDC), which is responsible for the country’s scaling up of geothermal production. The project will help GDC design and test an investment and project structure that could be replicated to develop other fields. SREP’s capacity building support will also lend credibility to GDC and inspire private investor confidence.

With an estimated potential of 7,000 MW, geothermal power is Kenya’s preferred choice for the future. It is a base load, indigenous, clean, and relatively reliable and affordable solution. The Kenyan government plans to increase geothermal generation capacity from the current 198 MW to 1,700 MW by 2020 and 5,530 MW by 2031.

This is the first project under Kenya’s SREP investment plan (September 2011) to be readied for implementation.

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