GRMF identifies and develops geothermal resources for power production in Ethiopia, Kenya, Rwanda, Tanzania and Uganda. The projects will be supported by a fund of EUR 50 million provided by the German Government and the European Union. Based on Pöyry’s extensive experience in the procurement and tendering processes and deep understanding of geothermal resources, the company was selected as best bidder to support the AUC in evaluating and selecting eligible applicants.

Pöyry creates common developer manuals and operational methodologies for choosing parties interested in surface studies and exploration drilling projects in the region. During the execution period the chosen projects will be monitored and reported. A regional geothermal database of prospects in the region will be developed and updated.”

Source: Pöyry news release

The fund recently allocated endorsed parts of a $250 million investment plan to promote private and public sector-lead renewable energy and energy efficiency projects and mass-transit urban transport investments.

Ethiopia received funding of $50 million from the CIF under the Scaling Up Renewable Energy Program for Low Income countries (SREP), following meetings in late April/ early May.

Ethiopia’s plan calls for AfDB technical support and investment to implement the Assela wind farm project and Phase II of the Aluto Langano geothermal project. The Bank expects to channel USD 23 million of total SREP financing to Ethiopia.

“The plan will help unlock Ethiopia’s renewable energy potential and share some of the risks. Funds will be applied to technology transfer to reduce the cost of wind energy and to initial drilling and exploration activities of geothermal,” stated Gosaye Mengistie Abayneh, Director of Energy Study and Development in the Ethiopian Ministry of Energy.”

Source: Vanguard

The African Development Bank (AfDB) claims that there were delays in money released for the project while audit reports have not been handed in on time.

Regulations of AfDB require fund beneficiaries to provide project audit reports every six months. There are though challenges in processing disbursed funds in Kenya. Audits from the last fiscal years were not submitted in time and the AfDB is generally concerned.

The African Development Bank is the key financier of the 400 MW Menengai Phase I development scheduled to be commissioned by 2016.

Rules and regulations are crucial in dealing with international development banks such as the AfDB and have to be taken into account at all times.

Source: Business Daily Africa

This was reported by Reuters last week, following a company release by GDC. The funding is sought for the development of a steam field at Silali, planned as a block from Lake Bogoria to Silali.

GDC plans to move from the Menengai steamfield and development to the Silali field by next year. The company has 16 geothermal sites in the geothermal region of the Rift Valley with an overall potential of about 7,000 MW.

The development of the first phase of 400 MW steamfield  at Menengai is set to be completed by 2016 and IPPs are expected to bid for the installation of geothermal power plants.

There have been 19 international and Kenyan firms been short-listed, including KenGen and the Kenyan investment company, TransCentury. Four of those will be given concessions of 100 MW each.

KenGen is also seeking investors for the development of up to six geothermal power plants for a total of 585 MW.

Source: Reuters

The deal contracts the installation of steam pipelines and control systems by Sinopec for the development of 280 MW geothermal power plant projects in Kenya. It was awarded through a competitive biding process and is financed by the World Bank and KfW of Germany.

It is the final major contract for this project. According to Reuters, the pipe system will consist of more than 40 kilometers carrying steam from geothermal wells to units 4 and 6 of the Olkaria I and the Olkaria IV power plants. Both have a planned capacity of 140 MW. The contract has a duration of 20 months and includes the installation of piping system of over 40 kilometers and includes various pipe sizes ranging up to 42 inches in diameter. The wells for the steam have already been drilled.

Source: Reuters, Daily Nation

The company now has invited bids for the installation of an emergency 5 to 10 MW geothermal power plant that would churn energy to used for operating the rigs.

“The geothermal modular power plant to be installed at the Menengai geothermal field and commissioned within the shortest time possible so as to reduce the high cost associated with drilling using diesel,” the company said in a tender that closes on May 2.

Successful bidders would be handed the contract under a 15-year build, own, operate and transfer (BOOT) arrangement.”

The company is looking at alternatives to generate power by diesel for its drilling operations, as it is expected to become even more expensive and a large cost burden to the development plans of the company at Menengai.

Source: Business Daily Africa

Part of the package is $149.5 million loan and grant financing for the Menengai Geothermal Development Project.

The loan agreement for the Menengai Geothermal Development Project, consists of an ADF loan of USD 124.5 million, and a loan and grant totaling USD 25 million from the Scaling-Up Renewable Energy Program (SREP) under the Climate Investment Funds for which AfDB Group is an implementing agency.

The Menengai field alone has a potential of up to 1600MW, and the AfDB Group support will help develop the steam field for generation capacity of up to 400MW in a first phase, which is represents a 20 percent increase in installed capacity of the country.

The signing of these agreements totaling USD 336 million brings the ADB’s combined support to Kenya’s Energy and Transport sector close to USD 1.4 billion.”

Source: All Africa

The company plans to drill 168 wells this and the next two years until the end of 2014 and 41 wells for the years 2015 and 2016.

KenGen bought seven drilling rigs to help it reach its targets. There are though currently discussions about pending drilling contracts with Chinese drilling company Great Wall Drilling.

Source: Businessweek

The country – as reported by local news – has now scheduled to be drilling the first exploration wells in Karisimbi in August this year. If drilling is successful and the wells are productive, it is planned that a 10 MW geothermal power plant will be built. It is expected that the cost to build the plant will be $30 million and could start producing power as early as 2014.

Last week, the Rwanda Energy Investor Forum in Kigali took place and energy officials announced that development is expected to be driven by private sector investments on four potential site. Each of those sites has an estimated resource potential for a power generation capacity of 75 MW that could together add 300 MW to the Rwandan power grid by 2017.

“The four prospective sites are Gisenyi, Karisimbi and Kinigi located in western region as well as Bugarama in southern region.

By funding the test drilling in Karisimbi at an estimate cost of US$ 5m per well, the government intention is to show courteous investors that there are 100% chances of striking commercially viable geothermal reserves in this area of live volcanoes and active seismic and magnetic activity.

Initial surface surveys estimate the steam in underground in Gisenyi to generate about 200MW, Karisimbi 320MW, Kinigi 120MW, Bugarama 60MW and about 40MW from other smaller sites. This brings the total geothermal energy potential to about 740MW. But Dr Steven Onacha, a geothermal expert involved in the exploration work, said that more recent studies show the potential could be much bigger than originally thought.

Evidence of availability of geothermal reserves in Rwanda was first noticed in 1982 when the French Bureau of Geology measured temperatures under ground to be 100 degrees Celsius.

In 2006, an investigation by another company, Chevron, estimated the temperatures at 150 degrees while BGR and KenGen concluded in a survey done last year that temperatures in Karisimbi are after all higher.

Geothermal is just one of the several other sources of energy the government is seeking to attract private investments to significantly increase power generation capacity needed to meet the development needs of the country.

Apart of geothermal and hydro sources, attention is also focusing on the development of methane gas in Lake Kivu where studies have confirmed availability of 55 billion cubic meters.

Officials of the Rwanda Development Board, the organizers of the Rwanda Energy Investor Forum co-hosted by the World Bank said that funders such as the African Development Bank, World Bank Group and the European Union have in the past expressed interest in financing feasible projects in the country.”

Source: AllAfrica

During the month of January, GDA engineers worked closely with KenGen engineers and operators and Civicon construction crews to complete the commissioning and performance testing. The plant was first synchronized to the grid on January 23rd. The performance testing was completed just six days later on January 29th.

GDA designed the plant and the steamfield, and supplied all of the major equipment. This included an Elliott GYR steam turbine, Kato generator, Lufkin gearbox, Graham condenser and vacuum pump, Goulds cooling water pumps, and a Cooling Tower Depot single-cell fiberglass tower. GDA also manufactured auxiliary equipment in-house to minimize installation time, including the lube oil system, turbine control valve assembly, compressed air system, fire pump skid, emergency power system, and plant control system. The equipment and materials were shipped from the US to Kenya in 11 shipping containers one month ahead of schedule.

KenGen is the leading electric power generation company in Kenya, producing about 80% of the electricity consumed in the country. They currently own and operate multiple geothermal power stations at Olkaria with a total capacity of 150 MW.

Eburru is located approximately 2 hours outside of the capital, Nairobi, in Kenya’s Great Rift Valley. The Eburru geothermal field is on the flanks of the Ol Doinyo Eburru Volcano and is situated 11 km northwest of Lake Naivasha.”

Source: GDA release

“A Kenyan parliamentary committee has now recommended that the contract for the drilling of 80 new geothermal wells at the Ol Karia Geothermal Field Phase I and II be reviewed.

The Energy, Communications and Information Committee resolved that procurement of the Sh43 billion ($400 million) project that is to be executed by Great Wall Drilling Company must follow the provisions of the Public Procurement and Disposal Act.

Energy PS Patrick Nyoike has been recalled to appear before the committee Wednesday morning over the issue.

Energy minister Kiraitu Murungi and KenGen managing director Eddy Njoroge have already appeared before the team to shed more light on the deal. The committee wants the contract executed through the Geothermal Development Company and not KenGen as indicated in the yet to be signed contract.

The committee chaired by Karachuonyo MP James Rege met behind closed doors Tuesday and concluded that the memorandum of understanding (MoU) signed between the Ministry of Energy and Chinese firm Great Wall Development Company on March 10, last year should be reviewed.

Last year, the committee raised questions as to why the ministry signed the MoU with a foreign private company as opposed to the Chinese government. It would then have invited tenders from qualified companies to bid for the drilling of the wells.

The company is to drill 30 wells in the Ol Karia Phase I and 50 wells in Ol Karia Phase II at an estimated $6 million (Sh540 million) per well. The estimated contract for the Ol Karia Phase I is $150 million while Phase II is $ 250 million. (READ: KenGen embarks on expansion with two steam plants)

Sources say the committee took issue with the terms of the financing of the projects whose funds were to be secured from the Exim Bank of China. They particularly singled out the 20 per cent escalation price to Chinese firm, which they argued would not reduce the cost of electricity in the long run.

In the MoU, the government was seeking the financing through the Government of China in the form of Preferential Export Buyers Credit or Concessional Loan for drilling of wells in support of a 420 megawatts power generation facility in the Ol Karia.”

Source: Business Daily Africa

The company is open, so its Managing Director Eddy Njoroge, to different models to raise the necessary financing.

“We will be looking at different options like joint ventures …The most viable one is build and transfer. We have the steam, we want somebody to come and build the plant and then operate it (to recover the cost) and then transfer it to us.”

He said drilling to reach the steam was a major problem in building geothermal power plants, but the company was planning to hire new rigs and buy some more.

Mr Njoroge said KenGen would not consider a rights issue because the market was bearish.

“Part of the problem of a right issue right now is that the market has been very bearish. We may not get the proper value of the stock. A bond of course goes to our balance sheet since it’s a borrowing,” he said.”

Source: Reuters via Business Daily Africa

Today I am asking you for your help in a short Reader Survey. It would be great if you could assist in filling out the survey.  Click here to take survey

I sincerely hope that you find the site and its features useful. From the beginning I have been using a variety of social media tools to help promote geothermal energy. Twitter has become an increasingly important tool. Facebook is something a bit underutilized. Google+ is coming. The ThinkGeoEnergy LinkedIn group with now also around 600 members is providing a great platform for discussions. The Ning community has not been that overly successful, but is still being used.

The free-to-use pictures I share via ThinkGeoEnergy’s Flickr account are also popular. If you want to share good geothermal pictures you can do this via the Flickr Group of ThinkGeoEnergy.

Then there are the other elements. In 2010, a weekly newsletter was added that today has over 600 subscribers and now even has a fine co-sponsor in Scientific Drilling. The Geothermal Job Portal was added last year and slowly gains some traction.

Also at the end of 2011, ThinkGeoEnergy was able to offer one of the first Geothermal apps for the iPhone – the GeoEnergy app, available in the App Store.

I am also very excited about the ThinkGeoEnergy Geothermal Power Plant Map, which is in full work. It is under development, so don´t expect it to be anywhere close to ready and correct, but for a preview see here: http://map.thinkgeoenergy.com/map.php, for the old map (on Google Maps) you can use this link.

I am now going through a bit of a strategic review of the site, for which the survey is supposed to be a little guidance of what you want to see for ThinkGeoEnergy going forward, so your help is appreciated.

There are some exciting news coming along for the industry, so the start into this year looks a lot better than indications of the end of last year. So lets hope we will see an exciting year.

I am also exploring the idea of a Marketing Workshop/ event in connection with the GRC Annual Meeting and the GEA Trade Show in Reno this fall, so stay tuned.

In this context I also would very much like to thank all the companies that have supported me through the years with advertisements and other contributions. Namely this is Islandsbanki, ISOR, GeothermEx, Hannon Armstrong, Verkís, Mannvit, Technip, Scientific Drilling, Iceland Drilling, Enerchange and Activated Logic.

There are a large number of other individuals and companies that have helped tremendously through advise, thoughts, critical remarks and comments and general support.

Rwanda is located on the East African Rift Valley, one of the world’s largest geothermal resources covering a wide array of country across Eastern Africa.

The potential for power generation is estimated at about 15,000 MW, with only Kenya and Ethiopia currently producing power from geothermla energy.

Rwanda’s region with most geothermal potential is the country’s Virunga volcanic zones in the north and hot springs in the western part of the nation.

Rwanda’s Energy Ministry is targeting a geothermal power generation capacity of 310 MW with an investment need of $935 million.

The cost for initial three exploration wells and preparatory work is expected to be around $30 million. Other energy sources such as hydropower, methane gas, solar etc. are also being explored to bring the overall power generation capacity of the country to 1,000 MW by 2017.

There are several countries that have raised interest in supporting Rwanda. Japan has recently sent experts on a fact finding mission with Japan’s International Cooperation Agency (JICA) willing to support the country to utilize its geothermal resources.

China is also showing interest and the country already has signed a “a contract with a Chinese firm, China Petroleum Technology and Development Corporation (CPTDC) to supply drilling materials to the tune of $7 million.”

Initial scientific studies on the potential for geothermal energy utilization has been carried out by Ackland Uniservices Ltd. from New Zealand.

Last year, the Belgian Development Agency also reported interest in spending $74 million by 2014 to explore Rwanda’s geothermal energy potential. The hope is that this work attracts investors to Rwanda by conducting drilling to prove that about 300 megawatts of energy can be extracted from Rwanda’s geothermal resources.

Source: OilPrice

SPX’s ADCC’s will serve four Toshiba 70 MW steam turbines at the new plant being constructed in the Rift Valley of Kenya, 100 kilometers northwest of Nairobi. SPX Heat Transfer was selected to provide the condensers by Hyundai Engineering, the full turnkey contractor for Kenya Electricity Generating Co.’s Olkaria I and IV geothermal plants. The two plants are expected to be completed by April 2014.

Designed mainly for geothermal power plants, SPX’s ADCC technology provides enhanced performance characteristics, including low liquid/vapor side pressure drop, high thermal efficiency, minimal degradation by non-condensibles, low susceptibility to fouling and or/corrosion, and prediction of absorption of non-condensibles.

“The advanced direct contact technology used within our condensers has gained significant momentum worldwide due to the technical advantages it provides,” explained Drew Ladau, SPX segment president. “SPX continues to be a pioneer in developing technologies that make sense in today’s environment,” Ladau added. “As demand for electricity in East Africa’s largest economy grows, Kenya anticipates that geothermal power will generate approximately 30 percent of power by 2031, a goal we believe can be attained by utilizing ADCC technology.”

Source: Company release via Marketwatch

Geothermal resources in Kenya, within the Rift Valley, have an estimated potential over 10,000 MW spread across 14 prospective sites. GDC was created in 2008 for the specific purpose of accelerating the development of geothermal in Kenya. In the Menengai field, GDC is drilling Phase I of their estimated 400 MW project, with a plan to start generating electricity with well head power plants as drilling progresses. The advantage of the concept to be implemented in the Menegai field is that revenues are generated early and in parallel to the continued development and testing of the geothermal field. Following GDC’s successful drilling of the first well (MW-01) in Menengai, GDC selected Ormat to build the first geothermal power plant included in GDC’s geothermal development plan. GDC will supply the steam for conversion to electricity by Ormat’s power plant.

Since 2000, Ormat has owned and operated the Olkaria III geothermal power plant which is now in its third phase of development and expected to reach 84 MW once the expansion is complete. The facility, featuring Ormat’s original air-cooled technology, has been operated by an entirely Kenyan team throughout commercial operation.

In addition, Ormat also provided the first combined heat and power geothermal plant to a private greenhouse specializing in flower export from Kenya.

Commenting on the award, Dita Bronicki, CEO of Ormat, said, “This award both reinforces Ormat’s position as a leader in the geothermal industry, as well as demonstrates our strong commitment to the development of geothermal projects throughout the world using our original technology to match specific local resource conditions. We are happy to be part of the future geothermal development in Kenya as we continue to increase our activities as owner of power plants in the area.”

The findings are interesting not only for the geothermal industry that sees its high capacity factors as one of the key selling arguments. While the research shows that geothermal energy is still a very favorable base-load capacity energy source for utilities world-wide, capacity factors are often not as high as they theoretically could be.

Building on the vast resources collected over the year, the research done by Bloomberg New Energy Finance for this study is quite thorough and looked at 71 geothermal fields globally.

For a global average, BNEF quotes a capacity factor of 73% and correctly notes that developers use much higher capacity factors for their project finance models. Higher resource temperatures statistically increase capacity factors at a rate of around 1% per 10 degrees Celsius. The performance of the different fields varies widely, with Iceland, Mexico and Indonesia representing the highest capacity factors. The age of the plants in Japan and the Philippines is mentioned as a reason for the lower capacity factors in both countries, through decreasing productivity of geothermal fields over time.

In detail the report goes into general trends of plant performance, performance by technology, country and developers.

In an interview with Mark Taylor the Head of Geothermal at Bloomberg New Energy Finance, he said, that “the findings might not be ideal for the industry, but geothermal energy is still base-load given its 90% availability. Also utilities in the U.S. still favor Geothermal and consider it a viable base-load option. This means that developers can still secure healthy power purchase agreements (PPA) and capital should be available for good projects.”

For financial institutions, capacity factors are important and information like that provided by Bloomberg New Energy Finance is crucial for the questions investors need to ask and developers need to be prepared to answer. “Lower than expected capacity factors could though mean difficulties with regards to not meeting PPA contract requirements, as well as meeting debt and interest payments through a decrease in revenues,” Mark Taylor added.

Geothermal development always has a risk element when it comes to resource assessment, drilling and planning, but the report by Bloomberg shows that it is crucial to be conservative in estimates as they determine the underlying contractual terms of the PPA, but also the availability of financing.

Again – and I mentioned this in various presentations these past 12 months – it is the question about the necessity about being conservative and successful, rather than overpromise and not live up to estimates given. The geothermal reporting codes by Australia and Canada are providing a codified approach to reporting of resource assessments that could help create investor confidence in projects, but also be one helpful element in securing PPAs that live up to expectations on both sides.

Kenya Electricity Generation denies claims that it faulted on procurement rules during the award of a Sh8 billion ($90 million) contract to the Chinese drilling company for drilling geothermal wells.

“In reference to information contained in a monthly magazine claiming that the board of directors and managing director Eddy Njoroge breached the rules to benefit from the deal, the company says none of the claims is true.

The article questioned the composition of the tender committee that awarded the extension of the Great Wall Drilling Company Contract, saying under the 2005 procurement rules, Mr Njoroge should not seat in the tender committee.

“The 54th KenGen Tender Committee meeting was legally constituted and acted in accordance with a transition provision of the Public Procurement and Disposal Act (2005) which came into force in 2006,” KenGen board chairman Titus Mbathi said.

The transition clause provided for continuity on all tendering processes that had started before the Act came into effect.

The Nairobi Law Monthly magazine has also accused KenGen of engaging in corruption in awarding a Sh8 billion tender for the commissioning of mobile wellheads to Norwegian company Green Energy Group.

Mr Mbathi said the contract extension of Great Wall Drilling Company, a Chinese firm, was within public procurement laws and did not amount to contract variation, as claimed by the magazine.

He said the tender was first floated in 2004 and only two firms applied, and were disqualified at the technical stage. The tender was re-advertised in 2006, after which over 240 firms, members of the International Association of Drilling Contractors (IADC), were invited to bid.

“Consequently, 12 companies bought the tender documents, but only three submitted bids. After thorough technical and financial appraisals, the Great Wall Drilling Company of China emerged as the most competitive,” Mr Mbathi said.

He further said that the initial tender was for six appraisal wells, but the tender and contract had an extension clause and this information was available to all tender applicants, “none of whom has to date complained of any malpractice throughout the execution of this tender”.

The following video was published by Kenyan TV station ntv with a press conference including the Chairman and CEO of KenGen:

Source: Sunday Nation

Assignment

The workshop will be attended by invited and interested investors, representatives of funding agencies, renowned geothermal exploration and development institutions, board of consultants and invited experts.

The workshop will review all available data to ascertain its quality and quantity, verify the interpreted models and suggest alternative interpretations, determine the viability of the geothermal resource, establish a preliminary conceptual model of the geothermal system, if a viable geothermal resource exists, locate exploration drilling sites, rank the geothermal sites, determine the most sustainable and cost effective development plan for the geothermal resources, determine alternative uses of geothermal energy

Location and Derivable Time-Frame

The assignment is expected to initially be undertaken in not more than 4 working days. The successful individual consultants will sign a contract for a period of 4 working days.

The Individual Consultants shall be based in Kigali for most of the duration of the assignment. The consultant shall report to the EWSA Energy Development Director or his designated representative.

Key Qualifications/ experience/ competencies/ knowledge

1. Shall have practical experience of not less than 5 years in geothermal development with specific experience in geothermal development including planning and drilling activities;
2. A professional degree in the subject of his expertise from a recognized University;
3. Fluent in both written and spoken English;
4. Have had professional experience in a broad variety of geographic settings and countries, including developing proven consulting in geothermal development in countries in high temperature geothermal fields;
5. Be recognized as an expert in his field through such things as publications, memberships in appropriate professional societies, or honors and awards received for works;
6. Having participated in previously organized workshop in February 2010, the will be an added advantage.

Expressions of interest must be delivered to the address below at or before 10 :00 hours local time and on 18/01/2012 Electronic bidding will not be permitted. EOI will be opened at the address below at 10: 10 hours local time on same date.

Application procedures:

Qualified individual consultants should submit a Curriculum Vitae and supporting certificates and documents, two references with addresses and phone numbers, as well as a letter of motivation to the address:

Interested individual consultants may obtain further information at the address below during office hours from 08:00 to 17:00 hours:

ENERGY WATER AND SANITATION AUTHORITY
Rue du Lac Ihema
P.O.B 537 Kigali, Rwanda
Tel.: (250) 573666
Fax. (250) 573802
E-mail: ewsa@rwanda1.com
Website: http://www.ewsa.rw

Source: DG Market with tender details (Attention it is now the correct link now)

ThinkGeoEnergy would like to thank its advertisement partners that have helped to keep the site running. So my sincere thanks to Íslandsbanki, Iceland GeoSurvey (ISOR), GeothermEx, Hannon Armstrong, Verkís, Mannvit, Technip, Iceland Drilling and the many other firms who have helped in one or another way.

This year was quite an active one for ThinkGeoEnergy. Finally late this summer, the Geothermal Job Portal was launched with now several jobs posted. Clearly it will need to grow and it will.

Earlier this month GeoEnergy, the iPhone news app for ThinkGeoEnergy was published on the App Store and allows a condense news overview for those of you using an iPhone. It will be tried to offer an Android app as well, but this might take a while.

In October, ThinkGeoEnergy – together with ISOR – published the Geothermal Power Map, a printed world map with the locations of the geothermal fields of this world. The online version is still a work-in-progress, but will be worked to a useable format in 2012.

To many of you, I would like to extend my gratitude for your ongoing dedication to geothermal energy and development in general. Many of you became good friends and I cherish our friendship and ongoing cooperation. Keep up the fight for development in Asia, the Pacific region, Australia, U.S., Canada, Chile, Argentina, Turkey and so on.

I wish you all a peaceful and regenerating holiday season. I am looking forward seeing many of you at the several geothermal events in 2012.

With all the best wishes for 2012,

Alex(ander) Richter

Kenya has substantial geothermal potential, and has made this sector a priority in its 2030 vision, with the objective to develop 5000MW of geothermal energy. The Menengai field alone has a potential of up to 1600MW, and the AfDB Group support will help develop the steam field for generation capacity of up to 400MW in a first phase, which is represents a 20% increase in installed capacity of the country. The project is being co-financed for a total cost of USD 503 million by a group of lenders including the French Development Agency, the European Investment Bank as well as the Government of Kenya. It will be completed by July 2016.

Following the approval, AfDB’s director for energy, environment and climate change department, Ms. Hela Cheikhrouhou revealed that this is the first ever project under the Climate investments funds dedicated to an African low income country to be approved by a multilateral development bank.

Ms. Hela Cheikhrouhou emphasized that when completed, the project will help trigger substantial increase in the provision of reliable, clean and affordable energy equivalent to the current consumption needs of 500,000 Kenyan households, 300,000 small businesses and some 1000 GWh to other businesses and industries. The project will also help to avoid some 2 million tons of CO2 per annum. The Menengai geothermal development project is situated within the Eastern sector of the African Rift system, about 180 km Northwest of Nairobi.”

Source: ADF

“Drilling for the exploration of geothermal energy is set to commence at the slopes of Mt. Karisimbi, the State Minister for Energy and Water, Eng. Emma Francoise Isumbingabo, has announced.

She made the remarks, in a meeting that brought together stakeholders in geothermal exploration to explore ways of harnessing the energy source.

“We have been conducting studies, and before end of this month, we shall get reports and start drilling three planned wells at Karisimbi, an exercise that is expected to be completed in two months,” Isumbingabo said.

The minister said that surveys conducted by various firms since 1983, including Kenya Electricity Company (KenGen), in 2009, indicated that the geothermal resource area at Karisimbi was enormous. Other sites identified are Gisenyi, Kinigi and Bugarama.

According to the national electricity master plan, geothermal energy is expected to contribute at least 300 MW to the national grid by 2017, and potentially provide half of the country’s energy requirements by 2020.

The Acting Head of Geothermal Unit at the Energy Water and Sanitation Agency (EWSA), Aimable Habinshuti, said negotiations for drilling equipment have been finalized.

“We are also working on measures to ensure that risks are minimized during the exploration phase to enable the private sector take part in the exercise,” Habinshuti said.

However, he pointed out that inadequate equipment and human resource capacity were the major challenges in the exploration phase. Japan International Cooperation Agency (JICA) Resident Representative, Hiroyuki Kobayashi, pledged support.

“We have brought in five experts in geothermal exploration and will continue to provide technical support whenever need arises,” he said.”

ThinkGeoEnergy posted 4 jobs that are directly related to the geothermal efforts in Rwanda. Details at: jobs.thinkgeoenergy.com

Source: EVWind

“The agreement provides for a contribution of EUR 50 million (US$65 million) from KfW Entwicklungsbank. The funds will be provided by the German Ministry for Economic Cooperation and Development (BMZ) and the EU. With a completely unique concept the facility will partially offset the high financial risk of non-discovery of exploratory drillings, thus winning over investors for the construction of geothermal power plants in East Africa. Geothermal energy is very reliable and thereby stabilises electricity supply, which in East Africa currently comes 60% from hydropower. During droughts there is often inadequate water to generate power. As a quick fix, governments and the energy supplier bridge these gaps by connecting leased diesel power plants to the power grid. This pollutes the environment and is extremely costly.

“The geothermal facility should make a significant contribution to improving electricity supply in East Africa, in particular for the poor population as well as small and medium sized enterprises. Furthermore, the expansion of geothermal energy sources leads to emission-free electricity generation and lower energy costs”, said Dr Norbert Kloppenburg, Member of the Executive Board of KfW Bankengruppe.

The geothermal facility, which was developed together by KfW Entwicklungsbank and the African Union, provides for a grant amounting to 40% of the costs for the first exploration drillings for suitable government and private project developers. Moreover, successful developers who secure financing of subsequent phases of the power plant construction within 18 months receive an additional success fee.

Today only every fifth private household has access to electricity in East Africa. In addition, electricity demand in the growing economies in East Africa is increasing on average by three to eight per cent annually. Using the heat of the earth can help considerably in meeting this large demand since once the geothermal heat is tapped, it reliably delivers emissions-free electricity independent of weather conditions.

The countries along the East African Rift System, a volcanically active area, possess a geothermal potential of much more than 7,000 megawatts (MW). Today the entire electricity generation potential in East Africa is approx. 4000 MW. It is relatively easy on the East African Rift System to tap into geothermal energy, as many locations create steam of more than 200 degrees at just 1000 metres depth.

For example, with financial support from KfW Entwicklungsbank the first geothermal power plant in Africa went on-line almost 30 years ago in Olkaria, Kenya, about 90 kilometres northwest of Nairobi. Today, the power plants in Olkaria supply approx. 200 MW to the grid and deliver reliable electricity. The capacities will be expanded to approx. 330 MW. Private investors as well have now recognised the advantages of geothermal power and are participating in financing the power plants in Olkaria

The example of Olkaria in Kenya should set a precedent in East Africa. Despite the large potential, interest of the industry and fundamentally promising framework conditions, these resources still remain largely unexplored with the exception of Kenya. The main reason for this is that test drillings generally cost approx. EUR 12 million ($15.6 million) and the probability of success for these first drillings is on international average only 70%.”

Source: KfW release

KEC International, which signed the Sh2.43 billion ($27 million) contract with electricity generation company, KenGen, will design, supply and install a substation and lines for transmitting power from Olkaria 1 and IV, and feeding into the national grid.

Recently, KenGen contracted a consortium of Toyota Tsusho Corporation of Japan and Hyundai Engineering Company Ltd of Korea to upgrade Olkaria I to produce an additional 140MW, and construct a new Olkaria IV at a cost of about $400 million.

The project, which will increase three fold the amount of power generated from geothermal sources from the current 150MW to 430MW, is expected to feed the national power grid by April 2014.”

Source: Standard Media (Kenya)

GeoEnergy – the ThinkGeoEnergy Geothermal News App

Long time in the making it now available on the App Store. “GeoEnergy” is a news application of ThinkGeoEnergy.com. It provides the complete news overview, access to the Twitter feed of ThinkGeoEnergy, the latest contributions posted on Flickr and YouTube, as well as regional feeds of geothermal news around the global.

As far as I am aware it is the first real Geothermal Energy focused App for the iPhone.

The app is available for free on the App Store. It has cost me though considerable nerves, effort and time to put it up, so if you feel rather generous any donations are welcome. To donate Click here

I might also spend some time creating an app for Android, but this might take a while.

As reported today by Reuters, KenGen has raised US$920 million in loans for the 280 MW development at Olkaria. While it was not reported who the banks behind the financing is, previously mentioned were: World Bank, KfW, the European Investment Bank, the Japan International Cooperation Agency and the French Development Agency.

Source: Reuters via Yahoo

As a result, the government has been wooing investors during the geothermal conference held this week at Kenyatta International Conference Centre.

“We want to shift into alternative sources of power that will provide cheaper electricity. Geothermal energy has high initial investment but provides cheaper electricity in the long-run,” said KenGen managing director, Eddy Njoroge.

He added that the company will need to raise at least $4.5 billion to generate 1,200 MW from geothermal wells in Olkaria and Menengai.

Kenya has an estimated potential of between 7,000 MW and 10,000 MW of geothermal energy, but only 200 MW is exploited.

The country’s power demand has been growing at eight per cent yearly, leaving a small reserve margin of about five per cent that is wiped out when there is drought.

Local and international private investors are expected to speed up exploitation of geothermal energy to achieve the 17,000MW target set for 2030.

Mr Njoroge said all options to raise investment will be explored.

“We need 4,000 MW from geothermal by 2030. We are looking at various options for financing this project,” Mr Njoroge said.

Energy Minister Kiraitu Murungi said several investors had shown interest and agreements with companies from China, Korea and Japan have been signed to start the fourth phase of Olkaria geothermal power in 2013.

He invited foreign investors to help the country exploit the energy, adding that the government will review Sessional paper No. 4 to align it with the new Constitution on clean energy.

Some investors have been demanding sovereign guarantees before they invest in energy projects.”

Source: Daily Nation

Reported this week from Kenya, “Three new investors have won licences to tap the vast geothermal resources that will secure the country’s growing demand for electricity.

The Brussels-based agency hopes to attract investors to the East African country by conducting drilling to prove that about 300 megawatts of energy can be extracted from Rwanda’s part of the East African Rift, a geothermal hot-spot that spans 11 African countries.

“They are a little bit reluctant to invest until it has been proven that there is a resource,” Van Malderen said in an interview yesterday in Kigali. “But there is some interest” from companies, he said.

Rwanda’s economy, still recovering from the 1994 genocide that left about 1 million people dead, doubled in size in the nine years to 2010, according to the World Bank. The government hopes energy projects will cut the price of electricity by 50 percent and reduce Rwanda’s dependence on oil imports.

“If we don’t invest in renewable energy, we will just see prices going up,” Van Malderen said.

Rwanda wants to generate 1,000 megawatts by 2017, up from 100 megawatts currently, which serves 6 percent of the population, according to the infrastructure ministry. Rwanda, Tanzania and Burundi are building a $360 million hydropower plant that could generate 90 megawatts, Van Malderen said.

The Rusumo Falls project may generate as much as 30 megawatts for Rwanda, with construction scheduled to begin in early 2012, he said. The African Development Bank is expected to fund 40 percent of the project, with bilateral organizations funding 15 percent. The governments are seeking financing for the remaining 55 percent.

Van Malderen said Rwanda’s 1,000-megawatt goal is unrealistic and may be less than what it needs. With developments in geothermal energy, hydroelectricity, methane gas and Rwanda’s natural supply of peat, the country may be able to generate 300 megawatts to 600 megawatts in the same time period, he said.”

Source: In2EastAfrica

Designed by KfW Entwicklungsbank (the German development bank) and the African Union Commission, the Geothermal Risk Mitigation Facility will provide between EUR20 million and EUR50 million (US$28-71 million) to surface studies and exploration drilling of geothermal prospects in Kenya, Uganda, Tanzania, Rwanda and Ethiopia.

Investment in power sector infrastructure in East Africa has been poor, with most recent infrastructure investments dominated by the telecommunications sector. It is estimated that Africa’s power sector requires US$40.8 billion of investment each and every year, but actual investment is far below these levels due to financial, regulatory and institutional constraints.

Financial issues are characterised by limited availability of local finance, limited access to international markets due to poor sovereign credit ratings, competition for funds and project specific risks of currency exposure, high inflation and low electricity tariffs.

Investors require confidence that regulatory structures protect their investment. These include aspects such as minimum service standards, adjustment mechanisms, access to networks, entry and exit conditions for participants and investment obligations. In particular, enforcement and revision of tariffs in offtake agreements are crucial to attracting investment.

While East African governments often lack the institutional capacity to establish the necessary legal and financial conditions, power sector reforms have been initiated in many countries. Reform laws have been passed leading to unbundling of state monopolies, some privatisation, increased regulatory autonomy and greater private sector participation.”

For the full article and a very useful insight into the current investment issues for East Africa’s geothermal sector, international experience of risk mitigation schemes and the Geothermal Risk Mitigation Facility for East Africa, see link below.

Source: SKM Achieve Magazine, Issue 3, 2011 (Thanks to Ryan Libby of CanGRC for pointing out this article)

The move came as Energy Permanent Secretary Patrick Nyoike faced MPs to shed light on how the Chinese contractor clinched the multi-billion geothermal deal.

Speaking Tuesday when he appeared before the House Committee on Energy, Mr Nyoike said that his ministry was not aware of the deal with Great Wall Drilling Company (China) to sink the wells in Kenya’s bid to boost it power capacity.

“It is a fake contract. I have checked with KenGen, they have never seen it. KenGen does not even have a draft contract. I have checked with Great Wall Drilling Company, they have not seen it. That’s a fake. I don’t know where it came from” said Mr Nyoike.

Mr Emilio Kathuri (Manyatta) flashed a copy of the contract that had been appended to the agreement between Kenya and Great Wall Drilling Company. That copy had the coat of arms of the Republic of Kenya and Great Wall’s logo.

Mr Nyoike confirmed that Kenya had signed a memorandum of understanding, but the sole purpose was to allow China’s Exim Bank to release money for the project. He said that the government had not signed any commercial contract on the matter.

The process of securing a Chinese Exim Bank loan is very different from the typical tied aid project. The first thing the Chinese contractor does is to approach the client directly with a deal and an offer to sign a memorandum of understanding with an implementing agency — a government utility or parastatal, for example.

The next stage is to lobby the Ministry of Finance to apply to Exim Bank for a loan. The larger the Chinese contractor and the bigger the scale and scope of the project, the more the chances that it will be supported by Exim Bank of China. And, companies like Great Wall Drilling, which already have the scale and international experience, usually find it easy to mobilise the Exim Bank to support them in winning contracts.

The MoU, the MPs said, has a figure of Sh40 billion (USD 400 million).

But Mr Nyoike said the government had applied for a loan from Exim Bank in China, but in keeping with the lending policy of China, the government had to demonstrate that it was a Chinese contractor handling the project. He said the government was quietly lobbying that the money be given to the Geothermal Development Corporation for the sinking of the wells.

“If they agree, that’s fine. If they don’t we’ll tell them to give the money to KenGen. We should not reject the money. We need it to improve our power generation,” Mr Nyoike said.

It emerged that the China’s Exim Bank had declined to issue a loan to state corporations citing weak financial muscle. The PS said Kenya’s government had approached China seeking money for the Geothermal Development Corporation, the Kenya Electricity Transmission Company and the Rural Electrification Authority, but the effort failed.

The Bank, Mr Nyoike said, decided to give the money to KenGen, because it already had a Chinese contractor –Great Wall — working in the country. Great Wall had drilled six wells in Ol Karia.

MPs questioned the rationale of valuing 8 geothermal wells at Sh4 billion, yet the six wells were valued at Sh2billion.

Mr Edwin Yinda (Alego Usonga) said the cost ought to come down now that the contractor was already in the country; and also because of economies of scale.”

Source: Daily Nation

Kenya Electricity Generating Company Ltd. awarded a full turnkey contract for Olkarai I and IV to a consortium of Japan’s Toyota Tsusho Corporation (Tokyo: 8015) and Korea’s Hyundai Engineering Co., Ltd. on November 7, 2011. Toshiba was selected by Hyundai Engineering to supply the turbines and generators for the project following a comprehensive evaluation of the company’s extensive supply experience and the equipment’s performance and reliability.

Located in the Rift Valley 100 kilometers northwest of Nairobi, Kenya’s capital, the Olkaria I extension and Olkaria IV will have a combined output of 280,000kW, the largest of any power generation complex in Kenya. They will deliver renewable energy with minimal emissions of CO2 and raise the share of geothermal power in Kenya’s supply mix to approximately 25%. The plants will make a significant contribution to overcoming Kenya’s current electricity shortage. Olkaria I, a major extension to a current facility, is funded by a yen loan from the Japan International Cooperation Agency (JICA), a Japanese government agency.

Toshiba is an industry leader in power generation equipment, with world-class capabilities in nuclear, thermal and renewable power generation equipment. Toshiba entered the geothermal power business in 1966 with the supply of a steam turbine and generator to the Matsukawa geothermal power plant, Japan’s first geothermal plant, and subsequently expanded the business to North America, Southeast Asia and Iceland. Toshiba is today the world leader in the manufacture of steam turbines and generators, with a market share of 25%*1, and has supplied a total of 52 units with an installed capacity of 2,800,000kW.

Going forward, Toshiba will promote its geothermal business and the supply of high performance, highly reliable equipment at the global level. This move is in line with the company’s aim of expanding its overall renewable energy business, including wind, hydroelectric and solar photovoltaic power, as a means to contribute to stable power supply and the realization of a low carbon society.”

Source: Toshiba announcement via 4-Traders

At the same time, KenGen Managing director Eddy Njoroge said 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 produce a total 115 MW — is $1 billion, he added.

“The contract is for 27 months which means it comes on board around January 2014,” Njoroge told Reuters on a sidelines of carbon credit workshop.

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 funded jointly by the Kenyan government, World Bank, Germany’s Development Bank KfW, European Investment Bank, JapanInternational Corporation Agency and French Development Agency, AFD and KenGen.”

For the full article see link below.

Source: Reuters via In2EastAfrica

The map is currently only available in a limited number of copies, but might be available for sale in the near future.

Tender No. GDC/HQS/023/2011-2012

Tender does supply of Scientific Equipment of Geothermal Resource Development

Bid Security: 2% of Tender sum

Closing date: 16/11/2011, AT 2. 00PM (1400 HOURS)

Tender GDC/HQS/024/2011-2012

Tender for Drilling of twenty two (22) Seismic Short holes and drilling & installation of twenty (20) water boreholes at Paka-Silali Geothermal Prospect in East Pokot and South Turkana Districts (Mandatory site visit)

Bid security: 2% of tender sum

Closing date: 16/11/2011, AT 2. 00PM (1400 HOURS)

Interested eligible bidders may obtain further information and inspect the tender document from the office of the Manager, supply Chain at Riverside office along Riverside Drive between 9. 00 am and 4. 00pm during week days. An electronic copy of the tender document may be obtained by interest firms upon payment of a non refundable fee of Kshs. 3, 000 payable to our accounts office in cash of by bankers cheque.

The completed tenders in plain sealed envelopes clearly marked with Tender No and Tender reference name shall be addressed to:

And deposited in eh tender box at GDC Riverside office 1st floor on r before the dates specified above.

Tenders will be opened immediately thereafter in the presence of the tenderers or their representatives who choose to attend at GDC Riverside Board Room. Late tenders will not be accepted.

There will be a mandatory site visit for Tender No: GDC/HQS/024/2011:2012 on 1s November, 2011 at Paka Silali Block. Prospective bidders are requested to assemble at Kampi Samaki.

Source: TendersUnlimited Kenya

The funding for the project will come from the Global Environment Facility, as well as the World Bank and OPEC. It is expected that drilling could be completed by 2013, with development plans for a geothermal power plant of 56 MW capacity by 2018.

Currently the country relies completely on oil for electricity generation, it currently has an effective power generation capacity of 57 MW. It is expected that the peak power demand of the country is at 75 MW, with an increase of up to 219 MW is expected by 2035. Just in the next 3-4 years it is expected that the country will need roughly twice the power generation capacity of today.

Source: BusinessWeek

The region around the volcano Silali in the east African rift valley will be flown over with thermal camera. Together with satellite pictures and thermal pictures, it is possible to derive geological information, that allow more rapid and focused exploration work. GDC will use this process to explore further potential geothermal sites int he northern Rift Valley.

The project is financed by the Federal Ministry for Economic Cooperation and Development of Germany as part of the GEOTHERM program, which supports several partner countries since 2003. The program provides support on analytical, strategic and technical steps in the utilization of geothermal in selected developing countries. This includes help in overcoming the exploration risk, high up-front capital cost among others.

Source: Hannover Zeitung (in German)

Mr. Njoroge says 10% of the carbon revenue will be channeled towards community projects around the plant area involving water, health, education facilities while the rest of the money will be ploughed back to KenGen’s expansion plans.

In 2010, KenGen signed an Emission Reduction Purchase Agreement (ERPA) with the World Bank for the purchase of 900,000 tonnes of carbon generated from one of its six Clean Development Mechanism (CDM) projects.

The CDM projects include Olkaria II 3 rd unit, Eburu, Kipevu combined cycle, Kiambere, Sondu Miriu and redevelopment of Tana Power Station.

Managing Director KenGen, Edward Njoroge says KenGen intends to continue developing green energy projects under the CDM.

“The company’s geothermal; wind and hydro power generation projects are eligible for CDM since they are clean energy projects. We intend to keep supporting green energy production for a safer environment,” he says.

The Kenya Electricity Generating Company (KenGen) is the pioneer company in the Clean Development Mechanism (CDM) project development process in the country. It began exploring the possible benefits of CDM from as early as 2000.

CDM is one of the market mechanisms defined under Article 12 of the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC) (1992) which provides the framework for stabilization of green house gases concentrations in the atmosphere at non-dangerous levels and preventing dangerous climate change globally.”

Source: Kenya Broadcasting Corp.

The answer is, of course, money, and Chinese companies’ ability to virtually guarantee funding and timescales for Chinese-led projects.

Although the agreement stipulates the Kenyan government will seek its own funding, there’s a tacit understanding that when Kenya asks the Chinese Export-Import Bank for a loan, it will be granted, without too many questions asked. It’s happened before – the Great Wall Drilling Company is currently drilling 26 geothermal wells in Kenya, financed with a $96 million loan from the same bank.

Organising a normal bidding process involving local and international companies, would be ultimately cheaper for the government, but would give it the significant headache of finding funding from international banks or institutions, and having to deal with all the strings often attached to such loans – strings which raise questions of democracy, human rights and timely payback.

But there’s no such thing as a free geothermal well, and China will have to be paid back at some time or another. This might end up being more expensive – financially or politically – than just doing the process domestically from the outset.”

Source: All Africa

Economic and financial, along with technical and human capacity, constraints have hindered Kenya’s ability to take full advantage of its natural energy resources, which include geothermal, solar, wind, biomass and biogas. While Kenya has made important institutional and policy reforms to its energy sector, SREP concessional financing, estimated at about USD 50 million, will help absorb high start-up costs and other risks and catalyze financing from the private sector and other sources to help bring Kenya’s renewable energy market up to scale.

The AfDB is working closely with Kenya to prepare one of the first projects in the SREP investment plan: a geothermal plant at Menengai which aims to produce 400 MW of its 1,650 MW potential by 2015. An associated transmission line project will evacuate geothermal power from Menengai to the national grid. This will improve power reliability and stability and reduce system losses on the national grid. It will also avail additional capacity that will facilitate grid extension to other areas.

Menengai is the first geothermal field being developed solely by Kenya’s newly established Geothermal Development Company (GDC), which is responsible for the country’s scale-up in geothermal development. The proposed project will help GDC design and test an investment and project structure that could be replicated to develop other fields. SREP’s capacity building support will also lend credibility to GDC and inspire investor confidence.

In terms of the unit generation cost, geothermal is the most cost effective of Kenya’s renewable energy sources. It is also not affected by drought and climatic variability, has the highest availability factor at about 95 percent, is green energy with no adverse effects on the environment, and is indigenous and readily available in Kenya—an estimated potential of over 7,000 MW spread over 14 prospective sites. Kenya’s current geothermal capacity is 198 MW. Kenya seeks to develop about 5,000 MW of electricity from geothermal by 2030.

Kenya is one of three African nations to pilot SREP; the others being Mali and Ethiopia. SREP aims to scale up the deployment of renewable energy solutions and expand their markets in the world’s poorest countries. It is a program under the CIFs, a USD 6.5 billion financing instrument designed to channel scaled up climate change financing to developing countries through multinational banks like the AfDB.”

Source: AfDB

MIGA has been insuring OrPower 4 Inc.’s power plant in Kenya’s Olkaria geothermal fields since 2000. The agency recently increased its coverage against the risks of transfer restriction, expropriation, and war and civil disturbance to cover an additional equity investment of $110 million for phase three of the project. MIGA’s total gross exposure under the project now stands at $134 million. The facility is the first privately provided geothermal power plant in sub-Saharan Africa, and with the completion of the planned phase three expansion in 2013, the total combined generation capacity will be 84 megawatts.

Kenya’s energy deficit is inhibiting the country’s potential for growth and development. The country is heavily reliant on hydropower, which is seriously constrained during droughts like the current one. As a result, the country imports costly fossil fuels to fill the growing demand for electricity. An increase in indigenous geothermal generation will guarantee a more reliable supply of energy while also reducing CO2 emissions. The existing plant has been registered as a “Clean Development Mechanism” project with the United Nations Framework Convention on Climate Change with an expected annual CO2 reduction of 180,000 tons per year.

At a signing ceremony in Washington, Yehudit Bronicki, President of Ormat Holding Corporation, said “MIGA’s continued participation in the project is critical. With MIGA’s involvement, the political risk profile of the project is much lower, allowing us to focus on our day-to-day operations.”

MIGA Executive Vice President Izumi Kobayashi said “We are committed to the continued success of this investment that is bringing the electricity needed to support Kenya’s growing economy. We also recognize the important work the company is doing with the local Maasai community to provide support for schooling and early childhood development.”

More information about the project and MIGA’s support can be found here.

Source: MIGA

Under the agreed term sheet attached to the commitment letter, the loan will be comprised of a refinancing tranche of up to $85 million to prepay the existing loan and fund transaction costs, a construction loan tranche of up to $165 million to finance the construction of an additional 36 MW expansion currently underway, and a $60 million stand-by facility to finance an additional optional 16 MW capacity expansion, that, if exercised by Ormat, could bring the total capacity of the complex to approximately 100 MW.

The maturity dates of the construction tranche and the refinancing tranche are expected to be June 2030 and December 2030, respectively. The maturity and certain other terms of the stand-by facility will be finalized following Ormat’s decision to exercise the option to construct the additional 16 MW expansion.

Financial closing is targeted to occur during December 2011, subject to (among others) successful negotiation of the loan documentation, completion of due diligence by OPIC and fulfillment of certain conditions precedent to be agreed upon in the loan documents.

Dita Bronicki, CEO of Ormat Technologies said, ‘This financing marks one of the largest project finance loans obtained by Ormat, and demonstrates OPIC’s confidence in our technology and operational skills, evidenced by our successful track record of over a decade with the Olkaria III Geothermal complex. We thank OPIC for their confidence in Ormat and their support of U.S. investments in nurturing development in Africa’.

Mrs. Bronicki continued, ‘We are very happy with our long-standing involvement in the Kenyan power sector, as the first renewable IPP in Kenya and probably in all of Africa. The expanded project will provide the Kenyan people more reliable, clean and cost effective power.’

OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help solve critical world challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC supports U.S. investment in emerging markets worldwide, fostering development & the growth of free markets.”

Source: Company release via PR Newswire

Although Kenyan officials were keen to play down the significance of the deal, arguing that a memorandum of understanding was not a commitment, the deal has once again exposed the tactics Chinese construction companies employ to bag multimillion-dollar contracts, especially when they are pitted against contractors from Western Europe.

The geothermal sector in Kenya is the new battlefield, with Western development finance institutions and the Chinese Exim Bank scrambling for a stake in what has quickly emerged as the preferred target for international development finance intuitions.

Under the new memorandum, Great Wall Drilling, which has just completed another Exim Bank-supported drilling programme, sinking in excess of 50 wells — has offered a contract price of $400 million for the 80 wells. This works out to an average of $5 million per well. The contract price will include supply of drilling materials.

In reality, the fact that a Chinese company is angling to clinch a big infrastructure project with the support of China Exim Bank is not new. Indeed, tied aid as a phenomenon is commonplace even with contractors from Western Europe.

The point of departure of Great Wall’s new bid is that it graphically demonstrates how the Chinese have perfected the game of circumventing international competitive bidding.

The process of securing a Chinese Exim Bank loan is very different from the typical tied aid project.

The first thing the Chinese contractor does is to approach the client directly with a deal and an offer to sign a memorandum of understanding with an implementing agency — a government utility or parastatal, for example.

The next stage is to lobby the Ministry of Finance to apply to Exim Bank for a loan. The larger the Chinese contractor and the bigger the scale and scope of the project, the more the chances that it will be supported by Exim Bank of China.

And, companies like Great Wall Drilling, which already have the scale and international experience, usually find it easy to mobilise the Exim Bank to support them in winning contracts.

Indeed, Chinese contractors are adept at recruiting politically connected agents capable of influencing decisions across power centres in government.

Which is why it does not surprise that even though Exim Bank of China has not made a commitment to fund the drilling of 80 geothermal wells, Great Wall Drilling has gone ahead and signed a memorandum of understanding with the government on the presumption that concessional financing will follow later. The memorandum of understanding, a copy of which has been seen by The EastAfrican, stipulates the government of Kenya will on its own initiative now seek financing through the government of China in the form of a “preferential export buyer’s credit” for drilling steam production wells.

The documents stipulates that the total amount and financing terms will be provided in a loan agreement to be directly negotiated between the Ministry of Finance — the designated official borrower on behalf of either Geothermal Development Company or Kenya Electricity Generating Company) and the government of China.

Great Wall’s first break in Kenya was a contract in 2005 to drill six wells in the Ol Karia fields.

This was followed by an even bigger contract to drill 15 more wells, which were completed in 2008. Subsequently, Great Wall clinched another contract to drill 10 additional wells.”

The article goes on in lengths on the issues of competition with western and local drilling firms in Kenya and in general draws a very critical picture of it.

Source: The East African

Installation of a 5-10 MW Geothermal Wellhead Electricity Generation Unit at Menengai Geothermal Field.

In a note GDC informs all interested bidders that the closing date for the tender has been extended from September 22, 2011 to October 26, 2011 at 1400hrs.

The second and last site visit has been scheduled for September 19, 2011 at menengai Geothermal projects.

Bidders are required to assemble at GDC Generation House – Nakuru at 10.00AM and thereafter proceed to the project site.

Bidders are also advised to collect all the addenda (1&2) if they haven´t collected yet.

Further information is available at www.gdc.co.ke

Release in pdf

“Mits Motomoshi, an Energy and Financial Specialist with the World Bank said that the Bretton Woods institution was in talks with the Kenyan government and the International Geothermal Association on how the fund would be used in future drilling exercises.

“We have started discussions with development partners and the government as they start exploration in the Rift Valley,” said Motomoshi.The Kenyan government is on a mission to switch to more renewable sources of energy such as geothermal and wind, as the vagaries of weather wreak havoc on hydro-generation of power.

However, the high upfront costs associated with geothermal exploration have slowed down progress on harnessing. With an estimated potential of 14 000 megawatts (MW), the country has only been able to harness 265MW out of a total installed capacity of 1 185MW.

Geothermal Development Company (GDC) Managing Director Dr Silas Simiyu said it cost Sh400 million on average to drill a single well, making the process slow and expensive.

“The way things have been done in the past is that you wait for an investor to come and put in money before you have even been shown that existence of the resource. But with the fund it is very easy for partners to come on board because there is evidence the resource is there,” said Dr Simiyu.

GDC, with two drilling rigs, is in the process of securing four more rigs that will speed up geothermal exploration.

Dr Simiyu said that to accelerate the speed of power connection to the national grid, GDC intends to use wellhead generation technology to be installed as soon as a well is drilled.

“The wellhead power generators will enable us to move quickly and start injecting power to the grid and recoup our costs,” he said.”

Source: CAJ News Agency

The Geothermal Development Company (GDC) said it had since 2009 concentrated its activities around the Menengai area in Nakuru, saying it was in negotiations with the Treasury for more funds.

GDC managing director Silas Simiyu said the company had a shortfall of Sh7 billion and Sh12 billion ($130 million committed by the French Development Bank (ADB) would likely to be disbursed in January.

Discussions between the Treasury, the budget and energy committees of Parliament were also likely to yield new allocations from the Treasury. The company was allocated Sh16.1 billion, nearly a quarter of the money earmarked for the energy sector, during the Budget presented in June.

The company intends to drill 200 wells in the Baringo, Bogoria, Paka, Chepchuk, Korosi and Silale areas. Nine other wells are to be drilled in the OlKaria fields .

The cost of drilling one well is estimated at Sh585 million ($6.5 million), while a piece of generation set is estimated at Sh765 million ($8.5 million).

GDC undertakes the upstream work before handing over proven sites to developers as a way of attracting investors to the highly capital intensive sector.

The ministry of energy projects that implementation of the geothermal power projects in Kenya will require investments of up to $650 million (Sh58.5 billion).”

Source: AllAfrica.com 

The two-day meeting organized by UNEP in collaboration with the Government of Kenya, Geothermal Development Company (GDC), and Kenya Electricity Generating Company (KenGen) is expected to raise awareness and sensitize high level decision makers about the unique development opportunities that geothermal energy presents and how member countries can benefit from ARGeo’s support services, to accelerate the development of their geothermal resources.

Kenya is a concrete example of a country making a transition to a low carbon, resource efficient Green Economy. Using Kenya as an illustrative Geothermal success story, the ARGeo high level meeting is discussing among other issues, challenges and opportunities for development of geothermal resource in the East African Rift region, strategic approaches in development of geothermal resources, responses of various geothermal programmes to develop geothermal energy, country support for resource mobilization and financing of geothermal projects as well as best practices and lessons to be learnt.

Geothermal energy accounts for about 15% of Kenya’s current power generation in operation, with an estimated potential of 4,000 MW. Preliminary estimates along the whole African Rift indicate that there might be some 6 GW or more of geothermal potential in this region

The ARGeo project was proposed with a view to accelerate the development of this large untapped geothermal resource potential in the East African Rift region.

The meeting will lead to a common understanding of the objectives and outcomes of the ARGeo project and to the development of strategic partnerships and synergies with the other major geothermal support programmes in the region.

As one of its key outcomes, the meeting is expected to result in transfer of adequate knowledge about the objectives and outcomes of the ARGeo project, and development of a strategic framework for ARGeo projects in line with requirements of the other geothermal support programmes in the region.

The meeting includes field visits to the Olkaria geothermal power plant for the High level officials from ARGeo member countries and Menengai geothermal fields for the technical experts.

The African Rift Geothermal Development Facility (ARGeo) originated from the Eastern Africa Geothermal Market Acceleration Conference held in Nairobi in April 2003. The program was officially launched in November 2010 at the opening session of the Third African Rift Geothermal Conference (ARGeo-C3) in Djibouti. The objective of the project is to promote geothermal resource utilization by reducing the various risks involved, and as a result, attract investors and lower the cost of geothermal power development projects. The project has two main components: (i) A regional networking, information systems and capacity building and a technical assistance program implemented by UNEP/DTIE, and (ii) A Risk Mitigation Fund Component implemented by the World Bank.

The project is supported by GEF with co-funding from the Icelandic International Development Agency (ICEIDA), the German Federal Institute of Geosciences and Natural Resources (BGR), the United Nations University-Geothermal Training Programme (UNU-GTP), and the International Atomic Energy Agency (IAEA).”

Source: AllAfrica.com

The government is looking towards the private sector to explore if there is an interest in developing geothermal power projects in the country.

In a similar story to Kenya, draughts have drained the country’s main hydropower dams, while at the same time power demand is expected to rise exponentially over the next 15 years.

It is expected that the country has about 650 MW of geothermal power generation capacity potential in the Mbeya region alone. It is expected that there might be more discoveries made, but exploratory work demands high investment costs.

Source: Bloomberg

Among the companies bidding are the major players of the industry: Mitsubishi, Alstom Power, General Electric and Toshiba.

GDC plans to select a different company to build each of the eight facilities with the backing of the investors in the project, including the World Bank.

There is an element of competition expected for the companies in getting the plants up and running. “Construction of the power plants is expected to start as early as January and be completed in 2017 at a cost of $31. billion.”

Source: Bloomberg

The bonds, so reported, “maybe ready to be offered linked to geothermal resources as early as next year”. This would require the permission by the authorities in the country. The securities would trade on the Nairobi Stock Exchange. “We can use steam as an asset to raise funds for drilling. The idea is in the development stage, but we could be ready in six months, a year.”, so KenGen’s Managing Director Eddy Njoroge.

The country’s Geothermal Development Company considers unexploited geothermal resources in the range of 7,000 to 10,000 MW at 14 “high-potential” locations with an estimated value of $30 billion.

The country is expected to see a surge in power demand and geothermal is a key element in meeting this demand. Today geothermal represents about 15% of generated electricity, by 2030 this is expected to reach 30%.

Source: Bloomberg