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Geothermal project promises to cut electricity costs

BUSINESS
By Winsley Masese | June 30th 2014

The national electricity grid will be expanded and power bills reduced drastically after investors tap into the 479 MW produced by the Geothermal Development Company (GDC).

According to a Parliamentary Report seen by The Standard, GDC has 59 wells of geothermal energy in Olkaria and 22 in Menengai. Steam from Olkaria will be used to support the 280 MW power plant that is set to start generation by the end of this year.

In Menengai where GDC opened the green field in 2010, 100 MW of power will be generated by mid-2015 according to documents availed to The Standard.

Private investors

Currently, the total generation in Kenya is about 1,700MW. GDC has also awarded tenders to three private investors to put up well-head generators in Menengai. This is in a bid to fast-track the acquisition of power from the project.

GDC Managing Director Dr Silas Simiyu said Kenya will save close to Sh44 billion used to import diesel once the geothermal steam is converted to electricity. “If you go to Menengai today, you will find that heavy infrastructural development is ongoing. We are constructing a steam gathering network to collect the steam to the power plants. Menengai will be the fastest developed field in the world to produce in just less than five years,” he explained.

The new funding from the Germany’s kfw and from the Geothermal Risk Mitigation Fund will also see the firm opening up the Baringo-Silali Block which has a potential of about 3,000 MW. This will reduce the cost of electricity and of doing business. Calculations show that electricity from geothermal energy is the cheapest at Sh7 per kilowatt hour.

Diesel-generated electricity is the most expensive at Sh35 per kilowatt hour while wind sells at Sh12 per kilowatt hour. However wind availability is only 30 per cent. Geothermal availability is 98 per cent. While Kenya has been relying on hydro-electricity, unreliable rain patterns lead to low water levels at dams and therefore below par generation.

 Normally geothermal projects worldwide take time to complete. The Olkaria Power Project in Naivasha took 30 years before the first megawatt could be generated. “At GDC we came up with a model of early generation. That is why you see that investors can come and put up small power plants that will quickly add power to the grid,” he says.

GDC has also managed to reduce the cost of drilling by almost a half. “Our model was to buy, own and operate rigs. This has heavily reduced the cost of drilling while at the same time creating jobs for the youth. It has as well provided training opportunities and accelerated the development of geothermal fields,” explained Dr Simiyu.

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