The Geothermal Development Company has embarked on an ambitious Sh17billion project to produce 400Megawatts of electricity by 2016 from the Menengai Crater.
Speaking during the project launch with financier African Development Bank, Dr. Silas Simiyu said when complete, the project will meet 26 per cent of the country's energy needs.
African Development Bank is providing Sh9.2billion as a loan, and Sh2.4billion in a mixture of loan and grant under the Scaling-Up Renewable Energy Program (SREP) while the Kenyan government has provided Sh5.2billion in counter-party financing.
The Menengai field is said to have the potential of up to 1600MW and the 400MW will be produced in the first part of a two-phased project. "This 400MW is Menengai Phase 1, and it is just being used as a seed project to demonstrate that using this approach we can develop the resource much faster," Simiyu said.
"Menengai Phase 2 is 800MW which is already at the discussion stage. In fact as we speak we already have applications from financiers including the African Development Bank to finance the phase 2."
The project will see 120 wells drilled after which private investors will carry out the development and generation of power to be transmitted to the national grid. A transmission line will be built from Menengai to the Lessos Ol Karia line to evacuate the power. "We will have all the plants online by 2016 but within that time we will have started phase ," Simiyu said. "By 2016 we will have all the 400MW on stream. In terms of early generation from the modular power plants that should come on stream by next year."
Caleb Indiatsi, the GDC deputy manager for corporate strategy and planning, said use of modular power plants will allow immediate generation of energy and also earn early revenue rather than wait for the construction of conventional plants after all the wells are drilled. "The modular power plants can be containerized and can be mounted on the well head meaning that we don't have to have elaborate civic works you can bring the units and place them on the drill pads," Indiatsi said.
To drill the wells, GDC will deploy six rigs. Already, two rigs funded by the government are on site with another two financed by the French Agency for Development are expected within the next one month and will begin work in June. Two more rigs financed by African Development Bank are expected in 2013.
Five wells have already been drilled with three showing capacity to produce 23MW in total, while one is a non-producer. Another one is overheating. Simiyu said using its own rigs, GDC has seen savings of up to 50 per cent with one well now costing Sh250million to drill.
Investors who will put up power plants have been shortlisted to 19 and GDC is developing Requests for Proposals. "The most efficient in terms of steam utilization and also the one who will give us the most competitive tariff per Kwh is the one who will be given the steam," Simiyu said.
"For the main power plants we are not going with the Feed in Tariff. Whoever will give you the lowest (will be picked). I see a situation where it will be much lower than the (current) Feed in Tariff."