5,000MW plan goes full steam ahead

Two weeks ago, the Kenya Electricity Generating Company (KenGen) announced that it had successfully drilled one of the biggest geothermal wells in the world, boosting the country’s quest to triple electricity output capacity to 5,000 megawatts.

And with the long rains likely to delay or fail, according to the latest forecasts by the weatherman, KenGen is on a mission to deliver more geothermal energy and, in effect, cut the generation of electricity through costlier, privately-owned, thermal sources. 

With a capacity of 30MW, the new well is Africa’s biggest and is located in the geothermal energy-rich Olkaria in Rift Valley. It is 3,000 metres deep and took one-and-a-half months to complete.

The well positions Kenya as a major geothermal power producer globally and helps to realise the government’s goal of generating 5,000MW in less than three years.

KenGen plans to add at least 3,000MW to the national grid by 2018. Most of this power will come from renewable sources such as geothermal, hydro and wind. The company plans to open new fields — Olkaria V and Olkaria VI.

The new well, Olkaria OW-921, will be connected to Olkaria IV. And to accelerate geothermal power production, KenGen has resorted to mobile wellhead plants which are faster to deploy. One such mobile wellhead was installed in 2012 with a capacity of 5MW. Two others currently produce 12.8MW. Fourteen mobile wellheads are expected to be completed by 2015.

After initial hurdles on land acquisition, the firm says it is abandoning plans to build coal plants and is instead focusing on a clean energy drive, including additional capacity from geothermal, wind and hydro sources.

Unlike hydro, which is dependent on weather patterns and long lead times to develop the plants, geothermal is freely and continuously available once steam has been harnessed.

Smart Company interviewed KenGen’s managing director Albert Mugo at Olkaria.

Tell us about the new 30MW new well.

This is the largest to be tested in our exploration history. It has a production capacity of 30MW and is bigger than the previous one whose output was 18MW. It is also one of the largest in the world.

By getting 30MW from one well, it will help us accelerate plans towards the 5,000MW plan by the government to add new capacity for more affordable energy. The well can supply twice the electricity needs of Naivasha or half the demand of Nakuru town.

When are we likely to attain 280MW?

The project has four units which are staggered until August. The first unit of 70MW will be unveiled in March. The second unit will come in May, while the third in June. We expect to run full reliability tests and commission the entire 280MW by September 2014. This will help meet Kenya’s growing demand for electricity through geothermal sources which is less costly. 
But hydro is the cheapest. What is the current state of key dams in Kenya?

As at Thursday, we were at 1048.9MW, just six metres shy of the spilling level, a situation that has forced us to cut uptake from Masinga. Sondu Miriu and the Sangoro plants are both impaired due to bad inflows, forcing us to run them only in the evenings during peak consumption. Hydro and geothermal are among the cheapest sources of power.

Which other projects are expected this year?

The 280MW project is the single biggest plant of the entire 5,000MW programme and will boost efforts to cut the cost of power by up to 40 per cent in slightly over the next two-and-a-half years. In addition, we plan to get 124MW through expansion of our plant in Ngong and build two other plants in Isiolo and Marsabit. We will also achieve some 20MW of hydro from the Kindaruma third unit.

Comment on wellhead technology?

Geothermal power is highly capital intensive. It costs upwards of between $5 million (about Sh425 million) and $6 million (Sh510 million) to drill one well. We hope to use available resources quickly as we await the bigger projects. To date, we have delivered a total of 70MW this way at Olkaria I and Olkaria II.

What of plans to tap coal?

We want to concentrate on clean energy for now. We have abandoned plans to build the 600MW plant in Kilifi because of land acquisition issues. Another plan for a 500MW liquefied natural gas plant in Dongo Kundu has been taken over by the ministry and expanded to two projects, each with a capacity of 960MW to be fired at Lamu and at Dongo Kundu in Mombasa. The gas plant will now have a capacity of 700MW. Because of the size of the required funding, both projects will be done purely under public-private partnerships.

Any chance of KenGen participating in the public-private partnership?

The Energy ministry has sent out request for proposals to 16 foreign firms pre-qualified to build the coal and gas plants at the coast. A pre-bidders conference will be held at the end of this month. For now, KenGen won’t participate. However, our diesel plants will fire the gas plants. We have an heavy fuel plant at Kipevu III.

Where will the funds come from? 

We are looking to raise Sh30 billion through a mix of debt and equity. We already have 90MW of the 140MW from Olkaria I, which is funded by JICA, which is keen to fund us further. We have already attained the 50 per cent steam output which they wanted before they could consider additional financing. The government, with a 70 per cent holding, has also opted to restructure its debt of Sh13.99 billion to equity. This will help improve our equity holding position and improve our balance sheet capacity to borrow even more. 
What is this debate around the WARMA issue?

The Water Resource Management Authority (WARMA) has in the past three months charged a levy of five cents per kwh on KenGen for use of water to generate electricity. This is a new charge on hydro power generation. Since December, we have been passing on the cost at between five and six cents per kwh to Kenya Power, which in turn levies consumers. It is such charges by county governments on KenGen that build up the cost of electricity. We urge the government to look into this.