5 March 2012

Rwanda: Geothermal Test Drilling Finally Starts in August

Photo: Seth G
A geothermal energy source in Kenya.

Efforts to exploit geothermal reserves for electricity generation appear to gather more steam with drilling of the first exploration wells in Karisimbi scheduled to commence in August.

And if the wells are productive, a 10MW power generation plant will immediately be built to convert the steam into electricity as one of the several options the government is exploring to boost power supply. The planned US$ 30 million investment will produce its first power in 2014 if all goes according to plan. Development of infrastructure needed to facilitate the drilling such as water has commenced.

Energy officials who spoke during last week's Rwanda Energy Investor Forum in Kigali said that subsequently, the plan is to let the private sector develop four potential sites, each with a capacity to generate 75MW, that together will add 300 MW to the grid by 2017. The four prospective sites are Gisenyi, Karisimbi and Kinigi located in western region as well as Bugarama in southern region.

By funding the test drilling in Karisimbi at an estimate cost of US$ 5m per well, the government intention is to show courteous investors that there are 100% chances of striking commercially viable geothermal reserves in this area of live volcanoes and active seismic and magnetic activity.

Initial surface surveys estimate the steam in underground in Gisenyi to generate about 200MW, Karisimbi 320MW, Kinigi 120MW, Bugarama 60MW and about 40MW from other smaller sites. This brings the total geothermal energy potential to about 740MW. But Dr Steven Onacha, a geothermal expert involved in the exploration work, said that more recent studies show the potential could be much bigger than originally thought.

Evidence of availability of geothermal reserves in Rwanda was first noticed in 1982 when the French Bureau of Geology measured temperatures under ground to be 100 degrees Celsius.

In 2006, an investigation by another company, Chevron, estimated the temperatures at 150 degrees while BGR and KenGen concluded in a survey done last year that temperatures in Karisimbi are after all higher.

Methane gas

Geothermal is just one of the several other sources of energy the government is seeking to attract private investments to significantly increase power generation capacity needed to meet the development needs of the country.

Apart of geothermal and hydro sources, attention is also focusing on the development of methane gas in Lake Kivu where studies have confirmed availability of 55 billion cubic meters.

The resource is estimated to be sufficient to generate 700MW of electricity for 55 years with Rwanda's share being 350MW. The other half belongs to the DRC.

Kivuwatt, owned by ContourGlobal, a New York-based power supply company, is in developing a 100MW plant to generate electricity from methane gas. The first phase of the project that will generate 25MW is expected to start generating power by the end of this year after an investment of US$ 147 million. The company is seeking US$ 260 million to finance the second phase of the project that will generate 75MW by 2017. Kivuwatt has already signed a 25-year power purchase agreement with the government.

There are several investment opportunities in methane gas power generation for which the government is promising various incentives to investors. For example, there is KP1, a 4.5MW facility that owned by the government but is operating below capacity generating only 1.5MW since 2007. Officials say that negotiations are going on with a strategic partner to boost capacity to at least 50MW.

The other is the 3.5MW plant owned by Rwanda Energy Company (REC), a subsidiary of Rwanda Investment Group. REC is looking for partners to finance the rehabilitation and expansion of the plant to about 50MW. About US$ 106 million is needed to revive and expand the plant, according to information availed to investors at the Forum last week.

Officials of the Rwanda Development Board, the organizers of the Rwanda Energy Investor Forum co-hosted by the World Bank said that funders such as the African Development Bank, World Bank Group and the European Union have in the past expressed interest in financing feasible projects in this area.

They said the government is also putting final touches on the Gas Law and Regulation that is now under review by Parliament. New power purchase and concession agreements that will govern new projects are also being developed as part of the measures to put in place the necessary legal framework.

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