Experts upbeat over cheaper energy, thanks to 280MW geothermal plant

Energy analysts are upbeat over the recently launched 280 megawatt geothermal power plant, saying it will bring closer the dream of having cheaper electricity locally.

They also say it will raise Kenya’s prospects to attract more funding for green energy projects, a priority for the Ministry of Energy as it strives to meet increasing demand for electricity in the long term.

“The new geothermal capacity will meet increased electricity demand while replacing the expensive thermal generation and provide a safety margin in case of hydro generation exposure during droughts,” said George Wachira, director of the Petroleum Focus Consultants in an interview.

The power mix in Kenya has been such that there is more than 50 per cent dependence on hydro resources operated by the state-owned power generator, KenGen.

Although hydro power is cheaper than thermal power, the latter has been relied upon to fill the generation gap widened by low water levels during dry spells.

The pricing for thermal power contains a variable component representing the price of diesel, which end consumers have borne, depending on international crude oil prices, leaving them hardest hit during months when these prices are up.

At the launch of the 280 megawatt geothermal plant, whose construction is expected to be completed in 2014, KenGen’s managing director Eddy Njoroge said the new power source would reduce significantly the cost of electricity and therefore offer relief to end consumers.

“Whereas upfront costs may be higher initially, running and maintenance costs of geothermal plants are low, hence the model holds real promise of affordable power in Kenya,” said Mr Njoroge.

He added that the plant puts Kenya on the path to achieving power supply to meet projected demand as the country prepares to acquire a middle income status by 2030.

Kenya’s total installed capacity is estimated at 1,500 megawatts, out of which more than 700 megawatts consists of hydro power.

The installed capacity of thermal power is estimated at 568 megawatts, which consists of 115 megawatts by KenGen at its Kipevu III thermal plant, 180 megawatts by UK’s Aggreko and the rest operated by three independent power producers.

The total installed capacity of thermal power is expected to rise once construction of three thermal plants with a combined capacity of 247 megawatts is complete.

Aggressive exploration

However, according to KenGen, aggressive exploration of geothermal resources is meant to ensure that the country reduces its reliance on thermal power — currently responsible for high electricity costs — while preparing to do away with it in the long term.

“The idea is to produce as much power as possible from cheap sources so that it no longer makes sense for anyone to procure electricity from expensive sources,” said a KenGen spokesperson.

Once complete, the 280 megawatt Olkaria plant will mark the end of the first phase of the planned massive exploration of geothermal resources.

KenGen plans to embark on the second phase, that will see it set up a 560 megawatts plant within the Olkaria geothermal fields, as per a feasibility study by Maanvit Consortium of Iceland.

Meanwhile, the Geothermal Development Corporation (GDC), which was set up to drill for steam that KenGen uses to produce geothermal power, said in a statement that it is currently undertaking a feasibility study for the setting up of a power plant with a capacity of 400 megawatts in the Menengai fields.

This signals a possibility of increased exploration of geothermal resources in the short term. “We have drilled and realised 354 megawatts in just two years. This is the steam that KenGen will use to generate electricity once the 280megwatts plant is complete.

The GDC shortlisted 19 firms that expressed interest in constructing power plants in Menengai.

Currently, GDC is undertaking a feasibility study which will inform the request for proposal to be issued later this year,” said a statement from the corporation.

In the Least Cost Power Development Plan adopted by the Energy ministry, reliance on hydro resources will be downscaled to only five per cent by 2030 as geothermal is poised to be the base load, accounting for 26 per cent of total electricity consumed locally.

Nuclear and coal resources that are yet to be developed are hoped to be the second and third largest sources of power locally, accounting for 19 per cent and 13 per cent of the total electricity consumption.

Wind power, that is currently under development, will reportedly account for nine per cent.