Nairobi — President Mwai Kibaki on Monday unveiled the construction of the world's most ambitious power project that will help ensure adequate power supply in the country, while reducing the cost of electricity.
The Olkaria 280 MegaWatt (MW) geothermal project will raise Kenya Electricity Generating Company's (KenGen) total electricity capacity by 25 percent which President Kibaki noted will significantly raise geothermal contribution by the country's largest power producer to help meet the power demand.
"I am happy to note that this project begins the shift from hydro based electricity to a geothermal based power future," he said.
"Unlike hydro generation that is at times affected by vagaries of weather forcing us to rely on expensive modes of generation, geothermal is affordable, stable, renewable and clean," he explained.
Kenya's power generation, largely dominated by water-powered turbines, is gradually seeking to shift the more dependable geothermal and wind powered plants due to the effects of climate change, which has sparked off ecological damage.
Once the Olkaria I and IV geothermal power development facilities are completed in 2014, Kenya will be on the global geothermal map as it will be the world's single biggest project in terms of power output.
It will also bring the country closer to claiming one of the top positions in terms of global geothermal output, which is led by the United States at 3,000MW and Philippines at 2,000MW.
Kenya is seeking to generate at least 5,000MW from its vast geothermal resource by 2030, and KenGen revealed that it will soon start generation of 65MW from geothermal using the mobile geothermal wellhead, a new technology introduced from Iceland.
President Kibaki acknowledged that the government cannot single handedly raise the resources need for geothermal power exploration and development.
"We have put in place a conducive legal and fiscal framework to attract private sector participation in harnessing our robust geothermal resources," he stated.
KenGen drills the wells and rents the steam to private companies who can bring in overhead generators to tap the steam, generate electricity and connect to the national grid.
Kenya has feed-in tariffs that encourage investors to participate in electricity generation projects.
"Our work is to offer investors a risk-free alternative by providing them with ready steam. All they need to do is to construct power plants and produce electricity," KenGen CEO Eddy Njoroge said.
The project's total cost will be $981 million (Sh82.6 trillion) which is financed by KenGen, the Government of Kenya, World Bank, German Development Bank KfW, European Investment Bank, French development finance institution AFD and the Japan International Cooperation Agency.
The project will pump an additional 280MW of electricity to the national grid and Njoroge said the project will be a game changer by raising the amount of electricity generated from geothermal sources from 155MW to 435MW.
He said that steam wells for the project have already been successfully drilled with well head generators expected to be installed and generate power as plant construction continues.
"Whereas upfront costs may be higher initially, running and maintenance costs of geothermal plants are low and hence the model holds real promise of affordable power in the country," he said.
"This project will firmly put Kenya on the path to Vision 2030, since affordable, reliable and adequate power are key to the attainment of this economic blueprint," he added.
The project has been divided into four parts to ease financing and implementation.
Steam field development will be carried out by Sinopec of China, the power plant will be built by a consortium of Toyota Tshusho of Japan and Hundyai of South Korea, transmission lines and the substation will be undertaken by Kamani Engineering Corporation of India, while Sinclair Knight Mertz of New Zealand is in charge of the project consultancy.
Kenya has an immense potential of geothermal resources and KenGen's strategic plan has identified geothermal based electricity as the best option for the future thanks to its stability, renewable nature and affordability in the long run.
In addition to geothermal resources, the country has recently discovered commercial coal deposits and received encouraging oil exploration results, and President Kibaki expressed his disappointment by the nature of local politics taking place in areas where resources have been found.
"I would like to remind all Kenyans that natural resources in all parts of the country belong to all Kenyans and not just the residents of those particular areas," he emphasised.
"The State is the custodian of these resources and our new constitution guarantees the equitable sharing of the accruing benefits from these activities," he added.
The Kenyan government has so far invested $329 million (Sh27.7 trillion) in the geothermal drilling as part of efforts to increase generation to displace the expensive thermal generation.
The investment includes financing to the Geothermal Development Company (GDC) that has announced 2014 deadline for the completion of 120 wells expected to help the country produce an additional 400 MW of electricity at the current drilling site of Menengai near Nakuru Town.
The GDC was formed in 2009 by the government to accelerate the exploration and drilling of the vast geothermal resource along Kenya's Rift Valley to enable the country to increase the pace of benefiting from cheaper renewable energy.
Studies by Maanvit Consortium of Iceland have confirmed even more untapped geothermal resources at the Olkaria complex, capable of generating an additional 560MW of electricity.
The geothermal plant is also expected to increase the role played by the clean energy in Kenya's energy mix increasing production from geothermal to 35 percent from the current percent.
The project will complement other efforts by the geothermal development corporation which is selling steam to independent power producers and has a target of 20 drilling steam wells with a potential to generate 400MW at the Menengai block also by 2014.
KenGen is planning to tap this resource and have at least half of its total output to be geothermal by 2018.