Sh1bn shot-in-the-arm for green power search

The drive to increase production of cheaper geothermal power got a boost when the African Development Bank released a Sh1.1 billion partial risk guarantee for 105 megawatts at Menengai.

The guarantee covers private lenders and investors against government failure to meet their obligation.

The money will cover three independent power producers in Menengai and their financiers should Kenya Power fail to pay for electricity as agreed.

NON-SUPPLY OF STEAM

It will also secure them should Geothermal Development Company fail to produce steam. The company is contracted to sell steam to the power producers.

“The partial risk guarantee has three roles: Attracting investors to the Menengai project, helping tap geothermal potential and helping to bridge the tremendous gap between supply and demand,” Mr Alex Rugamba director of the AfDB’s energy, environment and climate change department said on Tuesday.

This comes just weeks after the commissioning of the production of 140 megawatts of electricity were commissioned in Olkaria.

This is part of the government’s pledge to increase power production from inexpensive sources and bring down energy costs.

The three power producers for whom the guarantee were signed are Sosian Menengai Geothermal Power Limited, QPEA GT Menengai Limited and OR Power Twenty-Two Limited.

The guarantee will enable the firms to secure financing from their debt providers.

Each of the firms will construct a 35 megawatts geothermal power plant. It is hoped this will increase national generational capacity from renewable sources by about 10 per cent.

Kenya has an estimated geothermal potential of 10,000 megawatts but to date only less than 500 megawatts has been exploited.