KenGen woos investors to tap surplus power

Albert Mugo KenGen CEO

NAIROBI: The Kenya Electricity Generating Company (KenGen) has disputed claims that its energy expansion plan will result in unutilised surplus. The electricity generator says it will invest in reserve energy from green sources, in anticipation of higher demand from the industrial sector.

“Many investors have in the past shied away from investing in the country because of inadequate capacity and as the leading energy generator, we have rolled out a plan to further capacity so that demand is stimulated by availability and reliability,” KenGen Chief Executive Officer Albert Mugo said.

KenGen, which currently has an installed capacity of 1,611MW, is betting on higher energy consumption due to increased industrial activity once the construction of the Standard Gauge Railway (SGR) is complete.

The company is also considering setting up an industrial park at its Olkaria geothermal fields, which once complete will attract heavy energy-reliant industrial plants, thereby taking up the surplus energy. The industrial park will host energy intensive industries, which will enjoy the advantage of having the power and steam supply close to the manufacturing plants.

Engineer Mugo gave the example of South Africa, which is one of countries that rode on huge power reserves to attract industries that contributed to a high level of economic development.

He said the current national power demand at 1,530MW was still not the peak, hence the need for increased investment, especially in environment-friendly and affordable energy sources like wind and geothermal. The Government in 2013 embarked on an ambitious plan to add 5000+MW to the national grid by 2016. KenGen already has delivered 375MW out of its 844MW expected contribution to the government initiative.

Of these, geothermal accounts for the largest share at 330.6 MW. Hydro accounts for 24MW while wind has contributed 20.4MW. KenGen is implementing several geothermal energy projects in Olkaria expected to inject an additional 370MW into the national grid in the near future. It also expects to increase the capacity of wind energy at the Ngong Wind Farm, which currently contributes 25.5MW and set up another wind farm in Meru County.

The firm has secured Sh38 billion loan from Japan to fund another power plant in Olkaria. The Japan International Cooperation Agency (JICA) will fund the construction of the the Olkaria 5 Geothermal Power Plant. JICA is a Japanese government agency that coordinates official development assistance.
Olkaria 5 is expected to add 140 megawatts of power to the national grid. The drilling of the project is already underway and the company said it was only waiting for financing to start the plant.

“The loan agreement has been negotiated and will be signed between the Government of Kenya and JICA in February. The project is expected to be completed in the third quarter of 2016,” KenGen said. Mugo said tenders for the project will be issued next month and a contract awarded in July 2016.