Nairobi, Kenya — ESI-AFRICA.COM — 04 November 2011 – In an effort to diversify its power sources, Kenya Electricity Generating Company (KenGen) says it is to sign a contract next week with a consortium to build its 280 megawatt (MW) Olkaria IV geothermal plant, which is scheduled to be operational in 2014.
At the same time, KenGen managing director Eddy Njoroge said that an extra 202 MW would be injected into the national grid next year from a mix of thermal power, renewable energy and rehabilitation of an existing hydropower dam.
The total cost of Olkaria IV “’ an extension of Olkaria I and II plants that already produced a total 115MW “’ is US$1 billion, he added. “The contract is for 27 months which means it will come on board around January 2014,” Njoroge told newsmen here. The consortium comprising Japan’s Toyota Tsusho Corp and South Korea’s Hyundai Engineering & Construction, is expected to begin construction of the geothermal plant by the end of the year.
The plant is being funded jointly by the Kenyan government, the World Bank, Germany’s Development Bank KfW, the European Investment Bank, the Japan International Corporation Agency, the French Development Agency AFD and KenGen. Kenya is the first African country to drill geothermal power, tapping the vast steam energy in the country’s Rift Valley region.
The country has potential to produce 7,000MW and is targeting production of at least 5,000MW of geothermal power by 2030. Development of cheaper geothermal power means the country has to rely on less thermal power that is prone to the vagaries of high international prices, and rain- fed hydroelectric dams.
High electricity and fuel costs are among factors that pushed Kenya’s annual inflation rate to 18.91% in October, the 12th consecutive month rise. Njoroge said that at present, the country’s grid had quite a narrow margin between demand and supply of electricity.
"The peak power demand right now is about 1,200MW. Our total installed capacity is about 1,400 MW, but when you really calculate the effective capacity because of hydro, it comes down to about 1,100 MW,’ he admitted.