Saturday, April 17, 2010

Kenya's Geothermal Power

"An Analysis of the World Bank Approach to Kenya’s Geothermal in 1998"

By Boaz Adhengo
AAEA Kenya Director

‘Geothermal’ literally means ‘Earth’s heat, which is estimated to be 5,500 degrees centigrade at the Earth’s core – about as hot as the surface of the sun. Geothermal energy is a clean, renewable resource that can be tapped by many countries around the world located in geologically favorable places. Geothermal energy can be harnessed from underground reservoirs, containing hot rocks saturated with water and/or steam. Boreholes of typically two kilometers depth or more are drilled into the reservoirs. The hot water and steam are then piped up to a geothermal power plant, where they are used to drive electric generators to create power for businesses and homes. Geothermal energy is considered a renewable resource because it exploits the Earth’s interior heat, which is considered abundant, and water, once used and cooled, is then piped back to the reservoir.

Geothermal energy can be utilized for electricity generation and for various other types of heat direct use applications, e.g. heating purposes, fish farming, bathing etc. Compared to other renewable energy technologies, geothermal is unique as it provides a base-load alternative to fossil fuels based electricity generation, but can also replace those used for heating purposes.
High temperature geothermal resources are most important for electricity generation (temperatures greater than 150 degrees Celsium), while medium-to-low temperature resources (below 150 degrees Celsium) are suited for many different types of applications utilizing heat. The classical Lindal diagram provides a good overview of the typical utilization forms of geothermal energy by temperature ranges.

Kenya’s Geothermal Development Program

Between 1979 and 1996, the bank carried out five projects to support Kenya’s program to develop geothermal power resources—the first such program in Africa. An OED audit* of the five projects found that they were successful, but warned that the sustainability of the last two projects is unlikely without further government support. The audit highlights actions that both the Bank and borrowers could take in the future to increase the chances of success for similar power projects in the region. The Bank could have taken greater advantage of its inhouse technical expertise in geothermal drilling, and could have made the procurement process more flexible to respond more rapidly to drilling problems as they arose. For its part, the government could intensify its commitment to expanding geothermal exploration and development, boost its expertise in the field, and provide sufficient resources for maintenance, while pursuing private sector participation.

Geothermal Power Plant in Naivasha, Kenya

Between 1979 and 1989, the Bank approved three loans and two credits, for a total of $117.2 million, to support the development of Kenya’s geothermal power program and resources. The five projects, carried out between 1979 and 1996, helped the Kenya Power Company (KPC) install the first geothermal-based power plants in Africa. The first three projects (approved in 1979, 1980, and 1983) drilled wells, set up transmission facilities, and built a power plant with 45 megawatts (mw) of capacity in the Olkaria Geothermal field of Kenya’s Rift Valley. After the plant was successfully put into operation, the government decided to greatly expand its geothermal development program, with a view to making it one of the main pillars of its future power generation system. The Bank supported this objective with two credits (approved in 1984 and 1989) for exploration, appraisal, and drilling in other parts of Olkaria and at the extinct volcano of Eburru.

The Bank has been suggesting that most, if not all, the future growth of Kenya’s power supply should be met by the private sector. The government has agreed to offer the Olkaria West fields for private development and to promote private sector participation in conventional coastal power generation plants. At the time of the audit, several private sector generation proposals were under discussion.


For the Bank:

1. The Bank needs to make greater use of technical staff in reviewing drilling and resource development programs during both the appraisal and supervision stages of geothermal projects.

2. The Bank needs to be more flexible in its procurement to allow the borrower to make unscheduled rush orders more efficiently and at minimum costs.
For the Borrower:

1. KPC needs to review its commitments to geothermal exploration and development drilling and needs to identify the resources needed to implement its program efficiently. Geothermal development should become a self-supporting profit center within KPC’s power generation activities, with the resources needed to support maintenance and expansion.

2. KPC needs to expand training in the areas of surface facilities design for steam gathering systems.

For the Bank and Borrower:

· If the private sector cannot be attracted to participate in Kenya’s geothermal development on equitable terms, the government and the Bank will need to prepare an alternative approach, in which government institutions play a more significant role. Such a strategy might include the provision of drilling services to investors or guarantees of competitive prices for steam, allowing the private sector to invest in lower-risk generating plants.

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