Thursday, March 10, 2011

Kenya seeks investors for 800 MW geothermal plants

The Nesjavellir Geothermal Power Plant in ├×ing...Image via Wikipedia
Kenya's Geothermal Development Company invited applications on Wednesday from investors interested in setting up eight power plants to plants to produce a total 800 MW in the country's Rift Valley.

The state-run firm said in a newspaper advertisement it planned to drill 200 wells from next January on the Bogoria-Silali Block.

"GDC intends to shortlist potential investors to develop 8X100 MW at its Bogoria-Silali Block," it said.

"The investors' role will include financing, design, construction, operation and maintenance of the power plants. In addition, GDC will require the selected investors to partner in financing steam development."

Geothermal power comes from steam made from water heated by the earth's core and used to spin turbines.

Kenya says it has potential to produce 7 000 MW from the vast heat reserves under the Great Rift Valley. It is targeting at least 5 000 MW of geothermal by 2030.

GDC said studies showed the Bogoria-Silali block had a potential to produce 3 000 MW. The 800 MW would be produced in an initial phase ending by 2017, and another 1 200 MW would be rolled out in three 400 MW phases ending in 2023.

The company said interested parties would have to prove they could raise at least $400-million for each 100 MW development, supported by letters from credible financiers.

"The expected capital structure for the power plant is at least 25% equity and 75% debt," GDC said, adding that the government would not provide any sovereign guarantees.

"Funds obtained from the investors, on the terms and conditions agreed, will be a loan to GDC, which will be repaid from steam sales revenues," GDC said.

State-run Kenya's main power producer KenGen is already producing more than 200 MW of electricity from geothermal sources in the Rift Valley, and plans to add 280 MW at a cost of $1,3-billion by 2013.

The drought-prone nation, which relies heavily on hydropower, is increasingly turning to geothermal energy to increase power production. Businesses say frequent blackouts increase the cost of doing business in Kenya.

GDC said that Kenya's peak power demand stood at 1 200 MW and was expected to grow to at least 17 000 MW in 20 years.

The GDC has pledges worth $400-million, 40% of the amount it needs for a 10-year plan to produce 2 000 MW of steam.

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