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Kenya’s hydro-power sources drying up

Tuesday January 22 2013

By MWANIKI WAHOME [email protected]

Kenya’s hydro-power production capacity is about to be exhausted. Consequently, attention has now turned to geothermal sources estimated to have a potential of 10,000MW concentrated in the Rift Valley.

Outgoing KenGen managing director Eddy Njoroge said the country’s capacity to develop new hydro-power sources was limited due to lack of sources where power can be tapped.

“There is not much capacity left in hydro-power production. Production of hydro-power is site -specific. We do not see any other major hydro–power project coming up in the future,” said Mr Njoroge.

KenGen is undertaking construction and rehabilitation of various hydro-power plants. Kindaruma plant that has been producing 40MW will now generate 32MW more when expansion and rehabilitation is completed. Others lined up for rehabilitation are Kiambere, Tana and Sangoro plants.

According to Mr Njoroge, half of the country’s power needs by 2018 will come from geothermal sources to feed rising demand and cushion it from erratic hydropower generation.

There are two major geothermal sources that KenGen is undertaking; 280MW Olkaria 1 and 585MW Olkaria. He said commissioning of the two plants will be done in February and September next year.

Energy experts say Kenya’s hope of attaining the 15,000MW target by 2030 lies in exploitation of its estimated 10,000MW geothermal potential in Rift Valley.

Presently, there is less than 300MW obtained from geothermal sources. This is due to the high initial costs involved in exploitation with private investors initially hesitant to incur upfront costs that involve data collection and other field studies.

The government set up Geothermal Development Company (GDC) to soak up these initial costs of studies and facilitate the entry of private investors.

Financiers such as African Development Bank have provided funds to GDC to facilitate exploitation of geothermal power at the Menengai Crater through procuring and commissioning of drilling rigs, wellhead generation units, acquisition of offshore drilling materials, and consultancy services.

The government has stepped up expansion of power sources through exploitation of geothermal, wind and solar in recent years to meet the rising demand.

Current production stands at 1600MW against a peak of 1300MW. The demand for power has been expanding with growth of the economy and domestic connections through increased rural electrification.

“We want to shift to alternative sources of power that will provide cheaper electricity. Geothermal energy has high initial investment but provides cheaper electricity in the long run,” said Mr Njoroge in an earlier interview.

The geothermal wells that include Olkaria and Menengai are expected to provide over 1,200MW when operational.

Financing options

KenGen has been exploring various financing options that include direct foreign investment, vendor financing, public-private partnerships (PPPs) and independent power projects (IPPs) as well as built, operate transfer (BOT).

KenGen signed a Sh98.6 billion ($1.3 billion) funding deal with Sinclair Knight Merz Ltd, a New Zealand firm, in 2010 to provide some of the cash. The money was to be raised by a consortium of Japan International Cooperation Agency, French Development Agency, European Investment Bank, World Bank, and German owned development bank KfW Group.

The country’s power demand has been growing at over eight per cent a year, leaving a small reserve margin of less than five per cent that is wiped out when there is drought.