Kenya: Geothermal Gains More Steam

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"The government plans a strategic shift from hydro-power."

The government plans to have nearly half of the national power output sourced from geothermal by 2018 as a strategic shift from hydro-power, which has become unreliable because of erratic rainfall.

The government has the tough task of financing geothermal, with skittish investors demanding to be cushioned from losses should they hit dry wells. Treasury has declined to offer such guarantees to private investors.

Energy minister Kiraitu Murungi says the government is considering setting up a risk mitigation fund for this purpose.

"Beneficiaries will be required to pay 40% of the cost of any dry well sunk. Under this arrangement, Kenya will accelerate geothermal drilling," the minister said.

Kenya is among few countries with huge untapped geothermal power, with 14 sites in the Rift Valley that have estimated potential of 7000MW to 10000MW. Currently only 265MW are sourced from geothermal sources.

KenGen Managing Director Eddy Njoroge says production of 1,260MW from geothermal in the next seven years will require $4.5 billion. Olkaria fields are expected to contribute 700MW and Menengai 560MW.

"Upfront capital investment is very expensive but the long term benefits are cheaper power rates," Mr Njoroge said.

KenGen expects to earn carbon credits from use of geothermal, which is clean and the first well will be registered in December. Geothermal Development Company is expected to facilitate the shift to geothermal power production with two rigs which will be hired out to private companies.

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