Kenya is exploiting its rich geothermal potential to harness alternative and reliable energy that could lower the cost of manufacturing and spur economic growth. Dr. Silas Simiyu, the managing director of the state-owned Geothermal Development Company (GDC) tells TradeInvestAfrica why now is the perfect time for interested investors to explore the opportunities in the industry.
The global trend of reducing carbon emissions from fossil fuels has sparked an interest in renewable energy. What is the potential of geothermal energy in East Africa and globally?
Globally, the potential for high grid geothermal resources alone is estimated to be in excess of 60 000MW. However, if you consider the different levels of resources, it is significantly higher than that. In the East African region, the potential is now estimated at 15 000MW. During the 1990s, the wells were drilled with a depth of 2 000 meters and had an average productivity of around 5MW. Today, they are being drilled with a depth of 3 000 Km and the average productivity has gone up from 7MW to 8MW. The capacity to extract energy from the ground increases with improved technologies. This is precisely why in Kenya the potential is now in excess of 10 000MW, which is ten times the current total power capacity.
What is the long-term vision for geothermal energy in Kenya?
Without a reliable source of energy, the country cannot reach the level of industrialisation that it is targeting by the year 2030. The government has established the Least Cost Power Development Plan (LCPDP) and has also looked into the different power generation modes that can be used to meet the target of up to 15 000MW. The advantage that we have in Kenya is that all our non-clean energy sources are imported. The government is working to ensure that 60% of the energy needs come from renewable sources. The development of geothermal energy as the main source of energy is viable because it can be generated locally and is not affected by the changing weather patterns.
To install 5 000MW of geothermal energy in the next 20 years would require an investment of US$4.5-billion. Raising that kind of money would be an arduous task for the government and the plan is to seek international investors. The development of the geothermal industry has been slow over the years due to the lack of private sector participation. The major challenge for investors is the high upfront risks and the enormous investment capital that is required for this kind of venture. In order to facilitate investor entry into the industry, the Geothermal Development Company(GDC) will undertake exploration and drilling for all fields and provide steam to investors so as to mitigate upfront risks.
Kenya is one of the leading countries globally with significant geothermal resources and the government has invested a lot to develop the industry. This includes supporting scientific research, drilling and the generation of electricity. There are numerous investment opportunities for interested companies that range from supply of equipment and materials, development of steam fields and power plants, supply of early generation equipment, civil engineering and construction.
What guarantees and incentives do potential investors have?
Potential nvestors will want to have a Power Purchasing Agreement (PPA) that is enforceable and also reasonable tariffs that can yield appropriate return on the investment - these can be made available. Previously it was challenging for companies to invest in the industry due to cumbersome entry procedures. For instance, one was required to seek licences and approvals from three different ministries. These processes have now been simplified through the establishment of a one-stop advisory and investment facilitation service at the GDC. Kenya has an ambitious infrastructure construction programme and a determination to upgrade its power generation grid and transform the country into a green energy leader. The new constitution is expected to help establish a more transparent political system and balanced economy. We are hoping that this envisaged transparency will reassure investors. The existing rules that govern foreign investment in the country should help instill confidence in companies looking to invest in the geothermal industry.
Which other applications of geothermal energy is GDC considering besides power?
As GDC develops geothermal energy for power generation, the water we separate before taking the resource out of the ground will be used for other industrial purposes. That way, we can tap into the other benefits that geothermal energy can bring. The Menengai area in the Rift Valley province, which we are currently developing, has a community of large-scale farmers who are interested
in starting other factories around the geothermal power plants. Pastoralists at the Maasai Mara have a thriving hides and skins processing industry that requires sulphuric acid. We are able to produce sulphuric acid from hydrogen sulphide to be used in tanning plants.
We are also working with some hoteliers to develop a tourist resort at Lake Bogoria where there are hot springs. The resort will feature heating and spas supported by geothermal energy. In some specific areas, we do not want to drill for power generation but rather we want to liaise with the local communities to tap into the hospitality industry.
Floriculture is an important foreign exchange earner for Kenya and there are Dutch investors growing flowers around Lake Naivasha. I think the world’s largest geothermal-powered greenhouse is in Kenya, along Lake Naivasha. Geothermal steam has some carbon dioxide and hydrogen sulphide. The farm there generates electricity to ensure the greenhouses have light for about two hours (as opposed to 12 hours) and they inject carbon dioxide to stimulate photosynthesis. The use of this technique has resulted in a 40% increase in the flowers produced, which consequently reduced the area required for growing flowers. The EU market does not allow the use of pesticides even though mildew is a common concern in flower farming. Geothermal heating provides a constant temperature that eliminates the formation of mildew. This increases the overall yield and also allows for real green farming without the use of pesticides.
Going forward, we want to have a holistic approach to the utilisation of geothermal resources.
Are we going to see a “geothermal valley” in Kenya in the next 20 or 30 years?
Yes, that is the goal and some people have already mooted that kind of concept. In one area where there are three geothermal fields owned by different developers, a very huge flat area lies in between the fields. An investor is interested in putting up a geothermal park there. The park would host industries looking to take advantage of the high temperature fluids and condensed water from the fields. Some of the factories would need a huge amount of electric power and this would involve the direct utilisation of high temperature fluids, which is more efficient than converting it into electricity and then converting it into heat. This obviously reduces the overall cost of energy. Reliable and affordable energy supply would spur growth in the manufacturing sector, which is currently battling to remain competitive.