Baringo geothermal project gets Sh1.3 billion funding boost

A steam well at Menegai Crater in Nakuru County. The geothermal resource is largly under-exploited in the country despite its potential in adding to the national energy mix. [Kipsang Joseph, Standard]

The Geothermal Development Company (GDC) has received a major boost in its efforts to upscale the exploitation of geothermal resources in the country.

This after the Geothermal Risk Mitigation Facility (GRMF) approved a Sh1.3 billion grant to GDC to facilitate the drilling of six geothermal wells and support the development of key infrastructural works at the Baringo-Silali Geothermal Project.

The project covers three geothermal prospects - Silali, Paka and Korosi - from which the company is looking to produce a total of 300 megawatts (MW) by 2030.

The GRMF grant will fund 40 per cent of the costs associated with the drilling of two geothermal wells in each of the three prospects and 20 per cent of the total costs incurred during the development of requisite infrastructural work in the project area.

Representatives of the facility said they had reviewed GDC’s application, which had met all the requirements for funding.

“The next step is for GDC to give us a date and venue for the signing,” said Sylvain Degolmal, a marketing expert at GRMF and the African Union Commission.

GDC has committed to expediting the process of getting the requisite approvals to pave the way for the signing of the grant contract.

This is expected to fast-track the development of their Baringo-Silali geothermal project.

GDC Managing Director Johnson ole Nchoe, who led a team of the firm’s senior management to the meeting with GRMF, outlined the importance of the geothermal resource as baseload in the Kenyan energy mix.

The project, he said, would have an impact not only locally but also in the larger East African region where the resource exists in abundance but is largely untapped.

GRMF is a risk mitigation facility set up in 2012 by the African Union Commission, the German Federal Ministry for Economic Cooperation and Development, the European Union-Africa Infrastructure Trust Fund via KfW Entwicklungsbank (KfW) and the UK Department for International Development.

The key mandate of the facility is to encourage the development of the geothermal energy sources in East Africa by removing the high upfront costs that are associated with infrastructure development in greenfields and initial exploratory drilling in geothermal fields.

The GRMF funding comes at a time when there is a renewed investment in green energy projects in the country and region.

AfDB funding

Last month, the African Development Bank (AfDB) announced a Sh2.52 billion fund for renewable energy projects in the continent.

The approval of the funding by the AfDB board of directors came just a month after the bank announced plans to raise over Sh700 billion from capital markets to finance development projects in member countries. Through its Africa Renewable Power Fund, a $250 million (Sh25 billion) private equity fund, AfDB will provide finance for the development of 10 to 15 greenfield renewable energy projects in sub-Saharan Africa.

The various projects have a capacity to add at least 533MW of installed energy generation capacity from renewable sources.

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