GDC seeks new energy investors
A geothermal power generation plant at Ol Karia. The Geothermal Development Company, GDC, has invited equity investors into developing steam. Photo/FILE
The geothermal Development Company has announced plans to start the second phase of developing steam at the Menengai field.
The plan signals a possibility of increased power output from the renewable energy resource which could reduce reliance on hydro and thermal power and consequently bring down the cost of electricity.
In a Thursday’s tender advertisement, GDC sought interests from equity investors to participate in the second phase of the project.
The investors will be responsible for developing 200 megawatt steam plant each jointly with the geothermal company.
The phase will comprise of four projects each producing 200MW of steam at $200 million which translates into a total cost of Sh68.8 billion for the whole project.
An additional 800 megawatts of steam will be sought in the second phase which once added to the maximum capacity that is targeted for production in the first phase will be 1,200 megawatt of steam.
“GDC intends to engage four equity investors who will each get the opportunity to jointly develop 200MW of steam with GDC at its Menengai geothermal field under the Menengai phase II scheme.
Recoup investments
The investors under a joint steam development contract will finance between 60 and 80 per cent of the required capital and recoup their investments through regular payments made from revenue generated through steam sales,” read the tender advertisement in part.
According to the tender notice, the second phase of developing steam is expected to start early 2014 and complete in 2021 with a total of 210 steam wells.
A total of 12 rigs will be required for the second phase with the initial six being sourced between 2012 and 2014 while the remaining will be deployed from the first phase of steam production which is expected to come to a close by 2016.
Industry data estimates that as of last year, Kenya had an installed geothermal power capacity of 190.6 megawatts despite analysis by the ministry of energy showing that the country’s geothermal potential is 10,000 megawatts.
According to industry analysts, the high risk associated with geothermal development as a result of failed wells has often discouraged private investors into the subsector leading to low power output from geothermal resources as compared to the relatively expensive thermal power.
In the second phase, GDC will finance between 20 and 40 per cent of the investment with a provision that it will bear the risk for failed wells.
