German state-owned development institution KfW has cleared the Geothermal Development Company to start sourcing for investors to drill up to 20 wells at the Baringo-Silali field.
The project is expected to develop 200 megawatts of geothermal steam which will be sold to independent power producers for generation of electricity.
The project will be financed through a Sh9.6 billion concessional loan from KfW that was signed by The National Treasury in July.
“We received a go-ahead from the financier and the bidding process is going on. We estimate the average output per well will be 5 megawatts,” said GDC spokesperson Ruth Musembi.
The bidding process will close mid this month. Aside from financing drilling, the funds will also be spent on consulting services and feasibility studies.
DROP IN COST
GDC is tasked with producing at least 800 megawatts of steam as its contribution to the ambitious plan by the government to install additional 5,000 megawatts of national power generation capacity by 2016.
Since its inception, the state-owned company has drilled a combined 450 megawatts of geothermal steam from Olkaria and Menengai fields.
Geothermal has been identified by the government as one of the main sources of electricity as it seeks to reduce the cost of power.
Energy cabinet secretary Davis Chirchir has said utilisation of cheap and renewable sources of electricity such as geothermal, wind, coal and natural gas will lead to a drop in the cost of electricity by half.
The current cost is estimated to be about 20 US cents per unit of electricity.
In March, Mr Chirchir led a Kenyan delegation to the World Geothermal Conference held in Manilla, Philippines where it lobbied for the country to be given a chance to host the prestigious event.
“If awarded to Kenya, this will be the first time the congress will be held in Africa. It will positively impact Africa’s geothermal sector.
“This bid has been endorsed by government of Kenya and supported by the United Nations Environment Programme and the African Union Commission,” Chirchir told the conference, while announcing a plan to license three new investors to harness the country’s resource.
It is estimated that Kenya has a potential to generate 10,000 megawatts of electricity from geothermal. However, currently, the resource remains underutilised, accounting for less than 500 megawatts of the country’s total installed capacity which is at around 1,700 megawatts.
This month, consumers will not benefit fully from completion of a project to generate 140 megawatts of geothermal power by the Kenya Electricity Generating Company (KenGen) due to continued reliance on thermal generation which is prone to erratic prices of fuel and unreliable exchange rate.
It was expected that the prices of electricity would drop by up to 20 per cent starting this month with the injection of 140 megawatts from the KenGen plant in Olkara into the grid network.
KenGen is expected to add a similar capacity by the end of this year. The Kenya National Bureau of Statistics indicates that the overall inflation rose to 8.36 per cent in August from 7.67 per cent during the previous month, partly on account of increased prices of electricity.