Generation of 105MW of power in the offing as Geothermal Development Company hands over sites

Geothermal Development Company workers at one of the steam well in Menengai ,Nakuru county recently. The company has laid ground for independent power producers to begin generation of 105 mega watts from the 11 steam wells. [PHOTO:KIPSANG JOSEPH]

Kenya will save about Sh13 billion annually once the 105 megawatt (MW) geothermal power plants start operating in Menengai, Nakuru County, by end of next year.

The construction of Sh18.9 billion ($210 million) three geothermal power plants will start early next year. This follows the handing over of the power plant sites to three Independent Power Producers (IPPs) - Sosian Energy, Quantum East Africa and OrPower 22 by Geothermal Development Company (GDC) yesterday.

The three investors selected through competitive bidding last year will build, operate and own the first three power plants in Menengai, each generating 35 megawatts of geothermal power.

GDC Managing Director Silas Simiyu said, during the handing over of the sites, that the completion of the 105 MW plants will save the country about Sh13 billion annually as fuel levy. He noted that the construction work would have started in October last year, to be completed end of this year.

However, the project delayed due to lengthy negotiations to sign a Power Purchasing Agreement (PPA) with Kenya Power too long. “It takes too long to negotiate the PPA with Kenya Power and more so, based on the fact that it was the first of its kind in the generation and management of geothermal power in the country. The PPA was signed sometimes this year and construction will start soon,” said Dr Simiyu.

He explained that GDC will continue drilling geothermal wells to harness steam and offer the same to IPPs for energy generation. In Menengai alone, he said GDC has mined steam equivalent to 110MW, which is enough for the first phase of the Menengai Project. “In total, GDC has more than 500MW of steam in both Menengai and Olkaria from a total of 85 geothermal wells.”

National grid

Quantumpower East Africa business development Director David Carroll, assured that the construction of the power plants will be completed on time.

GDC started drilling in the Menengai field in February 2011, and by December next year, the three power plants to be constructed next to each other, will generate 105MW, which will then be connected to the national grid within five years.

To supply steam to the three power plants, the GDC boss said the company has contracted H Young to construct a steam gathering system whose construction is underway.

The pipeline will gather steam from the different wells and deliver it to a central point, from which each IPP will be billed for the steam as consumed. Dr Simiyu assured that the company is fast-tracking the process so that the projected power output can be connected to the national grid by end of next year.

“This milestone makes Menengai the fastest developed geothermal field in the world. No other geothermal project in the world has been actualised within five years. To this end, GDC is excited,” said GDC board chair Faisal Abass.

“The Menengai success story is attributed to the innovative geothermal development model that has de-risked geothermal investment and opened the door for investors to participate fully.”

Abbas said GDC has procured seven deep drilling rigs to cut costs and reduce time to drill the wells. “Using our own rigs, Kenyan drilling crew has reduced the cost of drilling by 40 per cent. The benefits go to reducing the cost of power. The addition of geothermal energy into the Kenya power mix, will reduce the cost of electricity from Sh22 per kilowatt-hour to about Sh7 per kilowatt-hour,” noted Abass.

Last month, GDC drilled a 30MW geothermal well in the Menengai field - one of the largest geothermal wells in Kenya. “By drilling such a big well, GDC made savings both in terms of cost and time. Ordinarily, wells produce an average of 5MW, hence this single well is equivalent to drilling six wells for the cost of one well. At an approximate cost of Sh300 million per 5MW well, GDC has saved Sh1.5 billion,” observed the GDC Chairman.

The three investors have a guaranteed supply of steam for the next 25 years and a guaranteed power purchase agreement from KPLC for 25 years.